No, 90% of small businesses do not fail, at least not in any time frame the federal data covers. In the U.S. Bureau of Labor Statistics survival table, updated in October 2026, 78.9% of the private business locations that opened in the year to March 2025 were still operating in March 2026, and 47.2% of those that opened in the year to March 2021 were still operating five years later. Even across a quarter century, BLS reported on October 30, 2026 that 15.7% of the locations born in 2000 were still in business in 2026. The real pattern is steadier than the myth: the first year is the hardest, and the odds improve every year a business stays open.
Here is what the numbers say for year one, year five and year ten, what the data counts as a closing, why survival gets easier with time, and the ten-minute check we use with owners who want to be in the half that lasts.
Is it true that 90% of small businesses fail?
Not in the first year, not in five years and not in ten. The BLS Table 7 follows every group of new private business locations from the March they open, year by year:
- Year one: of the 976,437 locations that opened in the year to March 2025, 78.9% were still operating in March 2026.
- Year five: of the 839,297 that opened in the year to March 2021, 47.2% were still operating in March 2026.
- Year ten: of the group that opened in the year to March 2016, 34.2% were still operating in March 2026.
- Twenty-six years: of the locations born in 2000, 15.7% were still in business in 2026 nationwide, and 17.9% in Ohio, according to the BLS state comparison.
So about one in five closes in the first year, about half are gone by year five and about two in three by year ten. Those are hard numbers. They are also a long way from nine in ten.
What does the government count as a closed business?
The BLS counts establishments, which it defines as "an economic unit that produces goods or services, usually at a single physical location." Survival is measured by employment each March. The data is built from the records employers keep for unemployment insurance, and the BLS notes that self-employed workers are among the major exclusions from that coverage. A solo owner with no payroll is not in these numbers.
A closing means the location stopped reporting employees. The table does not record why. A business that ran out of money, an owner who retired and a planned close all look the same. That is one more reason the word "fail" overstates what the numbers show.
Why do the odds get better every year?
Follow one group and the curve flattens. Of the businesses that opened in the year to March 2021, 79.1% made it to March 2022. After that, the share of the previous year's survivors still operating rose each year: 84.7%, 88.1%, 88.6% and 90.3% by March 2026 (Table 7). By year five, nine in ten of the businesses still open made it through the next twelve months.
The survivors also grew. The same group averaged 3.6 employees per location when it opened and 7.5 five years later. The 396,316 locations still open in March 2026 employed 2,980,047 people, nearly as many as the whole group of 839,297 employed when it started. Fewer than half the businesses, almost the same number of jobs. The businesses that last tend to be the ones that build something that can hold more people.
What do the businesses that last have in common?
The federal table counts closings. It does not explain them. What we can add is the pattern we see in our work with owner-led businesses that are past their fifth year. Three things show up again and again:
- The owner knows the numbers every week, not only at tax time: what came in, what customers owe and how many new customers arrived.
- A good share of the work comes from customers who return or send someone. The business does not start from zero each month.
- The work is written down. Quotes, scheduling, follow-ups and billing run the same way whether or not the owner is in the room.
None of these needs a large budget. Each one needs an owner who sets an hour aside to build it. Our guide on why your business needs systems covers the third in more depth.
How do you check where your business stands?
This is the ten-minute check we run with owners at the start of a consulting engagement. Answer each question without opening a file:
- What came in last month, and what do customers owe you today?
- Of last month's customers, how many had bought before or came from a referral?
- If you were away for a week, which three tasks would stop?
Every "I would have to look" or "I am not sure" marks where to start. If the answers point to time you cannot find, our guide to finding where the week goes shows how two ordinary weeks and one simple log reveal it.
How Banana Blueprint helps businesses last past year five
Banana Blueprint is a business design and engineering firm in Northeast Ohio. We work in person with owner-led businesses in Kent, Akron and Cleveland, and by video with owners across the U.S. Through consulting, we find where your time and money go, set up the few numbers worth watching each week and write down the work so the business does not depend on one person's memory.
To see what that first step looks like, read what a small business consultant does. For a quick read on your setup, take the 60-second check.
When you are ready, start the conversation by phone or video, in English or Español.
Filed under Strategy
Written by Adolfo Polanco for owners who want their business to run with less chasing and more clarity. We map how the business really runs and agree with you on what to fix first.