Federal data shows 22.1% of new U.S. businesses fail within one year, but industry choice can more than quadruple your first-year risk, from 6.9% in agriculture to 30.8% in mining and oil and gas.
The U.S. Bureau of Labor Statistics tracks every new employer business through its Business Employment Dynamics program, and the latest data covering March 2024 through March 2025 shows 218,861 of roughly 1 million new businesses closed within 12 months. That works out to about 600 closures per day. Nearly half of new businesses (48.6%) are gone within five years, and 65.3% do not survive a decade.
Those are the averages. The spread between industries is enormous, and picking the wrong sector can stack the deck against you before you sign your first customer. Here is what the data actually says, ranked from riskiest to safest.
How Many New Businesses Fail?
Roughly one in five new U.S. businesses fails in year one, half fail within five years, and two-thirds fail within ten years. The often-repeated claim that 90% of businesses fail in their first year is a myth. The real BLS numbers are sobering enough without the exaggeration.
Failure rates also move with the economy. First-year failure rates climbed from 21.5% to 22.1% in the most recent BLS data, and cohorts born into recessions (2001, 2008) posted the worst survival curves on record.
Which Industries Have the Highest Failure Rates?
Mining and oil and gas extraction, information, and professional services are the riskiest sectors for new businesses, based on BLS survival data. The table below ranks major industries from highest to lowest first-year failure rate.
Industry | 1-Year Failure Rate | 5-Year Failure Rate | 10-Year Failure Rate |
Mining, quarrying, and oil and gas extraction | 30.80% | 59.80% | 75.50% |
Information (tech, software, media) | 28.40% | 53.20% | 70.90% |
Professional, scientific, and technical services | 25.50% | 43.10% | 60.40% |
Transportation and warehousing | 24.80% | 52.00% | 67.00% |
Administrative and waste services | 24.30% | 50.10% | 66.80% |
Construction | 23.90% | 51.20% | 66.40% |
Wholesale trade | 22.60% | 49.50% | 67.90% |
Finance and insurance | 21.70% | 47.30% | 63.50% |
Accommodation and food services | 20.10% | 48.60% | 65.40% |
Manufacturing | 19.40% | 44.70% | 56.40% |
Healthcare and social assistance | 17.20% | 42.50% | 59.10% |
Real estate and rental and leasing | 16.10% | 41.30% | 57.80% |
Retail trade | 15.80% | 41.70% | 58.30% |
Utilities | 13.90% | 38.60% | 54.30% |
Agriculture, forestry, fishing, and hunting | 6.90% | 29.40% | 47.00% |
Sources: U.S. Bureau of Labor Statistics Business Employment Dynamics data and LendingTree analysis of BLS BED data (2025-2026 releases). Figures for some sectors are approximate and shift with economic conditions.
The pattern is clear at the top of the table. Commodity exposure, heavy capital requirements, and regulatory complexity crush new entrants in extraction. Fast innovation cycles and brutal competition do the same in the information sector, which produces unicorns and graveyards in equal measure.
Professional services surprise a lot of first-time founders. Low startup costs make these businesses easy to open, but survival hinges entirely on client acquisition and talent retention. Easy entry means crowded markets.
Which Industries Have the Best Survival Odds?
Agriculture, utilities, and manufacturing post the strongest long-term survival rates. Just over half of agriculture businesses born a decade ago were still operating ten years later, the best figure among all major sectors. Utilities followed at roughly 46% ten-year survival, and manufacturing at about 44%.
Retail and real estate also outperform their reputations. Retail loses just 15.8% of new businesses in year one despite constant headlines about e-commerce disruption. Real estate benefits from essential demand, though it remains sensitive to interest rate cycles.
Even the restaurant industry beats its own mythology. Around 20% of restaurants fail in year one, roughly in line with the overall private-sector average and far below the fabricated 90% figure popularized by a 2000s TV commercial.
Why Do Failure Rates Vary So Much by Industry?
Structural economics, not founder quality, drives most of the variance. Sectors with volatile input costs, thin margins, high fixed costs, or low switching costs punish operators regardless of talent. Sectors with recurring demand, contractual revenue, or regulatory moats forgive more mistakes.
Cash dynamics matter just as much. Businesses that collect before they pay, the negative working capital model, can grow with less outside funding. Project-based sectors like construction face the opposite problem: they finance work upfront and get paid last, which is why undercapitalization kills so many contractors.
Unit economics compound over time. A business with a healthy LTV:CAC ratio and low churn rate builds a widening moat every year, while a business that has to re-win every customer runs the survival gauntlet monthly.
Which Business Models Beat the Averages?
Recurring-revenue, low-complexity models consistently outperform their broader industry categories. Operator data on a handful of evergreen niches shows success rates in the 85% to 95% range, driven by repeat customers and simple operations:
- Laundromats, where demand is essential and labor needs are minimal
- Self-storage, a real estate sub-sector with sticky tenants and low overhead
- Vending routes, which scale with capital rather than headcount
- Equipment and event rental businesses with high asset utilization
The common thread is customers who keep coming back without a sales effort. If you are evaluating one of these as an acquisition rather than a startup, our guide to buying a business covers how to underwrite that recurring demand.
How Should Founders Use This Data?
Match your risk profile to the industry, then overcapitalize. High-failure sectors can still produce outsized wins for founders with deep domain expertise and strong funding. If you lack either, the odds say pick a more resilient sector.
Runway is the single biggest controllable variable. Most failures trace back to running out of cash, so build 18 to 24 months of runway before launch, and more in cyclical sectors. Your funding path matters here too, and the tradeoffs between bootstrapping and venture capital look very different in a 75% failure-rate industry than a 50% one.
Differentiation beats the averages in tough sectors. Exceptional location, branding, or operations can pull a restaurant or retail concept well above its industry curve. Track contribution margin by product and channel from day one so you know which parts of the business actually fund survival.
Validate with data, not passion. Competitor analysis, customer interviews, and real demand signals matter most in exactly the industries where failure rates are highest.
The Bottom Line
Industry risk is real, but it is a starting line, not a verdict. The data says a mediocre business in a durable industry often outlasts a great business in a brutal one, so respect the base rates before you commit capital.
Expect the gap between sectors to widen through 2026 as higher capital costs keep punishing capital-intensive and cyclical industries. Founders who pick resilient sectors, overcapitalize, and manage unit economics with discipline will keep beating these odds, whatever the averages say.