Data from the US Census Bureau shows a record-breaking 5,481,437 new businesses were started in 2023. The onset of the pandemic in 2020 has driven a surge in new business creation, so the number of new businesses is trending up.
On average, there are 4.7 million businesses started every year. That average is from the past five years of business formation data in the United States. According to data from the US Census Bureau, the nearly 5.5 million businesses started in 2023 is the highest year on record, beating out the previous record of 5,380,477 new businesses started in 2021.
The total number of businesses started in 2023 also represents a 56.7% increase from the number of new businesses in 2019.
How many businesses are created each year?
| Year | Number of New Business Applications | % Change vs. the Prior Year |
|---|
| 2023 | 5.5 million | 8.7% |
| 2022 | 5.0 million | -7.4% |
| 2021 | 5.4 million | 22.7% |
| 2020 | 4.4 million | 25.7% |
| 2019 | 3.5 million | 0% |
| 2018 | 3.5 million | 9.4% |
| 2017 | 3.2 million | 6.7% |
| 2016 | 3.0 million | 7.1% |
| 2015 | 2.8 million | 3.7% |
Of course, not all of these newly formed businesses will stick around—many won’t even last past their first year. In fact, research from the US Small Business Administration shows that the average failure rate for new businesses is the following:
- 70% of new businesses survive beyond two years
- 50% of new businesses survive beyond five years
- 30% of new businesses survive beyond ten years
- 25% of new businesses survive beyond fifteen years
So as we can see, the number of new business applications and the number of new businesses that survive more than a few years are quite different. However, the actual survival rate of new businesses is much better than the commonly-cited myth that 50% of businesses fail in the first year.
New businesses started during the pandemic
The increase in small business applications has continued into 2023 after the surge brought about by the pandemic: 5.5 million businesses were started in 2023. Although the pace of new business creation has slowed slightly, the rate of new businesses being created is still far higher in 2023 than it was prior to the pandemic.
During Q1 2023, from January to March, there were 1.31 million new business applications in the US. That’s a 33.5% increase in new business formations compared to Q1 2020 and a 31% compared to Q1 2019.
And although the data might initially seem to show that new formations are cooling down—the number of new business applications in Q1 2023 is 9.5% lower than in Q1 2022—when we look at Q4, it’s a different story. There were 30.6% more new businesses started in Q4 2023 than in Q4 2022, which implies that new business formation began increasing throughout 2023. The entrepreneurial awakening, it seems, is not over yet. This data can be pulled here.
Number of new businesses created every quarter
| Year | Q1 New Business Formations | Q2 New Business Formations | Q3 New Business Formations | Q4 New Business Formations |
|---|
| 2023 | 1,319,880 | 1,356,119 | 1,414,048 | 1,391,390 |
| 2022 | 1,459,056 | 1,324,054 | 1,196,136 | 1,065,502 |
| 2021 | 1,568,892 | 1,505,508 | 1,219,264 | 1,070,361 |
| 2020 | 965,077 | 934,629 | 1,480,413 | 964,976 |
| 2019 | 1,001,711 | 912,961 | 814,788 | 767,003 |
| 2018 | 1,003,458 | 916,296 | 827,528 | 739,280 |
| 2017 | 904,358 | 825,780 | 752,698 | 699,060 |
| 2016 | 844,544 | 741,881 | 718,755 | 643,409 |
| 2015 | 752,198 | 725,798 | 720,241 | 598,478 |
Why have so many new businesses been created in the past two years? The prevailing theory after the numbers started to rise was that there was a backlog of business applications held up by the pandemic.
That was slightly true, but the number of backlogged cases was small and not the main driver of the increase. An analysis published by The Economist argued that the pandemic provided both the motive to start (with millions of people losing their jobs) and the means to start (via stimulus checks and high unemployment insurance) that drove this entrepreneurial awakening.
The 2023 numbers show that the increase in new business formations was not a temporary trend, but we’ll need more time to determine what the new baseline is this year and beyond.
