Starting a business may feel easier these days, especially with digital tools and AI doing much of the heavy lifting. But staying in business is another story. A fresh idea and a website can get you started, yet the road beyond the first year is anything but smooth.
Data gathered by LendingTree, based on historical records from the Bureau of Labor Statistics, paints a sobering picture. For every 100 businesses launched in a given year, only about 35 are still standing after ten years. The drop-off begins early and continues steadily.
In the first year alone, around 21 out of 100 businesses go under. By year two, the survival rate falls further, with just 65 still active. The third year chips away again, leaving roughly 59 still in the game. From there, the decline doesn’t hit as hard year by year, but the damage adds up. After five years, just over half of the original group remains. Beyond that, each additional year trims the number bit by bit, until only a third make it to the ten-year mark.
The early collapse isn't surprising when you look at the demands placed on new business owners. Most are new to the job, and it takes time to get a business off the ground. Revenue usually doesn’t show up right away, and profit is even slower to appear. That means founders often face long hours with little payoff, all while dealing with financial stress and constant uncertainty. The pressure can be relentless, and without enough runway, many end up folding before they’ve had a real shot.
Even experienced workers face a learning curve when switching from employee to entrepreneur. Running a business involves wearing more hats than most are used to. Sales, customer outreach, product development, budgeting, hiring, marketing, these responsibilities don’t split themselves. Mistakes pile up, confidence can slip, and decisions made in panic can sink the ship before it gets moving.
There is some relief with time. Survival rates slow their downward spiral as businesses mature. Those that make it past the halfway point tend to have found a rhythm. But even then, the numbers don’t promise safety. Only about 35 out of 100 will celebrate their tenth anniversary, meaning two-thirds still drop out before the finish line.
Since the pandemic, Americans have embraced entrepreneurship in large numbers. Remote work, economic shifts, and the lure of independence gave rise to a wave of new ventures. Applications for new businesses remain higher than they were before 2020, and the ease of launching online continues to attract first-time founders.
Artificial intelligence has played a part in that surge. It now acts as a brainstorming tool, a salesperson, and a marketing engine, all rolled into one. With fewer barriers than ever, more people are jumping into the game.
But jumping in is the easy part. Holding steady when the tide turns, that's where most businesses struggle. As the numbers show, launching isn’t the hardest part. Staying afloat is.
Read next: Buy Now, Pay Later (BNPL) Apps: The Hidden Costs Aren’t What You Think
Data gathered by LendingTree, based on historical records from the Bureau of Labor Statistics, paints a sobering picture. For every 100 businesses launched in a given year, only about 35 are still standing after ten years. The drop-off begins early and continues steadily.
In the first year alone, around 21 out of 100 businesses go under. By year two, the survival rate falls further, with just 65 still active. The third year chips away again, leaving roughly 59 still in the game. From there, the decline doesn’t hit as hard year by year, but the damage adds up. After five years, just over half of the original group remains. Beyond that, each additional year trims the number bit by bit, until only a third make it to the ten-year mark.
The early collapse isn't surprising when you look at the demands placed on new business owners. Most are new to the job, and it takes time to get a business off the ground. Revenue usually doesn’t show up right away, and profit is even slower to appear. That means founders often face long hours with little payoff, all while dealing with financial stress and constant uncertainty. The pressure can be relentless, and without enough runway, many end up folding before they’ve had a real shot.
Even experienced workers face a learning curve when switching from employee to entrepreneur. Running a business involves wearing more hats than most are used to. Sales, customer outreach, product development, budgeting, hiring, marketing, these responsibilities don’t split themselves. Mistakes pile up, confidence can slip, and decisions made in panic can sink the ship before it gets moving.
There is some relief with time. Survival rates slow their downward spiral as businesses mature. Those that make it past the halfway point tend to have found a rhythm. But even then, the numbers don’t promise safety. Only about 35 out of 100 will celebrate their tenth anniversary, meaning two-thirds still drop out before the finish line.
Since the pandemic, Americans have embraced entrepreneurship in large numbers. Remote work, economic shifts, and the lure of independence gave rise to a wave of new ventures. Applications for new businesses remain higher than they were before 2020, and the ease of launching online continues to attract first-time founders.
Artificial intelligence has played a part in that surge. It now acts as a brainstorming tool, a salesperson, and a marketing engine, all rolled into one. With fewer barriers than ever, more people are jumping into the game.
But jumping in is the easy part. Holding steady when the tide turns, that's where most businesses struggle. As the numbers show, launching isn’t the hardest part. Staying afloat is.
| Time Frame | % of Businesses that Survive | % of Businesses that Fail |
|---|---|---|
| Start | 100% | 0% |
| Within 1 year | 78.5% | 21.5% |
| After 2 years | 65.1% | 34.9% |
| After 3 years | 59.2% | 40.8% |
| After 4 years | 57.3% | 42.7% |
| After 5 years | 51.6% | 48.4% |
| After 6 years | 47.5% | 52.5% |
| After 7 years | 43.2% | 56.8% |
| After 8 years | 39.9% | 60.1% |
| After 9 years | 37.4% | 62.6% |
| After 10 years | 34.9% | 65.1% |
Read next: Buy Now, Pay Later (BNPL) Apps: The Hidden Costs Aren’t What You Think
