Business failure rates
In order to study business failure rates, you have to first define what a business "failure" is. We use quotes around failure because there's no clear-cut definition. Unfortunately, there is no easy answer to the business failure rate question, nor is there one place where the data is available as easy-to-read statistics. You may need to interpret and calculate the raw data, turning it into the statistical information necessary for your research. You need to be ready to do some work if you find that no one else has already done this ahead of you.
These are things to consider.
- When does a business fail, and when does it simply close?
- If a start-up closes within the first few years because it's insufficiently funded, then it's easier to argue it has failed.
- Is it a failure if it ran for 5 years? 10 years?
- Is it also a failure if it made a profit but not as much as the owner hoped?
Where to begin the search
The Small Business Administration and Bureau of Labor Statistics keep statistics on business exits. This is the number of businesses that close in any given year. Notice that they're not tracking business failures, because the term is subjective, as discussed in the section above. Business exits is probably the number that you should seek out, but you need to think carefully about what it will provide.
Business exits include any company that closes, such as:
- a new start up that ran out of money
- a company that has been operating for a few years but is closed because the owner wants to change direction
- a company that closes after 30 years of fabulous success with a wealthy owner retiring to Hawaii
You will need to plot the survival rates by industry for firms founded in a specific year. Listed below are helpful government websites that track business exits or other related statistics or information.
United States government websites
The U.S. Government collects and presents useful data for business and industry research. Explore these sites for data and statistics.
Note: This list features some of the most commonly used sites, but it is not exhaustive. For help in finding other useful sites for your research, contact the Library via the Ask a Librarian service.
- Bureau of Labor Statistics Business Employment DynamicsThe BED data series include gross job gains and gross job losses at the establishment level by industry subsector and for the 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands, as well as gross job gains and gross job losses at the firm level by employer size class.
- Business Dynamics Statistics (U.S. Census Bureau)Longitudinal source data that allows tracking a business or industry over time.
- County/Zip Code Business Patterns (U.S. Census Bureau)Search by geographic locale for subnational economic data by industry.
- North American Industry Classification System (NAICS, from U.S. Census Bureau)Identify the NAICS code for the industry you are researching, and build it into your searches in Business databases to make your searching more precise.
- Small Business Administration (U.S.): Firm Size DataFirm size data on employers are available from the Statistics of U.S. Businesses (SUSB), Business Dynamics Statistics (BDS), and Business Employment Dynamics (BED) programs, and data on nonemployers is available from the Nonemployer Statistics (NE) program.
- Small Business Administration (U.S.): Office of Advocacy Quarterly BulletinAdvocacy's two-pager of charts and tables uses economic variables to show the status of small business.
- Small Business Administration (U.S.): Small Business FactsSmall Business Administration provides reports and graphics on general business births and exits.
Sample search terms for articles
You can sometimes find articles that will present figures on failure rates, but be cautious and take a close look at how the article is defining failure for that figure. Additionally, it may be useful to search for business survival rates for various time-spans (e.g. 5 years).
Here are some alternate terms:
business exits
business closures
business AND births OR deaths
business survival OR business longevity OR business mortality
- Tutorial: Boolean Searching (Using AND, OR, NOT)
(4 min 45 sec) Closed captioning included in tutorial.
Business & Management databases
- ABI/INFORM CollectionABI/INFORM Collection offers over 2,000 full text resources including peer-reviewed journals, trade publications, business news, reports, and working papers. Topics include all aspects of international business, such as business trends, management practice and theory, corporate strategy and tactics, and the competitive landscape.
- Business Source CompleteThe Business Source Complete database contains both practical and scholarly business information. You can search Business Source Complete for full text scholarly journal articles, case studies, company profiles, reports, conference papers, financial data, and SWOT analyses.
- Sage Data (formerly Data-Planet)Sage Data provides easy access to an extensive standardized and structured statistical data repository. Sage Data's over 12.6 billion datasets provide immediate access to data presented in charts, maps, graphs, and table forms via multiple entry points.
- Emerald InsightEmerald is a leader in publishing management research for both the scholar and the practitioner. Be sure to search within My subscribed content to find full-text content.
- Regional Business NewsThis database contains business news articles and periodicals, including Crain's publications.
- SAGE JournalsIncludes current peer-reviewed journal articles in psychology, political science, management, education, and more.
- ScienceDirectCoverage is particularly strong for the life and physical sciences, medicine, and technical fields, but also includes some social sciences and humanities.
