Every year, millions of Americans file applications for new businesses, but only a fraction of these survive the first few years.

An analysis from Simply Business breaks down new business survival rates across the nation. In Mississippi, about 24.5 percent of businesses fail in the first year, compared to 21 percent nationwide. For businesses that survive the first year, roughly 85 percent nationwide, 84.4 percent in Mississippi, survive the second year. Almost 90 percent then successfully make it through the third year in operation.

Challenges in the early years range from solidifying business plans to navigating the complexities of hiring employees, acquiring licenses and insurance. Those businesses that survive the first three years have a much greater likelihood of long-term success.

By the fifth year, 91 percent of businesses manage to continue operations, and for those that make it 10 years, about 93 percent continue.

The two states where businesses are most likely to succeed in the early years are Washington and California, with 86 percent or higher survival rates. Their overall business survival index ratings were 99 and 98.3, respectively. Mississippi ranks 30^th, faring much better than neighboring Louisiana, with an overall survival rating of 42.5 out of 100. Louisiana scored 27.5.

The two states where the odds were greatest against new businesses were New Mexico and Minnesota, with overall rankings of 3.7 and 3.1, respectively.

 

Methodology

The data in Simply Business’ report comes from the U.S. Bureau of Labor Statistics’ Business Employment Dynamics. To determine the states where new businesses are most likely to succeed, researchers at Simply Business developed a business survival index. This index is based on a weighted average of the most recent survival rates for private-sector establishments during their first, second, and third years of operation, as of March 2024.

The survival rates were calculated using sequential benchmarks. The first-year survival rate is the percentage of businesses still active one year after opening. The second-year rate is the percentage of those first-year survivors that remained operational for another year. Similarly, the third-year rate is the percentage of second-year survivors that continued into the following year. The data focuses exclusively on private-sector businesses with at least one employee.