The States Where Your Small Business is More Likely to Survive

Business credit card expert Capital on Tap recently conducted research to determine the U.S. states with the highest chance of survival for a small business in a three-year and five-year frame. 

The study analyzed data from the U.S. Bureau of Labor Statistics to reveal the percentage of start-ups that are still active after three years. For a company that opened in 2019, the survival rate is determined in 2021.

Massachusetts has emerged as the U.S. state with the highest chance of survival for a small business. Out of the number of small businesses that opened in 2019 in Massachusetts, 64.96% have survived over three years. This survival rate is 19% higher than Washington, which places last in the ranking, with just 54.6% of small businesses still running after three years. 

Wisconsin has the second highest chance of a small business surviving at 64.93% on a three-year average. Starting your own business can be a considerable risk, but in this state, the chance of survival after three years of opening is nearly five percentage points higher than the national average of 60.27% as well as being almost six percentage points higher than the national average for a five-year survival rate (49.21%).  

In third position is South Dakota, with 64.03% of small businesses being active three years after their opening in 2019. Small business owners in this area also have the third highest chance of their small business surviving five years after opening.

Minnesota places fourth compared to all U.S. states, with a small business survival rate of 63.97% three years after opening. After five years, in Minnesota, 53.51% of companies are still active. 

63.71% of businesses opened in 2019 in Iowa survived for at least three years. Iowa’s strongest years for three-year business survival were for businesses that opened in 2000, 2008, and 2009.

The top ten is rounded out by North Dakota with a small business, three-year survival rate of 63.51%; Pennsylvania with a small business, three-year survival rate of 63.51%; Montana with a small business, three-year survival rate of 62.79%; Hawaii with a small business, three-year survival rate of 62.22%; and North Carolina with a small business, three-year survival rate of 61.91%.

Damian Brychcy, Chief Legal, America and Product Officer at Capital on Tap, said: “Despite the gruelling statistic that 20% of American small businesses fail within their first year, it’s reassuring to see that many states offer a strong environment for businesses to grow.

There are over 30 million small businesses in the U.S., making up an enormous percentage of the economy, and as this number continues to grow, so will innovation and commercial drive. This research should serve as a positive sign to entrepreneurs in the top ten states who are thinking about starting a business.”