The second chart was created by the US Census Bureau and can be found here.
FAQs
Quick stats on new businesses
Year-on-year change: For the last full years on record, business applications increased 7.57% between 2022 and 2023. Business Applications for April 2024: There were 432,517 business applications submitted in April 2024.
How many new businesses are started each year? ›
Data from the US Census Bureau shows a record-breaking 5,481,437 new businesses were started in 2023. The onset of the pandemic in 2020 has driven a surge in new business creation, so the number of new businesses is trending up. On average, there are 4.7 million businesses started every year.
What is the small business outlook for 2024? ›
The majority of entrepreneurs are forecasting another year of growth. Nearly two-thirds of small-business owners, 65 percent, expect their revenue to increase over the next 12 months, according to Bank of America's annual Business Owner Report survey that was released on Wednesday.
Do only 25 of new businesses make it to 15 years or more? ›
According to the U.S. Bureau of Labor Statistics (BLS), approximately 20% of new businesses fail during the first two years of being open, 45% during the first five years, and 65% during the first 10 years. Only 25% of new businesses make it to 15 years or more.
How many business days in a year 2024? ›
Planning for Your Work Schedule in 2024
Now that you know how many workdays there are in 2024, you'll be able to plan ahead and make the most of the upcoming year. While there are 251 work days, there are also 104 weekend days and 10 holidays.
How many businesses are there in the US? ›
There are 33,185,550 small businesses in the United States. Small businesses employ 61.7 million Americans, totaling 46.4% of private sector employees. From 1995 to 2021, small businesses created 17.3 million net new jobs, accounting for 62.7% of net jobs created since 1995.
Will 2024 be a good year for business? ›
Four in 10 small business owners believe 2024 will be a “make or break” year for their business, according to new research. The survey of 2,000 small business owners — half of whom work in tech or retail — revealed that 40% think this next year will be pivotal for their business.
Which is the fastest growing economy in 2024? ›
Out of the world's 62 major economies in Euromonitor International's Macro Model, five emerging Asian countries are expected to have the highest real GDP growth rates in 2024: India, the Philippines, Vietnam, Indonesia and China.
Is business slow right now in 2024? ›
In 2024's first quarter, the U.S. economy grew at a slower pace than in recent quarters. First quarter economic growth is 1.3% on an annualized basis. Consumer spending continues to be the U.S. economy's key driver.
How many startups are created every year? ›
Over 305 million startups are created every year around the globe, and the majority of them don't last long. There are many reasons why startups fail as it's difficult for emerging companies to find a place in the market, compete with established competitors, and make a profit—let alone just break even.
Five-year failure rate: 49.9% 10-year failure rate: 65.8% 15-year failure rate: 73.3% 20-year failure rate: 80%
How many businesses survive 12 years? ›
65.6% of businesses fail by their tenth year in operation
Only about 34% of small businesses will make it to their 10-year anniversary. Surviving 15 years or more is something that just one-quarter (25%) of American businesses do.
How many businesses will sell in the next 10 years? ›
In the next 10-15 years, over about 12 million businesses will be sold with that projection to increase over time. Business owners can agree on the one fact that the purpose of selling their business is the access the full value of its appraisal. Why? For retirement.
Which industry will have the largest increase in the number employed between now and 2024? ›
The health care and social assistance sector will account for over a third of the nation's projected job growth from 2014 to 2024. The construction industry is projected to have the largest industry increase in employment, but construction employment is not expected to reach prerecession levels by 2024.
How many startups are there a year? ›
Over 305 million startups are created every year around the globe, and the majority of them don't last long. There are many reasons why startups fail as it's difficult for emerging companies to find a place in the market, compete with established competitors, and make a profit—let alone just break even.
How many businesses make over $10 million? ›
Fewer than five percent of all businesses in the US grow to be more than $1 million in annual revenues. And fewer than one percent make it to $10 million. There are great number reasons why companies fail to scale to an Owner's desire or their dreams.
