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22 Key Small Business Startup Statistics 2022: Why Do 90% Of Startups Fail

Startup businesses are proving to be big business! Though there are certainly a lot of risks associated with creating a startup business, and the risk of failure is startlingly high, many amazing businesses have been able to get off the ground from very humble beginnings. 

Plenty of things can affect the likelihood of success for a startup business, including sociopolitical factors, or even the business acumen of the people behind the company.

One of the best ways to help increase the likelihood of success for a startup is to take a look at some of the statistics regarding startup businesses. Things such as how many are run by just one employee, and even how many fail right out of the gate.

Want to find out about some of these fascinating startup statistics? Then make sure to read on down below, because we’ve picked out 22 of the very best!

1 – 69% Of Startups Start At Home

That’s right! More than 69% of all startups in America have truly humble beginnings, starting off in someone’s bedroom, or spread out across the kitchen table!

This is proof that some truly amazing things can come from very humble beginnings and grow to become truly impressive.

In fact, not only do 69% percent of all startups begin at home, but a massive 59% of small businesses that have succeeded out of the gate are still run entirely from home! 

This is a truly impressive statistic that proves that, with the right mindset, you can truly achieve anything!

Source: Global Entrepreneurship Monitor.

2 – 77% Of All Startups Depend On Personal Savings

Many who start up their own businesses make use of their own personal savings to get them off the ground. As well as this, many entrepreneurs also make use of bank loans to get their initial funding to help them get started. 

This proves that a certain amount of dedication and faith in one’s business is needed in order for a startup to take its first steps.

Source: Gallup.

3 – 81% Of Entrepreneurs Work Overtime

Research has shown that entrepreneurs running their own startup businesses tend to work incredibly exhausting hours in order to keep the business afloat, especially during the difficult first steps. As well as this, 89% of entrepreneurs also work during weekends.

This is further proof of the dedication and faith needed to make any startup work.

Source: Fundera.

4 – More Than 78% Of Small Businesses Report Profits

Recent studies have shown that a much higher percentage of small businesses than ever before are managing to turn a profit, even during their initial rocky years.

Entrepreneurs are finding themselves more satisfied than ever, thanks to a renewed focus on small businesses thanks to the power of social media and the internet.

Source: Guidant Financial.

5 – 42% Of All Startups Fail Due To Offering Unneeded Products Or Services To The Market

Supply and demand are still very much the name of the game when it comes to making it in the world of business.

If there is no one out there that wants to buy your goods or pay for your services, then you won’t be able to turn a profit, let alone gain the attention needed! 

Make sure to carry out plenty of market research to ensure that your product or service will sell!

Source: CB Insights.

6 – Owning A Home Makes A Person 10% More Likely To Start A Business

Entrepreneurs tend to be more willing to take greater risks if they are in a stronger financial situation. Owning one’s own home is a better situation to be in than renting one’s home, giving the entrepreneur the security to take risks.

Homeowners can also use their own homes as collateral to help them to secure business loans!

Source: U.S. Small Business Administration.

7 – 50% Of All Startups With Employees Survive For More Than Five Years

Companies with multiple employees often have fifty-fifty odds when it comes to surviving beyond the first 5 years.

Sometimes, the odds of survival can actually be lower if a fledgling startup has more employees, largely because the issue of pay for those employees comes into play.

This is why it is important for any hopeful entrepreneur to dedicate plenty of time to researching the market and planning out their finances so that they can be ready for any challenges that inevitably present themselves in the first five years.

Source: U.S. Small Business Administration.

8 – Advanced Robotics And Technology Startups Are Growing At A Rate Of 189.4%

Technology continues to improve year upon year, and the entrepreneurs and engineers behind some of the most exciting technology also continue to see greater success.

Recent studies have shown that startup companies focused on blockchain technologies are seeing healthy growth, while artificial intelligence startups also see themselves growing steadily. 

It is unclear whether the growth rate of technology startups has peaked, or whether it will continue to grow, but it is clear that technology startups have made an impact!

