Summary:
20% of new U.S. businesses fail within the first year
Only 35% survive past the 10-year mark
AI tools lower the barrier to entry but not the survival rate
Financial insecurity and emotional resilience are key challenges in the first year
Experience reduces failure rates over time
Visualized: How Many Businesses Survive 10 Years?
Starting a business is easier than ever, but keeping it alive is the real challenge. With AI tools acting as idea generators, sales reps, and marketing directors, the barrier to entry has never been lower. However, the survival rates tell a different story.
Key Takeaways
- 20% of new U.S. businesses fail within the first year.
- By the 10-year mark, only about one-third (35%) will survive.
U.S. Business Survival Rates
| Time frame | % of Business That Survive | % of Businesses That Fail | |------------|----------------------------|---------------------------| | Year 0 | 100 | 0 | | Year 1 | 78.5 | 21.5 | | Year 2 | 65.1 | 34.9 | | Year 3 | 59.2 | 40.8 | | Year 4 | 57.3 | 42.7 | | Year 5 | 51.6 | 48.4 | | Year 6 | 47.5 | 52.5 | | Year 7 | 43.2 | 56.8 | | Year 8 | 39.9 | 60.1 | | Year 9 | 37.4 | 62.6 | | Year 10 | 34.9 | 65.1 |
Why is the first year so brutal? It's new for most people setting up a business. A new business won't generate revenue (let alone profit) immediately. This requires emotional resilience and long hours to grow sales, under financial insecurity.
Experience pays. The rate of failure falls steadily as the years progress, but only about one-third (35%) will survive to celebrate their first decade.
The Post-Pandemic Entrepreneur
Americans are in their entrepreneurship era, with new business applications way above pre-pandemic averages. AI tools make starting a business easier, but keeping it going is the real challenge.
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