Report: Top industries to start a new business based on surivability

• A new study has revealed that the retail trade industry is the best sector to start a new business, with the highest survival rate after three years at 72.11%.
• The accommodation and food services industry has the second-highest survival rate, with 72.06% of businesses founded in 2020 still running.
• The mining, quarrying, oil and gas extraction sector is the riskiest industry, with the lowest new business survival rate at just 59.62%.

Starting a new business takes courage, but choosing the right industry can make all the difference. To investigate which industries have the best chance of succeeding, we conducted a study by analysing data from the US Bureau of Labor Statistics on the survival rates of businesses founded in 2020. The study ranked the industries based on the percentage still operational in 2023, three years after their founding. The results? Some industries are proving more resilient than others, retail trade especially.

What industries have the best new business survival rate?

Retail trade, accommodation and food services, and agriculture, forestry, fishing and hunting have the highest three-year survival rates for new businesses, each above 71%.

Retail: The best industry for business resilience and longevity

Retail trade came out on top, with 72.11% of businesses still active after three years. That’s more than 38,000 retail businesses staying open through a global pandemic and major market shifts — proof that adaptability and strong demand continue to make retail a great space for entrepreneurs. With limited opportunities to spend on travel and entertainment during the pandemic, many consumers redirected their budgets toward retail consumption. E-commerce platforms made it easier for both consumers and business owners to adapt during the pandemic, offering accessible ways to shop and sell from anywhere.

In 2022 alone, retail sales in the U.S. topped $7 trillion, with growth projected to hit $7.9 trillion by 2026. It’s a fast-moving sector with room to grow, and for small business owners, that means opportunity.

Hospitality and food services: Resilient, despite the challenges

Coming in a close second, the accommodation and food services industry shows a survival rate of 72.06%. With more than 50,000 new businesses launched in 2020, and over 36,000 still operating today, this sector demonstrates the staying power of community-driven and experience-based businesses. As in-person dining was heavily restricted during the pandemic, food delivery platforms became a lifeline for restaurants, allowing them to continue serving customers and generate revenue despite restrictions.

The industry’s market value grew 6% year-over-year in 2023, showing there’s continued demand for great food and memorable experiences. Impressively, the total market value of the accommodation and food services sector in the United States was 1.3 trillion US dollars in 2023, demonstrating a 6% growth compared to 2022.

Agriculture: Strength in cultivation

Ranking in third place, the agriculture, forestry, fishing, and hunting sector demonstrates a strong survival rate of 71.88%. Out of the 5,822 businesses launched in 2020, 4,185 were still thriving by 2023.

While these industries may have fewer new businesses launching compared to others, it remains a stable niche for establishing new business ventures. However, it is also one of the most challenging sectors to operate in, holding the grim distinction of being the most dangerous. According to the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) report on safety and health protections for American workers, the sector reported 18.6 deaths per 100,000 workers in 2022, the highest rate of any industry. Due to the generally higher barriers of entry, these industries are also less commonly pursued by early-stage entrepreneurs.

Which other industries are notable for business survival rates?

• Manufacturing – 70.61% survival
  • In fourth place is the manufacturing industry, with a 70.61% survival rate, which remains a strong sector for business longevity. Of the 18,135 businesses that opened in 2020, 12,806 survived until 2023. Although many businesses started in 2020 have closed, the remaining ones have seen a 39% increase in employment by 2023, showing that those that survive tend to succeed.
• Real estate and rental – 70.46% survival
  • The real estate and rental and leasing industry ranks fifth, with a 70.46% survival rate. This sector launched 30,256 businesses in 2020, with 21,319 still operational in 2023. This industry is a massive provider of jobs within the US, employing around 2.5 million people as of July 2024.
• Arts, entertainment, and recreation – 70.37% survival
  • The arts, entertainment, and recreation sector ranks sixth, showing a commendable 70.37% survival rate. This indicates that out of the 11,684 businesses launched in this exciting sector in 2020, a significant 8,222 were still thriving by 2023.

