Starting a Business? These U.S States Offer the Best Chance of Lasting, with Michigan Landing in Fifth Place

Photo by Darina Belonogova

Article courtesy of Build Your Store 

• Minnesota has America’s highest five-year business survival rate, at 56.2%
• West Virginia and Pennsylvania share the second-highest rate, with 55.9% of establishments surviving five years
• Washington ranks last despite recording the strongest one-year survival rate in the country

The first year is often treated as the biggest test for a new business, but surviving the initial launch does not necessarily mean an establishment will remain open over the longer term.

Location can also shape the environment in which a business develops. Although online companies may sell to customers across the country, hiring, premises, logistics, and access to local business networks can still depend heavily on where they are based.

With this in mind, a new study by ecommerce experts Build Your Store compared all 50 US states to identify where new employer establishments have the strongest chances of remaining active five years after opening.

The research used Business Employment Dynamics data from the US Bureau of Labor Statistics. It combined establishments that opened in 2018, 2019 and 2020, then measured how many remained active five years later.

The states with the highest five-year business survival rates

Minnesota takes first place with a five-year survival rate of 56.2%. The state also has one of the strongest long-term results in America, with 41.9% of establishments from the 2015 opening group remaining active ten years later. This is the joint-highest ten-year rate among the 50 states, level with Hawaii. Minnesota also records a one-year survival rate of 79.4%, confirming consistent strength from launch through to a decade of operation.

West Virginia and Pennsylvania share second place, with both states recording a five-year survival rate of 55.9%. West Virginia’s result covers 8,364 establishments across the three five-year opening groups. Its one-year survival rate stands at 76.3%, while 38% of establishments from the 2015 group were still active after a decade.

Pennsylvania’s result is based on a much larger cohort of 64,353 opening establishments. It performs more strongly during the first year, with a survival rate of 78.8%, although its ten-year figure is lower at 36.4%.

The tie places both states ahead of major business markets including California, Texas, New York and Florida for establishments reaching their fifth anniversary.

Illinois ranks third with a five-year survival rate of 55.2%. The state also records one of the strongest first-year results in the leading group, with 79.7% of 2024 openers remaining active after one year. Its ten-year survival rate stands at 38.4%, meaning almost two in five establishments from the 2015 opening group were still operating a decade later.

Alaska comes fourth with a five-year survival rate of 54.8%. Its one-year rate is 74.4%, the lowest among the states in this section, while the ten-year figure reaches 33.4%. Despite having a much smaller business population than most of the states near the top, Alaska still records one of the strongest five-year results in the country.

Michigan ranks fifth, with 54.7% of establishments remaining active after five years. Its one-year survival rate reaches 77.6%, while 35.7% of businesses from the 2015 opening group survived for a decade.

South Dakota follows in sixth place with a five-year survival rate of 54.5%. The state also performs strongly over the longer term, with 38.8% of establishments remaining active after ten years. Its one-year survival rate stands at 78.5%, giving South Dakota consistently strong results across all three periods considered.

Ohio ranks seventh with a five-year survival rate of 54.4%. Its result covers 51,089 opening establishments, making it one of the larger business groups near the top of the ranking. The state records a one-year survival rate of 78.7%, while 38.4% of establishments from the 2015 opening group were still active after a decade.

California comes eighth with a five-year survival rate of 53.9%. Its cohort includes 419,036 opening establishments, by far the largest number recorded by any state in the study. California also has the strongest one-year result in this section, with 80.3% of establishments that opened in 2024 remaining active a year later. However, its ten-year survival rate is lower at 34.1%.

Montana, North Carolina, and Massachusetts share ninth place, with each state recording a five-year survival rate of 53.8%. Montana has the strongest ten-year result of the three, at 38.5%, while its one-year survival rate reaches 78.3%. The figure is based on 9,955 opening establishments.

North Carolina records a one-year rate of 76.1% and a ten-year rate of 37.2%. Its five-year result covers 61,656 establishments, the largest cohort among the three states sharing ninth. Massachusetts has a one-year survival rate of 76.4%, while 36.2% of establishments from the 2015 opening group remained active ten years later.

Maine completes the ten highest survival-rate positions with a five-year result of 53.7%. Its one-year survival rate stands at 76.9%, while 37.6% of establishments survived for a decade. The state’s result covers 9,510 opening establishments and places Maine 2.1 percentage points above the total private-sector benchmark of 51.6%.

The 10 states with the lowest five-year business survival rates

Washington records the lowest five-year business survival rate in the country, at 41.8%. This is 9.8 percentage points below the total private-sector benchmark of 51.6%. However, the state produces the most surprising contrast in the study. Washington has the highest one-year survival rate in America, with 82.5% of establishments that opened in 2024 remaining active a year later.

