Startup Business Failure Rates by Industry (Stats and Infographic)

Last updated on June 15th, 2017 at 12:07 pm

Far be it from me to put you entrepreneurs off of starting up your own business, as I think it is one of the most exciting and self affirming things you can do, but I feel it is my duty to point out that there are risks associated with starting a new business.

A US analysis of small business success rates reported on suggests that 25% of small businesses fail in the first year, 36% fail by year 2 and 44% fail by year 3. Of course, this is US data but I wouldn’t be surprised if the trend was replicated in the UK and in other major economies. The statistics brain research also showed that some sectors had higher failure rates than others with Finance, Insurance, Real Estate, Education Health having the highest success rates and the Information sector having the lowest success rates by some way.

Businesses With Best Success Rates After 5 Years.

The study also showed the businesses with the best success rate after 5 years and these were:

  1. Religious Organizations
  2. Apartment Building Operators
  3. Vegetable Crop Productions
  4. Offices & Clinics of Medical Doctors
  5. Child Day Care Services

Businesses With Worst Success Rates After 5 Years.

The study also showed the businesses with the worst success rate after 5 years and these were:

  1. Plumbing, Heating, Air Conditioning
  2. Single-Family Housing Construction
  3. Grocery Stores
  4. Eating Places
  5. Security Brokers and Dealers
  6. Local Trucking

As well as this a separate infographic by reports some similar stats in relation to small business success rates, although their stats are a little more pessimistic, suggesting that 50% of business fail within the first 5 years and 95% fail within the first five years.

Highest Risk Businesses

In this infographic they identified the highest risk area to start a business was in retail stores (80% fail in five years) followed by Independent Restaurants (60% failure rate).

If you are planning to start your own coffee shop or restaurant, I recommend that you read this bestselling book to help you on your way: Start up and Run Your Own Coffee Shop and Lunch Bar.

Alternately, if you are planning to start your own retail business/shop, then I’d strongly recommend this bestselling book written by Clare Rayner, a renowned retail expert, The Retail Champion: 10 Steps to Retail Success. It averages 4.5 out of 5 star reviews on Amazon  based on over 20 reviews and has been well road-tested.

Another useful read for retail entrepreneurs is: Smart Retail: Practical Winning Ideas and Strategies from the Most Successful Retailers in the World. This is another 4 star out 5 rated book based on 16 reviews, which is a must-read as it contains tips and advice from some of the most successful pioneer retailers in the world.


Recommended reading for entrepreneurs

As you can see, starting up a new business comes with great risk, but these risk can be mitigated with proper advanced planning and education. There are several books that I would recommend for entrepreneurs.

The first is: The Financial Times Guide to Business Start Up 2016: The Most Comprehensive Annually Updated Guide for Entrepreneurs (The FT Guides). This 4.5 out of 5 star rated book on Amazon is of the highest pedigree proven by the fact that this is now it’s 30th edition!

Also, another strongly recommended read for entrepreneurs is Online Business Startup: The entrepreneur’s guide to launching a fast, lean and profitable online venture. This 5 out of 5 star rated book on Amazon from a massive 213 reviews has had a thorough readership road-test and gives you lots of easy to absorb and practical advice on how to get your online venture off the ground or how to market your offline venture through the web.


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