Educational services is another sector where businesses show significant endurance. Ranking in seventh place with a 70.08% survival rate, out of 10,884 businesses started in 2020, 7,628 survived through 2023.

The utilities sector, while smaller in size, with only 857 businesses started in 2020, has a survival rate of 69.43%, with 595 still in operation. This sector’s stability is likely linked to its essential nature, providing critical services like electricity, water, and waste management, which ensures consistent demand.

The construction industry ranks ninth in new business survival, with a solid 68.29% survival rate. This means that out of the 57,753 businesses established in this sector in 2020, a substantial 39,438 remain active three years later.

The transportation and warehousing sector finishing at tenth place, with a 67.33% survival rate. With 14,777 out of 21,948 businesses founded in 2020 still operational after three years, this sector plays a critical role in providing goods and services across the country.

These industries may not always make headlines, but they offer steady ground for entrepreneurs who value long-term sustainability and strong community needs. Even in educational services and utilities, where business counts are lower, survival rates remain above 69%, reflecting their critical role in supporting daily life. These strong survival rates reflect the industries’ foundational roles in society — offering services that are consistently needed and unlikely to go out of demand.

Which industries have higher risk for new businesses?

Mining, quarrying, and oil and gas extraction, information, and finance and insurance have the lowest three-year survival rates, with mining at just 59.62% and information at 58.71%.

Notably, the information sector faces enormous challenges, with a lower survival rate of 58.71%. Out of 22,098 businesses founded in this sector in 2020, just 13,973 remained in 2023. If you’re looking to start a business in mining, information technology, or finance, be prepared for a more competitive or volatile environment:

• The mining, quarrying, and oil and gas extraction sector has the second-lowest survival rate, with only 59.62% of businesses surviving three years post-launch.
• Healthcare and social assistance sector has a relatively low survival rate of 65.47%, despite being a critical industry. This trend may be linked to the surge in healthcare-related businesses that emerged at the onset of the Covid-19 pandemic, which are now gradually returning to pre-pandemic levels.
• Additionally, the finance and insurance industry, which plays a vital role in the economy, shows a survival rate of 64.91%, indicating that while lucrative, this sector is highly competitive.

Commenting on the findings, Tim Lee, CEO and founder of the Bookipi Group, says:

“This study provides valuable insights for aspiring entrepreneurs, emphasizing industries with impressive business survival rates to guide those seeking long-term success.

“According to the US Bureau of Labor Statistics, nearly 45% of new businesses fail within the first five years, highlighting the challenges start-ups face in today’s economic climate. It’s important to note that the timeline of this study, from 2020 to 2023, encompasses the Covid-19 pandemic—a period that significantly disrupted global markets and business operations. Despite these unprecedented challenges, it’s encouraging to see resilience across many sectors, including retail and hospitality.

“The data also serves as a cautionary tale for sectors such as mining and information technology, where survival rates are notably lower. Entrepreneurs in these fields must be prepared to navigate greater risks and uncertainties.

“The findings emphasize the importance of thorough market research and strategic planning before launching a business. Understanding the unique challenges and opportunities within each industry is crucial for increasing the likelihood of long-term success.”

If using this story, please hyperlink credit to https://bookipi.com

Sources

• Business Employment Dynamics – US Bureau of Labor Statistics
• Retail market in the United States – Statista
• Market size of the accommodation and food services sector in the United States in 2022 and 2023 – Statista
• Death on the Job: The Toll of Neglect, 2024 – American Federation of Labor and Congress of Industrial Organizations
• Real Estate and Rental and Leasing: NAICS 53 – US Bureau of Labor Statistics

Methodology

1. Primary data was sourced from US Bureau of Labor Statistics (BLS), focusing on establishment age and survival rates across various sectors.
2. For each industry, the study identified the number of businesses established in 2020 and tracked how many of them remained operational by 2023.
3. A 3-year survival rate was calculated, tracking the percentage of these 2020- founded businesses that remained active through 2023.
4. The industries were then ranked highest to lowest according to their survival rates.
5. Supplementary data was also collected from Statista, AFL-CIO, and additional BLS datasets for broader context.

Top US industries for new business survival rate