The study ranked the industries based on the percentage still operational in 2023
- 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.
- Transportation and warehousing ranks 10th overall with 67.33% 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%
A new study has identified the retail trade industry as the top sector for launching a new business, boasting the highest survival rate after three years, according to bookipi.com/. The study, conducted by invoicing software company Bookipi, analyzed 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.
Top industries for new business survival rate:
| Rank | Industry | Survival Rate (after three years) |
| 1 | Retail trade | 72.11% |
| 2 | Accommodation and food services | 72.06% |
| 3 | Agriculture, forestry, fishing and hunting | 71.88% |
| 4 | Manufacturing | 70.61% |
| 5 | Real estate and rental and leasing | 70.46% |
| 6 | Arts, entertainment, and recreation | 70.37% |
| 7 | Educational services | 70.08% |
| 8 | Utilities | 69.43% |
| 9 | Construction | 68.29% |
| 10 | Transportation and warehousing | 67.33% |
The retail trade industry emerges as the most favorable environment for new businesses, with the highest survival rate of 72.11%. In 2020, 52,712 retail establishments were launched across the US and by 2023, 38,011 of them were still operating, highlighting the sector’s success and resilience.
In 2022, total retail sales exceeded $7 trillion, marking an increase of over $500 billion from the previous year. This highlights the industry’s exponential growth, with research predicting that retail sales will reach a staggering $7.9 trillion by 2026.
The accommodation and food services industry ranks second, following closely behind the retail trade industry, with a survival rate of 72.06%. This fast-paced industry saw 50,259 new businesses established in 2020, of which 36,219 remained active three years later.
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.
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 this industry 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.
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.
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.
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.
Rounding out the top 10 is the transportation and warehousing sector, 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.
On the other hand, the study also highlights sectors where entrepreneurs should proceed with caution. 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.
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.
Interestingly, despite being a critical industry, the health care and social assistance sector has a relatively low survival rate of 65.47%. 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.
“This study provides valuable insights for aspiring entrepreneurs, emphasizing industries with impressive business survival rates to guide those seeking long-term success,” said Tim Lee, CEO and founder of the Bookipi Group. “According to the US Bureau of Labor Statistics, nearly 45% of new businesses fail within the first five years, highlighting the challenges startups 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.”
Image by aleksandarlittlewolf on Freepik.
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