Startup Failure Rates: Why So Many Fold and How to Save Yours [Infographic]
- Startup 101

Startup Failure Rates: Why So Many Fold and How to Save Yours [Infographic]

Photo by Tim Gouw on Unsplash

There is more to the startup world than tales of success, lavish workspaces, and getting immersed in video games and table tennis.

All new businesses do not necessarily end with a successful initial public offering (IPO) and exit strategy, with founders celebrating with their friends and families. With that in mind, let’s take a closer look at the recent startup failure rates.

Startup Failure Rates

The US Bureau of Labor Statistics has kept a record of all the US startups every year since 1994. Upon analyzing the data, it was found that around 20% of businesses fail in the first year, about 50% in the first four years, and nearly 80% within the first two decades.

Startup Failure Rates

 

Startup failure rates differ by industry, with the healthcare and social assistance having the lowest and the construction industry having the highest. For instance, 56.9 percent of healthcare and social assistance companies that started in 2004 survived after five years compared to 40.8 percent of construction enterprises.

Startup Survival Rates

 

The influence of Covid-19 on new businesses is worth noting while discussing startup failure rates. For example, the pandemic forced 1.6 million (19%) US businesses to shut down temporarily, whereas 4.7 million (57%) battled for survival because of the fall in demand for their offerings.

Impact of COVID on startups

 

Final Thoughts

We hope that new ventures will have a bright future, sustainable profits, and innovative products and services despite the startup failure trends. However, avoiding failure and mistakes can become a roadblock in your success. The only way forward is to learn from your mistakes and keep going.

Startup Failure Rates: Why So Many Fold and How to Save Yours

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