576 - Beyond the Failure Statistics
The How of Business - How to start, run, grow and exit a small business.
Henry Lopez, Levante Business Group
4.7 • 522 Ratings
🗓️ 4 August 2025
⏱️ 19 minutes
🧾️ Download transcript
Summary
How to get your small business beyond the failure statistics.
Learn from the business failure statistics, instead of being a part of the failure stats, and build a business that will last.
Show Notes Page: https://www.thehowofbusiness.com/576-beyond-failure-statistics/
Most small businesses don't fail in the first year, but half won't survive past five years; here's how to be on the winning side of that statistic.
In episode The How of Business podcast, Henry Lopez breaks down the often-cited small business failure statistics and, more importantly, what they actually mean for small business owners and entrepreneurs. While over 20% of small businesses fail in their first year, it's the year five mark where nearly 50% have closed that should truly capture our attention.
But this episode isn't about fear; it's about insight and action.
Henry draws from a recent LendingTree analysis of U.S. Bureau of Labor Statistics data to examine why failure rates rise over time. He identifies two key variables that significantly influence business survival: where you start your business (geography) and what type of business you launch (industry segment).
As an example, high-cost states like Minnesota and D.C. have higher failure rates, while California and Iowa show stronger business survivability. Similarly, sectors like trades and professional services tend to outperform restaurants and retail.
The real takeaway, however, is not just about picking the "right" place or business. It's about developing and evolving a strong, profitable, and scalable business model, and ensuring you have enough capital runway to survive the early phases of growth. With real-world insights and practical recommendations, Henry challenges listeners to validate demand, remain adaptable, and avoid falling in love with an idea that doesn't work.
Whether you're in startup mode or reassessing your current business, this episode offers the strategic clarity you need to beat the odds.
This episode is hosted by Henry Lopez. The How of Business podcast focuses on helping you start, run, grow and exit your small business. The How of Business is a top-rated podcast for small business owners and entrepreneurs. Find the best podcast, small business coaching, resources and trusted service partners for small business owners and entrepreneurs at our website https://TheHowOfBusiness.com
Transcript
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| 0:00.0 | Welcome to the How of Business with your host, Henry Lopez, the podcast that helps you start, |
| 0:05.9 | run, and grow your small business. And now, here is your host. Welcome to this episode of the How |
| 0:13.5 | How of Business, this is Henry Lopez. And on this episode, I'm going to explore business failure |
| 0:18.3 | statistics, the numbers that show how small businesses fail in those |
| 0:22.6 | first few years of operations. But instead of being part of the failure stats, how do we build a |
| 0:28.0 | business that will last? Did you know that over one in five small businesses fail in their first |
| 0:33.6 | year? But really, that's not that bad of a stat, right? That means four in five live past that |
| 0:38.6 | first year. So why is that? I'll share some thoughts on that. I think what's more ominous is this |
| 0:44.0 | statistic that by year five, 48%, so almost half of businesses have failed by the time we get to year five. |
| 0:52.9 | This is all based and was influenced for me on a |
| 0:55.3 | lending tree article that was an analysis using data from the Bureau of Labor Statistics. So that's |
| 1:02.0 | the source of this information. But this episode is not about fear. I'm not trying to scare you |
| 1:06.6 | about starting a business or your current business. It's about maybe gleaming some insight. |
| 1:10.8 | Why does that happen to so many businesses and what can we possibly avoid there? In particular, |
| 1:16.9 | I want to highlight two critical reasons that so many small businesses fail after the first |
| 1:22.5 | couple of years. And again, what can you do about it? If you're thinking about launching or have |
| 1:26.9 | already started a small business, |
| 1:28.6 | then I think understanding these failure rates and what goes into it |
| 1:32.4 | can help you make smarter decisions about your small business. |
| 1:36.6 | You can find all of the How of Business resources, |
| 1:38.9 | including the Show Notes page for this episode, |
| 1:40.8 | and learn more about my one-on-one and group coaching programs at the howab business.com. |
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