Know about Small Business Surivial Rate

In USA, small businesses play a significant role in providing employment. But they are not able to survive the local market competition and from larger businesses. There can be many reasons for this poor survival rate including low capital, unawareness of new technologies, managerial inconsistencies etc.

According to a SBA report released in September 2009, around 627,200 new employer firms began operations in 2008 and 595,600 firms closed that year. This results to an annual turnover of about 10 percent for entry and 10 percent for exit. Non-employer firms have three times more turnover rates than employer firms as they are easy to enter and exit.

It also stated that out of ten new employer firms, seven last at least two years and about half survive five years. To be more specific, latest census data shows that 69 percent of new employer establishments born to new firms in the year 2000 survived at least two years, and 51 percent survived five or more years.

According to the latest data,

  • 70% of companies survive for at least two years
  • 51% for five years.

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