Business Survival Rates?

According to statistics published by the Small Business Administration (SBA), about half of all employer establishments survive at least five years and a third survive ten years or more. This is a far cry from the previous long-held belief that 50 percent of businesses fail in the first year and 95 percent fail within five years. Pictured, window cleaner, Russ Cox reaching the 5 yr mark.

What Are The Real Small Business Survival Rates? According to statistics published by the Small Business Administration (SBA), about half of all employer establishments survive at least five years and a third survive ten years or more. This is a far cry from the previous long-held belief that 50 percent of businesses fail in the first year and 95 percent fail within five years.

Those of us who converse with small businesses on a daily basis are well aware that many of them will fail in the first five years. In fact, these odds are a big reason why I assist people in buying well-established businesses that will provide a higher probability of success than a start-up. But what are the real numbers of small business survival? Many people believe that 80 to 90 percent of start-ups will fail in their first 5 years, but is that accurate? Let's take a look at the facts:  

"About half of all new establishments survive five years or more and about one-third survive 10 years or more. As one would expect, the probability of survival increases with a firm’s age. Survival rates have changed little over time.”

- Source: U.S. Bureau of Labor Statistics, BED

The latest data from the Small Business Administration (SBA) states that nearly 66 percent of small businesses will survive their first two years. That means only about one third of total businesses will actually fail in these first two crucial years, the main cause being a lack of experience. When the data is extrapolated four years out, the number of surviving businesses has been consistently near the 55 to 60 percent mark. This same data shows a five year survival rate that has historically hovered around the 50 percent mark, a far cry from the 80 to 90 percent failure rate so commonly claimed. 

Window cleaner to celebrate 5 years: Clinton Window Cleaner and Services will celebrate its 5-year anniversary Aug. 8th this year. Owner Russ Cox has been washing windows and cleaning out gutters for five years now, all the while working by himself in this labor-intensive job. Cox got this idea from his wife and son, Cox said. They said that since he had janitorial experience from working with the Clinton School District, this would be his best bet for opening a business, he added.

He travels within a 50-mile radius from the Clinton area to clean windows and gutters. “There are surprisingly not a lot of people who know I clean out gutters, too,” Cox said. He does both residential and commercial work. Two-thirds of his work is commercial, because he can go year around with commercial work, he said. He does homes from March to December if the weather will let him. Cox goes to all different homes, from those in the country to condos.

“I get to meet a lot of different people,” Cox said. “I have lived in the area since 1972, but only in the last 5 years I have seen the community in a different way by having my own business. I like the people. I like going to different places, that can be fun or interesting. I even had my granddaughter with me one time.” He said he does not repair windows, but he will help with information on repairing windows or other things in the home to get the help that is needed. “I like to see businesses sprout up that are home-owned businesses,” Cox said.