US States With The Highest And Lowest Business Survival Rates
Entrepreneurs / 10th October 2024
Nearly 9 in 10 small business owners feel optimistic about their company’s future, with 73% reporting business growth. However, despite this confidence, 20% of startups fail within the first year, and 70% within the first decade. As a result, many entrepreneurs are looking for strategies to improve their long-term survival.
With this in mind, back office admin experts Vera have identified the US states with the highest and lowest business survival rates, offering expert insights on how businesses can boost their chances of success.
Key findings:
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New Jersey, New York, and Pennsylvania have the highest first-year survival rate for new businesses at 78.60%
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New Jersey stands as the top state for female entrepreneurs looking to start a business, ranking second nationwide for the highest number of successful female business owners
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New businesses in the Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming face the lowest first-year survival chances at 74.40%
New Jersey stands out with a remarkable 78.60% first-year survival rate for new businesses. This success is fueled by the state’s diverse economy, strategic location, and innovative biotech ecosystem. Notably, New Jersey ranks as the second state with the highest number of successful female business owners and is recognized as the fourth-largest biotech hub in the US, home to industry leaders like Johnson & Johnson.
New York, also boasting a 78.60% survival rate, provides an unparalleled environment for entrepreneurs. Its vibrant economy and extensive resources continue to attract and nurture innovative startups, particularly in the fintech and creative industries. A prime example is Ramp, a fintech startup founded just five years ago in Manhattan, which has grown into a $7.6 billion company.
Pennsylvania matches New Jersey and New York with the same impressive 78.60% survival rate. The state benefits from strong infrastructure and access to key markets, making it an ideal location for new ventures. The University of Pennsylvania is a top global institution for producing successful founders, whose combined ventures have raised nearly $150 billion.6 Pennsylvania’s health system is also among the nation’s best, and the business community thrives with health and tech innovators and green energy companies in Philadelphia and Pittsburgh, such as the Allegheny Health Network (AHN), which generates $4.5 billion in annual revenues.
It is also worth noting that Arkansas, Louisiana, Oklahoma, and Texas rank second in new business survival rates, with a one-year survival rate of 77.80%. States like Texas, with its absence of personal or corporate state income tax, contribute to a competitive environment in the West South Central region. Combined with favorable tax credits, pro-business policies, and strategic locations, these states are ideal for a variety of new businesses, including IT, science, and manufacturing companies.
Tips on how to increase your business’s first-year survival chances
Regardless of the regional challenges different states may experience, back office admin experts, Vera, recommend the following strategies to enhance your business’s chances of first-year survival and success:
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Develop a business plan: Create a comprehensive plan with clear objectives, market analysis, financial projections, and strategies to address challenges. Regular updates will help you stay adaptable and focused on both market trends and customer needs.
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Secure funding and manage finances: Ensure you have enough capital for start-up costs and unexpected expenses. Explore funding options and maintain a financial cushion to navigate early challenges. Invest in tools to manage finances efficiently and stay proactive with regulatory compliance, including taxes, permits, and insurance.
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Adapt to market changes: Stay flexible and ready to adjust your business model based on market or economic shifts. Adaptability can help you seize new opportunities and overcome challenges.
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Build a strong network and seek expert advice: Network with industry experts and mentors for valuable insights and support. Use tools like Vera to connect with advisors, manage tasks, and access current information.
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Innovate with AI for back-office support: AI services, like Vera, can speed up admin time wastage, and help small business owners to efficiently handle regulatory requirements, manage renewals, and ensure compliance. This helps avoid missed deadlines and reduces administrative burdens.
