Editor’s Note: This story originally appeared on Simply Business.
Entrepreneurs face many challenges in the first years of starting a business, from solidifying business plans to navigating the complexities of hiring staff and obtaining licenses and insurance.
These obstacles often determine the fate of a startup, making the journey from an idea to a successful business difficult and uncertain.
Each year, millions of Americans apply for new businesses, but only a small fraction of these jobs convert to employment. Among those who do, surviving the first few critical years can still be an uphill battle.
However, business viability rates vary greatly by location, influenced by various factors such as economic conditions, government policies, and industry-specific demand. The good news is that businesses that face initial hurdles see greater opportunities for long-term success.
The following analysis examines the regions where new businesses are most likely to survive in their early years based on recent data from the US Bureau of Labor Statistics (BLS). The findings reveal important insights into how location and time affect the likelihood of business success.
This analysis was conducted by Simply Business – an online insurance marketplace for small businesses – using 2024 data from the US Bureau of Labor Statistics. Read more about how to do it in the end.
20. Delaware
- Business survival index: 60.2
- Probability of survival at 1 year: 76.5%
- Probability of survival at 2 years: 84.5%
- Probability of survival at 3 years: 89.7%
19. Massachusetts
- Business survival index: 62.9
- Probability of survival at 1 year: 76.4%
- Probability of survival at 2 years: 86.2%
- Probability of survival at 3 years: 88.0%
18. South Carolina
- Business survival index: 66.7
- Probability of survival at 1 year: 76.7%
- Probability of survival at 2 years: 85.4%
- Probability of survival at 3 years: 88.5%
17. New York
- Business survival index: 67.4
- Probability of survival at 1 year: 77.8%
- Probability of survival at 2 years: 85.5%
- Probability of survival at 3 years: 87.2%
16. Texas
- Business survival index: 69.0
- Probability of survival at 1 year: 77.8%
- Probability of survival at 2 years: 84.8%
- Probability of survival at 3 years: 88.4%
15. Illinois
- Business survival index: 69.4
- Probability of survival at 1 year: 78.1%
- Probability of survival at 2 years: 84.5%
- Probability of survival at 3 years: 88.2%
14. Kentucky
- Business survival index: 69.7
- Probability of survival at 1 year: 78.1%
- Probability of survival at 2 years: 84.9%
- Probability of survival at 3 years: 87.6%
13. Michigan
- Business survival index: 70.1
- Probability of survival at 1 year: 76.8%
- Probability of survival at 2 years: 85.8%
- Probability of survival at 3 years: 88.6%
12. Alabama
- Business survival index: 70.1
- Probability of survival at 1 year: 77.2%
- Probability of survival at 2 years: 86.7%
- Probability of survival at 3 years: 87.6%
11. New Jersey
- Business survival index: 70.1
- Probability of survival at 1 year: 78.5%
- Probability of survival at 2 years: 84.8%
- Probability of survival at 3 years: 87.2%
10. Nebraska
- Business survival index: 72.1
- Probability of survival at 1 year: 78.2%
- Probability of survival at 2 years: 84.4%
- Probability of survival at 3 years: 90.1%
9. Wisconsin
- Business survival index: 74.1
- Probability of survival at 1 year: 78.3%
- Probability of survival at 2 years: 85.4%
- Probability of survival at 3 years: 87.5%
8. South Dakota
- Business survival index: 74.8
- Probability of survival at 1 year: 78.5%
- Probability of survival at 2 years: 84.4%
- Probability of survival at 3 years: 90.0%
7. In Indiana
- Business survival index: 75.2
- Probability of survival at 1 year: 78.0%
- Probability of survival at 2 years: 85.0%
- Probability of survival at 3 years: 89.1%
6. Pennsylvania
- Business survival index: 82.0
- Probability of survival at 1 year: 79.0%
- Probability of survival at 2 years: 85.1%
- Probability of survival at 3 years: 88.2%
5. Iowa
- Business survival index: 92.2
- Probability of survival at 1 year: 80.2%
- Probability of survival at 2 years: 86.8%
- Probability of survival at 3 years: 89.3%
4. North Carolina
- Business survival index: 93.9
- Probability of survival at 1 year: 79.5%
- Probability of survival at 2 years: 87.0%
- Probability of survival at 3 years: 90.5%
3. West Virginia
- Business survival index: 94.5
- Probability of survival at 1 year: 79.1%
- Probability of survival at 2 years: 87.3%
- Probability of survival at 3 years: 91.9%
2. California
- Business survival index: 98.3
- Probability of survival at 1 year: 86.0%
- Probability of survival at 2 years: 89.8%
- Probability of survival at 3 years: 91.4%
1. Washington
- Business survival index: 99.0
- Probability of survival at 1 year: 86.4%
- Probability of survival at 2 years: 89.3%
- Probability of survival at 3 years: 91.8%
How to do it
The data in this report comes from the US Bureau of Labor Statistics’ Business Employment Dynamics.
To determine the regions where new businesses are likely to succeed, Simply Business researchers developed a business survival index.
This index is based on a weighted average of the most recent survival rates for private companies during their first, second, and third year of operation, as of March 2024. Survival rates are calculated using sequential rates.
The first-year survival rate is the percentage of businesses that are still in business one year after opening. The second-year rate is the percentage of first-year survivors who remain employed for another year.
Similarly, the third-year rate is the percentage of second-year survivors who continued into the next year.
The data focuses exclusively on private sector enterprises with at least one employee.
Source link