Business Survival Rates Rise to 10 Year High

Good time to form a startup? YES SBA data shows that more firms are surviving their first year

Looking for some good news for your small business? According to a recent SBA report, more startups are making it past their first year than ever before.

The U.S. Small Business Administration reported that almost 80 percent of small businesses in 2015 survived until 2016, the highest since 2006.

Small businesses are often defined as companies with fewer than 500 employees. They make up 99.9 percent of all businesses in the United States, meaning this is good news for most businesses out there.

After the first year, the chances that a business will have survived start to drop. About half of all establishments survived five years or longer according to the SBA’s data, and only one-third existed after 10 years.

Regardless of the risks, many are still setting up new businesses. Startups made up about 8 percent of all firms in 2010. If these survival rates stay consistent, this may be a great time to form one of your own.

According to the report, business startups have even started to retain more employees. In 2014, average employment in firms that had been open more than one year reached a four-year high of 6.1 employees. Compare this to the average number of employees in all firms, which had only increased by about one employee from 2005 to 2014.

Still, small businesses employees are actually a minority as shown by a figure in the report. Small business employees made up 47.8 percent of all private-sector employees, and 41.1 percent of private-sector payroll.

This may be confusing to some, as small businesses generate three-fifths, more than half, of net new jobs. The SBA explained that this is because as a business grows, they contribute to small firm job gains. Once they pass the 500 mark, though, they contribute to large firm numbers.

business survival rate failure statistics

About the Author:

marsha kelly small business blog

Marsha Kelly sold her first business for more than a million dollars. She has shared hard-won experiences as a successful serial entrepreneur on her Best4Businesses blog, where she also regularly posts business tips, ideas, and suggestions as well as product reviews for business readers. As a serial entrepreneur who has done “time” in corporate America, Marsha has learned what products and services really work well in business today. You can learn from her experiences to build your business.

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