Tennessee just slightly above the national average of five-year survival rates for new ventures
Businesses in only five states beat the odds, with more than 55 percent surviving five years.
Only 52 percent of the businesses that start in Tennessee in any given year are still going concerns after five years. Still, that’s slightly higher than the national average.
The results for all 50 states are part of a new analysis completed by DesignRush, a Business-to-Business media platform that connects companies with agencies through listings, reviews, and personalized recommendations.
The Volunteer State started strong with 78.3 percent of businesses serving their first year in operation. After the second year, that percentage dropped to 63.2 percent. By year three, it had declined to 57.0 percent, and year four showed a further decline to 54.8 percent.
The analysis used the U.S. Bureau of Labor Statistics – Business Employment Dynamics as its source.
Businesses in only five states beat the odds, with more than 55 percent surviving five years. That group was led by West Virginia followed by Connecticut, Alaska, Pennsylvania, and Illinois.
The report (here and here) contained six recommendations.
- Pick the right state to maximize your chances: Some states help businesses last longer. West Virginia and Pennsylvania both have five-year survival rates above 56 percent, while Missouri drops to just 43.2 percent. If you’re expanding, compare state trends to adjust your growth strategy.
- Don’t make outlooks based on year one: Washington has the highest Year 1 survival rate at 86.4 percent, but by Year 5, it falls to 41.1 percent — the lowest in the country.
- Look for consistency and averages, not peaks: Wisconsin stays above the national average every year, ending at 52.1 percent in Year 5. Stability matters more than a good start.
- Expect a drop after Year 1: Nationwide, survival falls from 76.8 percent in Year 1 to 63.8 percent in Year 2.
- Tap into local support whenever possible: States with strong ecosystems, like Connecticut and North Carolina, keep survival above 55 percent at Year 5. Support matters.
- Watch your overhead: Lower-cost states often have steadier survival. Alaska holds 56 percent survival at Year 5, despite lower first-year numbers.
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