Small Business Survival Rate

In this tough economy, many small businesses are struggling to survive. The SBA’s Office of Advocacy has released an updated fact sheet shedding light on survival. The data present a picture that is more optimistic than might be expected.

About 627,000 new businesses started up in 2008, despite the declining economy. This was fewer than the number of start-ups in 2007 (664,100), but it still means that people with good business ideas are finding the capital and the means to start up companies.

About 595,000 businesses closed their doors in 2008; this is only slightly higher than in 2007 (571,300) and fewer than in 2006 (599,333). The turnover rate is about 10%, but it’s three times higher for companies with no payroll versus companies with employees.

According to the latest data, about 70% of companies survive for at least two years, and about 51% for five years. The survival rates are higher than those reported last year, when only 67% lasted two years, 44% at least four years, and 31% for at least seven years. The survival rates are similar across states and major industries.

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