Sometimes it is interesting to take a moment and compare some of the business concerns your organization has in relation to other small businesses in the US. For that reason, we thought it would be useful to provide some intriguing small business statistics centered on small business success and failure in 2022.
The statistics in this article come from Fundera, LendEdu, NSBA, CBInsights, Guidant Financial, Xero, Cisco, and SSRN.
Statistics on small business success and failure
80% of small businesses survive their first year in business, while only 50% last more than five years and only 33% last more than 10 years.
The most successful small business industry sectors include finance, insurance, and real estate with 58% of these companies still in business after 4 years.
In contrast, the least successful small business industry sector is information technology, where only 37% of companies last more than four years.
59% of businesses selling services survived five years while only 19% selling products lasted that long.
Experience counts significantly for new small businesses. Founders of a previously successful small business have a 30% chance of success with another one, owners with a previously failed business have a 20% chance of success, and first-time founders only have an 18% chance at lasting success.
In general, 40% of small businesses are profitable, 30% break even, and 30% will continue to lose money.
Statistics showing the main reasons small businesses fail
14% of small businesses fail because of weak marketing, especially with social media. Your organization can be better than all your competitors, but you will still fail if you are ineffective in letting people know about your excellent products and services.
19% of small businesses fail because of competition. Companies in all industries need to continuously monitor what their competitors are doing right and wrong to improve their own efforts.
23% of small businesses fail because they don’t have the right team or follow the right business model.
27% of small businesses can’t obtain the capital they need to survive. Without sufficient financing to support operations businesses can’t maintain or increase sales and won’t be able to keep paying workers or hire new ones.
42% of businesses fail because there is not a sufficient market for their products or services.
82% of small businesses fail because of inconsistent or insufficient cash flow. This is the primary reason small businesses ultimately fail. Seasonal companies that earn their money primarily in one quarter are particularly vulnerable to cash flow issues during their slow times. All small businesses should pay close attention to cash flow statements and projections and be prepared with adequate reserve funding to avoid this widespread problem.
Statistics on cybersecurity and other challenges for small businesses
75% of small businesses report they don’t have the personnel to effectively address IT security.
43% of cyberattacks target small businesses. 20% of small businesses will fall victim to a successful cyberattack, and 60% of them will go out of business within six months of the incident.
43% of small businesses haven’t adopted cybersecurity assessment and mitigation plans, 33% use free, consumer-grade cybersecurity tools to protect their networks, and 20% use no cybersecurity tools at all.
29% of small business owners said the top challenge their companies face is handling the impact of COVID-19.
Other major challenges to being successful voiced by small business owners in surveys include:
- keeping up with advancements in IT
- lack of strategic planning
- leadership management skills
- finding and maintaining skilled employees
- attracting customers
- financial stability/cash flow
- providing healthcare for employees
- handling taxes
- meeting compliance requirements
Consult with an expert on helping small business thrive
Our most important advice to deal with the significant challenges facing small businesses is simple: Always work closely with a trusted IT Support partner such as Network Depot, who has been helping small businesses succeed for more than 30 years.
A trusted IT Support partner will ensure that your organization is well protected against cyberattack and that your IT is working optimally to achieve your unique business objectives. In addition, they will be able to offer valuable advice learned from their own experience as well as from working with a multitude of small business clients. Working with a reliable IT support partner will help your small business avoid becoming part of one of the negative statistics described above. With this important collaboration, your organization will have the opportunity to thrive in the current challenging business environment.