Guest Contributor

Startup Failure Rate Statistics To Take In [2020]

By | Jeremy

Every year, hundreds and thousands of highly-determined and ambitious entrepreneurs lay the foundations of several new businesses.

Most of these entrepreneurs have dreams in their eyes and emit rays of positive energy. But did you know that in the following four years, almost half of them would vanish as they never existed?

While plenty of small businesses fail to survive in the business world, a handful of them make it past this critical period and continue to thrive. How many of such businesses are there among the survivors?

Which industries provide the highest/lowest chances of startup success? What are the reasons why small businesses fail to grow? Keep reading to find out.

Top 10 Most Interesting Startup Statistics

Building your very own startup requires a lot of courage, determination, and skill. It takes years of constant struggle and hard work before a startup can be declared as established.

Catching on some of the most interesting startup statistics can help you take better decisions for your business. Some of these facts have been mentioned below.

  • 20% of the small businesses fail during their first year
  • 50% of the small businesses fail after five years
  • 13% of small businesses collapse because of a loss of focus.
  • 7% of the small businesses fail due to their failure to pivot.
  • 13% of small businesses fail because of disagreements between the workforce, owners, and investors leads to failure.
  • 42% of small businesses fail because they no longer have any market need.
  • 46% of the owners with failed startups are found to be incompetent for the job
  • Lack of managerial experience in the owner accounts for business failure in 30% of the cases
  • Around 55% of the small business owners believe artificial intelligence to be the most promising industry in 2019.
  • 25% of the small business owners are females

Top 10 Fastest-Growing Small-Business Industries

As far as small business industries are concerned, their rate of growth is multifactorial and dependent on several factors. Taking all these factors into consideration, the following top ten businesses have been nominated as the fastest-growing industries in the U.S. according to their growth rates (sales percentage) in the year 2018.

  • Computer system designing industry: 18% growth rate
  • Service to buildings and dwellings: 14% growth rate
  • Building finishing contractors: 13% growth rate
  • Residential building construction: 14% growth rate
  • Foundation, structure, and building exterior contractors: 13%
  • Building Equipment Contractors: 13%
  • Other speciality trade contractors: 13%
  • Non-residential building construction: 13%
  • Other heavy and civil engineering: 13%

Top 10 Industries with the Best Chances Of Startup Success

Amidst the countless industries of different types, it is difficult for one to decide which one to opt for. Statistics that measure the percentage of startup success according to the type of industry can come handy in such situations.

Here are the top ten industries with the highest chances of success on the basis of their net profit margin (NPM):

  • Accounting, tax preparation, bookkeeping, and payroll services: 18.4% NPM
  • Lessors of real estate: 17.9% NPM
  • Legal services: 17.4% NPM
  • Management of companies and enterprises: 16% NPM
  • Activities related to real estate: 14.9% NPM
  • Offices of dentists: 14.8% NPM
  • Offices of real estate agents and brokers: 14.3 %NPM
  • Nonmetallic mineral mining and quarrying: 13.2% NPM
  • Offices of other health practitioners: 13% NPM
  • Medical and diagnostic laboratories: 12.1% NPM

Industries with the Worst Startup Statistics

While it is important to know about the list of businesses with the best startup, it is equally significant to keep an eye on Industries with the least chances of succeeding. 

According to Sageworks, here is a list of top ten industries with the worst startup statistics is mentioned below on the basis of NPM:

Oil and Gas Extraction: -6.9% NPM

Software Publishers: -5.1% NPM

Beverage Manufacturing: -3.7% NPM

Semiconductor and Other Electronic Component Manufacturing: -0.3% NPM

Forging and Stamping: 0.4% NPM

Farm Product Raw Material Merchant Wholesalers: 0.9% NPM

Beer, Wine, and Distilled Alcoholic Beverage Merchant Wholesalers: 2.1% NPM

Petroleum and Petroleum Products Merchant Wholesalers: 2.8% NPM

Grocery Stores: 2.2% NPM

Bakeries and Tortilla Manufacturing: 2.3% NPM

What Are The Most Promising Industries in the Future?

It is important to determine the future of entrepreneurship with respect to different fields. This will help decide people which businesses to prefer in the upcoming future. The statistics regarding the most promising industries in 2019 are mentioned below:

Around 55% of the small business owners believe artificial intelligence to be the most promising industry in 2019.

Around 30% of the small business owners believe big data to be the most promising industry in 2019.

Around 25% of the small business owners believe cybersecurity to be the most promising industry in 2019.

Around 25% of the small business owners believe life science to be the most promising industry in 2019.

Around 25% of the small business owners believe digital health to be the most promising industry in 2019.

Financial Statistics for Startups

Money is among the key factors required to lay down the foundation of a small business. The statistical facts mentioned below provide interesting information about the financial views of small business owners in different contexts:

About 52% of the small business owners in the U.S. expect venture capital to be their next source of funding.

About one-third of the small businesses require less than $5000 to initiate.

58% of small businesses require a budget of less than $25000 to start.

65% of the small business owners admit that they lack sufficient budget to lay the foundation of a startup.

93% of the small business owners said they calculated a potential run rate of shorter than 18 months.

Republished with permission and originally published at

Show More

Related Articles

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back to top button