Full Breakdown
Analysis of Business Survival Rates in the U.S.
4/12/2026, 9:19:08 PM
Overview of Business Failure Rates
A recent analysis by LendingTree, utilizing data from the Bureau of Labor Statistics, reveals that 22.1 percent of American private-sector businesses fail within their first year. This failure rate escalates to 65.3 percent after ten years. The study highlights significant variations in business survival rates across different states, indicating that local economic conditions play a crucial role in the longevity of new enterprises.
State-by-State Breakdown
According to the findings, Washington, D.C. has the highest first-year failure rate at 32.9 percent, surpassing the national average by over 10 percent. Tennessee follows closely with a 29.3 percent failure rate. The top ten states with the highest first-year failure rates include:
1. Washington, D.C. - 32.9%
2. Tennessee - 29.3%
3. Delaware - 27.2%
4. Oregon - 26.7%
5. Oklahoma - 26.5%
6. Missouri - 25.9%
7. Alaska - 25.6%
8. Georgia - 24.9%
9. New Hampshire - 24.9%
10. Wyoming - 24.8%
Conversely, Washington state boasts the lowest first-year failure rate at 17.5 percent, although this figure rises to 68.3 percent by the tenth year. South Carolina follows with a 17.7 percent failure rate, while the bottom ten states include:
49. Louisiana - 19.6%
48. California - 19.7%
47. Iowa - 19.8%
46. Illinois - 20.3%
45. New York - 20.4%
44. Indiana - 20.5%
43. Wisconsin - 20.5%
42. Minnesota - 20.6%
Sector-Specific Insights
The analysis also indicates that the information industry experiences the highest first-year failure rate at 28.4 percent. Matt Schulz, a LendingTree analyst, notes that the low barriers to entry create a crowded market, making it difficult for new businesses to differentiate themselves and monetize effectively. Other sectors with notable failure rates include:
- Professional, scientific, and technical services: 25.5%
- Administrative and waste services: 24.3%
Economic Context and Concerns
The findings come amid growing concerns among small business owners regarding inflation and the overall economic outlook. Neil Bradley, executive vice president of the U.S. Chamber of Commerce, remarked that pessimism about both national and local economies has increased, leading to a decline in plans for hiring and investment. This sentiment reflects a broader unease about the future state of the economy, which may impact current business operations.
Official Statements & Responses
LendingTree's chief consumer finance analyst, Matt Schulz, emphasized the importance of having a clear business plan and understanding the target audience to improve the odds of success. He stated, “One of the biggest problems is going in without a real focus on what you’re trying to accomplish and who you’re trying to serve.”
Verbatim Quotes
- “One of the biggest problems is going in without a real focus on what you’re trying to accomplish and who you’re trying to serve. Starting a business is hard and incredibly risky. If you don’t have a plan for the audience you’re targeting and what problem you’re helping those people solve, your odds of success just get smaller and smaller.” — Matt Schulz, Chief Consumer Finance Analyst, LendingTree
- “Chamber of Commerce, following the group’s recent small business survey, said: “Views of the national and local economies have turned more pessimistic, concerns over inflation have jumped, and plans for future hiring and investment dropped markedly.” — Neil Bradley, Executive Vice President, U.S. Chamber of Commerce
Conclusion
The analysis underscores the challenges faced by new businesses in the U.S., particularly in certain states and sectors. As economic conditions continue to evolve, the survival rates of these enterprises will likely remain a critical area of concern for policymakers and business owners alike.
