Business Failure 9-20-24

The number of businesses that fail each year varies by year and by the business's age: 

• 2023: 48% of businesses failed in their fifth year 
• 2022: 42.7% of businesses closed in their fourth year 
• 2021: 37.9% of businesses failed 
• 2020: 31.3% of businesses failed 
• 2018: 20.6% of new businesses closed in their first year 
• First year: 20.4% of businesses fail in their first year 
• First five years: 49.4% of businesses fail 
• First ten years: 65.3% of businesses fail 

The average annual rate of business failure from 2019 to 2023 is 12.1%. 

The failure rate for businesses can vary depending on the industry. For example, the Agriculture, Forestry, Fishing and Hunting industry has a lower failure rate than the average. 

According to the Small Business Administration (SBA), 20% of new businesses fail in their first year, and the failure rate increases with each year: 

• First year: 20% of businesses fail 
• Second year: 30% of businesses fail 
• Fifth year: 50% of businesses fail 
• Tenth year: 70% of businesses fail 
• Fifteen years: 25% of businesses fail

Some common reasons for small business failure include:

• Lack of market demand
• Poor financial management
• Strong competition
• Failure to adapt to changing market conditions
• Planning issues
• Insufficient capital
• Inexperienced management 

SBA 7(a) loans: Variable rates range from 11.50% to 15.00%, while fixed rates range from 13.50% to 16.50%. 

SBA 504 loans: Interest rates range from 6.28% to 6.59% for 10 to 25 year terms. 

Small business failure rates: According to Zippia, 21.9% of small businesses fail in their first year, 31.8% in their second year, and 39.7% in their third year. The average survival rate for new firms is only two years, and 81% fail within ten years.

Comments

New start up companies do better when they do the planning themselves and pay as they go. Small minority-owned restaurants with smart owners make their own Strategic Plans and focus on capturing revenue early.  They pay as they go.  The closure of the large restaurant chain “fern bars” will result in more family-owned restaurant opportunities if we can restore the US economy. There would be “strings: attached to the $50,000 bribe offered by Kamala Harris.

Norb Leahy, Dunwoody GA Tea Party Leader