Wisconsin had the second-best 10-year small business survival rate in the nation over the last decade. Only Iowa had a better ranking, according to a Wisconsin Public Radio report.
The WPR report is based on a recent analysis from The Southern Bank Company, a financial institution based in Alabama that looked at data from the U.S. Bureau of Labor Statistics to compare the state-by-state business survival rates from March 2012 through that month of 2022.
Among Wisconsin’s 8,199 private sector businesses that opened in a 12-month period ending in March 2012, 43 percent, or 3,523, were still operating a decade later, Bureau of Labor Statistics data shows. And those surviving businesses went from averaging 4.5 employees each to 10.7 workers.
The state’s 10-year small business survival rate has remained fairly stable over time. For example, 42.2 percent of the businesses that opened in a 12-month period ending in March 1994 were still open in 2004, but only 19.7 percent were still open by 2022, according to the Bureau of Labor Statistics.
Small business survival rates tend to decrease the longer small businesses are in operation, according to The Southern Bank Company. After the first year, roughly 80 percent of small businesses nationally remain in operation. That drops to roughly 50 percent by the fifth year of business.
Missy Hughes, chief executive of the Wisconsin Economic Development Corp., said declining survival rates over time are largely due to financial limitations. She said many businesses have a "nest egg" during their first year, which helps them generate funding to get their company up and running.
"In years two, three (and) four, you really need your business to be self-sustaining and successful on its own because you’ll have used up that nest egg," Hughes said. Hughes said one of the reasons Wisconsin may be near the top when it comes to 10-year small business survival is the support structure around the state’s small business community.
"Wisconsin has a really vibrant support system for our small businesses," she said. "Whether it's our small business development centers, or our local chambers of commerce, we really have a hands-on approach to helping our small businesses survive."