The figures suggest that Washington businesses are particularly successful at getting through the launch period, but many struggle to maintain that momentum over the following four years. Its ten-year survival rate stands at 31.7%.

Missouri has the second-lowest five-year survival rate, with only 43.6% of establishments remaining active. This is eight percentage points below the national benchmark and places the state noticeably behind the rest of the bottom ten.

Missouri also records a one-year survival rate of 74.1%, while 29.7% of establishments from the 2015 opening group were still active after a decade.

Idaho ranks third among the weakest states, with a five-year survival rate of 46.8%. Its first-year result is considerably higher at 76.6%, while one-third of the 2015 opening group, at 33.3%, remained active ten years later.

Kansas follows in fourth place with a five-year survival rate of 46.9%. Its one-year rate stands at 76.4%, while the state performs more strongly over the longest period, with 34.6% of establishments surviving for ten years. This gives Kansas the highest ten-year survival rate among the states in the bottom ten, despite its weak five-year position.

Nevada and New Hampshire share fifth place, with both states recording a five-year survival rate of 47.5%. Nevada has the stronger one-year result of the pair, at 75.9%, compared with 75.1% in New Hampshire. It also performs slightly better after a decade, with a ten-year survival rate of 32.9% compared with New Hampshire’s 31.5%.

New Mexico comes sixth with a five-year survival rate of 47.6%. Its one-year result is comparatively strong at 77%, showing that most new establishments make it through their initial year. However, New Mexico has the weakest ten-year survival rate of any state in the study. Only 27.4% of establishments that opened in 2015 were still active a decade later.

Wyoming ranks seventh among the weakest states, with 47.7% of establishments remaining active for five years. Its one-year survival rate reaches 75.2%, while only 28.9% survive for a decade, the second-lowest ten-year result in the country.

Delaware follows in eighth place with a five-year survival rate of 47.8%. The state also has the weakest one-year result in the bottom ten, with 72.8% of establishments remaining active after their first year. Its ten-year survival rate stands at 29.6%, meaning fewer than three in ten establishments from the 2015 opening group remained active a decade later.

Rhode Island ranks ninth among the states with the lowest five-year survival rates, at 48.7%. Although it remains below the national benchmark, it has the strongest one-year result in the bottom ten after Washington, reaching 77.9%.

Its ten-year survival rate stands at 33.3%, matching Idaho and exceeding the results recorded by eight of the other states in this section.

Arkansas completes the ten lowest survival-rate positions with a five-year rate of 48.9%. Its one-year survival rate stands at 76.6%, while 31.8% of establishments from the 2015 opening group remained active after ten years.

Although Arkansas sits at the edge of the bottom group, its five-year result remains 2.7 percentage points below the total private-sector benchmark of 51.6%.

Commenting on the findings, Lior Pozin, Co-Founder and CEO of Build Your Store, said: “Minnesota’s position is particularly impressive because the state performs well over both five and ten years. It is not simply helping businesses through their first year. A comparatively large share are still operating a decade after opening.

“West Virginia and Pennsylvania also show that strong business survival is not limited to the country’s largest commercial centers. Both states outperform major markets such as California, Texas, New York and Florida when it comes to establishments remaining active for five years.

“California is another interesting result. It has by far the largest number of opening establishments in the study, yet it still reaches the top ten. That suggests a highly competitive and crowded business environment does not automatically translate into a weak survival rate.

“Washington presents the clearest warning against judging a location by its first-year figures alone. It has the highest one-year survival rate in the country but the lowest five-year rate. Getting through the launch period is important, but businesses also need a plan for maintaining demand, controlling costs and adapting after the initial momentum fades.

“For ecommerce founders, location may matter differently than it does for a traditional storefront, but it still matters. An online business can reach customers nationally, while its hiring, storage, fulfillment and operating costs remain tied to where it is based.

“These results should therefore be used as context rather than a guarantee. A high-ranking state cannot rescue a weak product, and a strong business can still succeed in a lower-ranking location. Founders should validate demand, understand their margins and build repeat purchases into their strategy from the beginning.”

Methodology and sources

Build Your Store analyzed data from the US Bureau of Labor Statistics Business Employment Dynamics program. The 50 states were ranked according to their pooled five-year establishment survival rates. The District of Columbia was excluded because the study ranks states only.

For each state, the number of establishments still active after five years was combined across the 2018, 2019 and 2020 opening cohorts and divided by the total number of establishments in those three groups. Pooling the cohorts reduces the effect of unusual movement in any single opening year and weights each group according to the number of establishments it contains.

The 2018 cohort was followed through March 2023, the 2019 cohort through March 2024 and the 2020 cohort through March 2025.

The one-year survival rate measures the share of establishments that opened in 2024 and remained active through March 2025. The ten-year survival rate measures the share of establishments that opened in 2015 and remained active through March 2025. These figures were included for context and did not influence the ranking.

Full ranking