Source: Gruenderwoche.

9 – 53% Of Startups In America Have An Executive Position Filled By A Woman

One of the most positive statistics regarding startups is that more than 53% of most startups have female representation within some of the highest positions.

This is one of the greatest aspects that differentiates modern startups from more traditional businesses, with many startups making a concerted effort to make representation and equality a top priority.

Source: Silicon Valley Bank.

10 – Around 25% Of Small Businesses In The United States Are Run By Immigrant Entrepreneurs

This is a fairly significant number of businesses, and this statistic stands as proof that entrepreneurs can start from anywhere, provided they have access to the right tools and information.

The States that have the highest number of small businesses run by immigrants are California, New York, and New Jersey, where more than 40% of small businesses are represented by immigrant entrepreneurs!

Source: Forbes.

11 – More Than 79.7% Of Small Businesses In America Only Employ The Founding Entrepreneur

11 - More Than 79.7% Of Small Businesses In America Only Employ The Founding Entrepreneur

The vast majority of small businesses in America actually only have one employee, which, in some ways, can be beneficial.

Paying just one employee is much more simple, which can lead to greater profits and far greater financial stability during the first five years of the business’s life. 

Only around 16.6% of small businesses in America have fewer than 10 employees at one time. 

Source: National Association For The Self-Employed.

12 – 54% Of Small Businesses In America Are Currently Hiring

Small businesses have actually helped to significantly stimulate the job market, by presenting numerous opportunities for workers across America.

This even proved to be the case over the course of the Coronavirus pandemic, which had a very significant impact on the job market at the time.

However, many small businesses, 89%, in fact, have reported that they have had trouble recruiting people that are fully qualified for specific positions.

Source: National Federation Of Independent Business.

13 – 60-Year-Old Entrepreneurs Are Around 3 Times More Likely To Create A Successful Business Than 30-Year-Old Entrepreneurs

This is a slightly surprising statistic, especially considering that most of us would imagine entrepreneurs to be young! However, what this statistic proves is that experience is truly key to helping a small business take off. 

Experience is necessary to understand the market, and to understand what it takes to really make it in such a competitive world.

Many young entrepreneurs, knowing that creating small businesses is a risk, find themselves actually taking too many risks, which in turn leads them to failure.

Greater experience helps entrepreneurs to identify and mitigate risks before they even arise!

Source: Kellogg Insight.

14 – Around 60% Of Entrepreneurs Believe Artificial Intelligence To Be A Promising Investment For The Future

Following on from our earlier statistic regarding the massive growth of technology and artificial intelligence within the world of startups, this statistic suggests that artificial intelligence has a very healthy future ahead of it, as the technology will only continue to grow and improve, thus increasing its market value. 

Investments across the board are already rising, when it comes to artificial intelligence startups, but these numbers could very well continue to grow into the future!

Source: Silicon Valley Bank.

15 – 58% Of Startups Have Access To Less Than $25,000 During The Initial Startup Phase Of Their Business

Unfortunately, money is a totally vital part of the initial phase of starting a business. Having a great idea and having the right team backing you up simply isn’t enough. 

One of the reasons that many fledgling startups fail right out of the gate is that they simply do not have enough funds to even get started.

This is why it is so crucial to carry out plentiful research before getting started on an entrepreneurial venture, to ensure that the business will be able to survive through all of the hurdles that all small businesses must inevitably face during the early years. 

Source: Profit From Tech.

16 – Most Companies Need To Be Drawing In More Than $50K Annually In Order To Survive In The Long Term

Making consistent profits year upon year is how most businesses are able to stay afloat. Without great profits, even some of the biggest businesses in the world would face trouble. 

However, making a profit is difficult for a young startup business, as significant investments are needed in order to get the business past the starting line. 

This statistic is a sobering reminder of why gathering investments is so important for any entrepreneurs hoping to help their business to survive past the first five years.

Without these investments, most small businesses will flounder right out of the gate!

Source: Quickbooks.

