Startup Business Failure Rate By Industry
Statistic Verification
Source: Entrepreneur Weekly, Small Business Development Center, Bradley Univ, University of Tennessee Research
Research Date: 1.1.2014
The reasons are sometimes complicated and not always clear why a certain business fails? Upper management, lack of funding, or just the free market phasing out unwanted items or services. Typically, startups have a casual attitude to promote efficiency in the workplace, often needed to get their business off of the ground. A new trend in failed startups is the purchasing of patents by what are derogatorily known as “Patent trolls”.

Industry Percent Still Operating After 4 Years
Finance Insurance and Real Estate 58 %
Education and Health 56 %
Agriculture 56 %
Services 55 %
Wholesale 54 %
Mining 51 %
Manufacturing 49 %
Construction 47 %
Retail 47 %
Transportation, Communication and Utilities 45 %
Information 37 %

Year Percent Failed
Year 1 25 %
Year 2 36 %
Year 3 44 %
Year 4 50 %
Year 5 55 %
Year 6 60 %
Year 7 63 %
Year 8 66 %
Year 9 69 %
Year 10 71 %

  Major Cause Percentage of Failures Specific Pitfalls
1 Incompetence
46 %
Emotional Pricing
   
Living too high for the business
   
Nonpayment of taxes
   
No knowledge of pricing
   
Lack of planning
   
No knowledge of financing
   
No experience in record-keeping
2 Unbalanced Experience or Lack of Managerial Experience
30 %
Poor credit granting practices
   
Expansion too rapid
   
Inadequate borrowing practices
3 Lack of Experiences in line of goods or services
11 %
Carry inadequate inventory
   
No knowledge of suppliers
   
Wasted advertising budget
5 Neglect, fraud, disaster
1 %
 

  Leading Management Mistakes
1 Going into business for the wrong reasons
2 Advice from family and friends
3 Being in the wrong place at the wrong time
4 Entrepreneur gets worn-out and/or underestimated the time requirements
5 Family pressure on time and money commitments
6 Pride
7 Lack of market awareness
8 The entrepreneure falls in love with the product/business
9 Lack of financial responsibility and awareness
10 Lack of a clear focus
11 Too much money
12 Optimistic/Realistic/Pessimistic

  Businesses with Best Rate of Success After Fifth Year
1 Religious Organizations
2 Apartment Building Operators
3 Vegetable Crop Productions
4 Offices & Clinics of Medical Doctors
5 Child Day Care Services
  Business with Worst Rate of Success After Fifth Year
1 Plumbing, Heating, Air Conditioning
2 Single-Family Housing Construction
3 Grocery Stores
4 Eating Places
5 Security Brokers and Dealers
6 Local Trucking
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