17 – 95% Of Entrepreneurs Need At Least A Bachelor’s Degree In Order For Their Startup Business To Succeed

Though there are a considerable number of entrepreneurs that have managed to achieve massive success despite never attaining a college degree, for most small business owners it is a total necessity.

First off, the skills gained while pursuing a bachelor’s degree are vital in helping you to recognize and achieve success.

Second of all, many investors will be wary of investing in a small business that is represented by an entrepreneur with minimal formal education. 

While it is possible to make it as an entrepreneur without a bachelor’s degree, the odds are so minuscule that it is best to avoid the risk.

Source: Serious Startups.

18 – 9 Out Of 10 Startups Don’t Make It

This is perhaps one of the most famous statistics that is floated around entrepreneurial communities, as it is incredibly sobering. It would be easy to take a look at such a statistic and give up on a small business before it has even had a chance to get off the ground.

However, the reason that this statistic is so stark and still so relevant is that many entrepreneurs enter the world of small businesses by offering products or services that there is no demand for, or the entrepreneurs have entered the business before they have carried out adequate market research.

It is possible to avoid the overbearing shadow that this statistic casts over the world of small businesses by making smart decisions right out of the gate.

Source: Failory.

19 – Oil And Gas Extraction Businesses Have A Profit Margin Of -6.9%

This is another stark and interesting statistic, but it stands as excellent proof of how public perception of a certain industry, product, or service, can affect the viability of any business that specializes in any of those industries.

Due to changing perceptions of the oil and gas industries, and their negative impacts on the environment, profit margins for startup companies in the industry have gone down massively, making them some of the worst startups to attempt.

Make sure to remember this statistic, as it will remind you to always be considering the market, and how it may be influenced by the sociopolitical moment of the time!

Source: Hustle Life.

20 – Less Than 1% Of Startups Achieve The Funding They Need From Investors

Once again, this is another potentially frightening statistic that could scare many potential entrepreneurs away from chasing their dreams, but it should definitely not be too surprising.

The world of startups is incredibly competitive, and in fact, it is currently more competitive than it ever has been! As such, it is important to attract the attention of investors right out of the gate.

Though this is definitely a frightening prospect, it is also a reminder as to why it is so important to have faith in the startup you are building, provided it is backed up with research!

Source: Medium.

21 – Most Startup Owners Are Aged Between 50 And 59

This ties directly back to what we learned earlier, regarding the fact that most startup businesses tend to succeed if they are led by entrepreneurs with plenty of experience.

This means that startup businesses that are owned by entrepreneurs over 50 are more likely to succeed, as they will have more experience, and will have a greater understanding of the market that they are entering and how to deal with its challenges. 

Source: Small Biz Trends.

22 – The UK Was The Best Country In Which To Start A Business in 2021

Research has shown that the UK is one of the very best countries in the world in which to begin a startup business, thanks to the various benefits it can afford its entrepreneurs. 

However, this is liable to change with time and has changed multiple times before.

Thus, this statistic is a great reminder that you should always try your best to monitor the market to identify changes before they happen so that you can always be one step ahead.

Source: Digital.

Frequently Asked Questions

What Percentage Of Startups Make It?

Unfortunately, the number of startups that actually make it past even a few years is very low. On average, 9 out of every 10 startups will fail within the first 5 years. Only around 33% of startups ever make it past the 10-year mark, and only a tiny 40% of startups ever manage to turn a profit. 

Why Do Most Startups Fail?

The main reason that most startups end up failing right out of the gate is that they are offering a product or service that there is no demand for within the market.

This is why it is so crucial that entrepreneurs carry out extensive market research before they set out on entrepreneurial ventures that cost significant money. 

How Long Before A Startup Becomes Profitable?

On average, it can take around 2 to 3 years for an average startup business to find success and make it in such a competitive market.

This is because the first 2 or so years are generally spent establishing the business, and pumping investments into it to ensure that it can survive through those first few years. 

However, this number can differ massively from business to business.