The 10 Most Risky Industries for Starting a Business

Editor’s Note: This story originally appeared on HireAHelper.

Risk is unavoidable in any new business, but entrepreneurs in certain industries can expect greater likelihood of survival early on.

Real estate and rental and leasing businesses have the highest first-year survival rates at 88.4%. Other industries that rank highly for survival rates include agriculture, forestry, fishing, and hunting at 87.7% and retail trade at 87.6%.

On the flip side, other fields may be even riskier for new businesses than the overall average.

To identify the most risky industries to start a business, researchers at HireAHelper calculated a composite risk index based on the most recent one-, two-, three-, four-, and five-year survival rates for establishments in each industry. The data used in this report is from the U.S. Bureau of Labor Statistics.

Here are the most risky industries for starting a new business.

10. Construction

• Composite risk score (higher = more risk): 47.1
• 1-year survival rate: 82.9%
• 2-year survival rate: 71.8%
• 3-year survival rate: 65.4%
• 4-year survival rate: 63.6%
• 5-year survival rate: 58.6%

9. Finance and insurance

• Composite risk score (higher = more risk): 49.4
• 1-year survival rate: 84.7%
• 2-year survival rate: 73.2%
• 3-year survival rate: 64.7%
• 4-year survival rate: 61.0%
• 5-year survival rate: 56.7%

8. Arts, entertainment, and recreation

• Composite risk score (higher = more risk): 60.0
• 1-year survival rate: 81.1%
• 2-year survival rate: 70.6%
• 3-year survival rate: 63.6%
• 4-year survival rate: 62.0%
• 5-year survival rate: 57.4%

7. Transportation and warehousing

• Composite risk score (higher = more risk): 65.9
• 1-year survival rate: 83.8%
• 2-year survival rate: 68.7%
• 3-year survival rate: 61.3%
• 4-year survival rate: 61.1%
• 5-year survival rate: 53.0%

6. Management of companies and enterprises

• Composite risk score (higher = more risk): 70.6
• 1-year survival rate: 83.8%
• 2-year survival rate: 69.9%
• 3-year survival rate: 60.8%
• 4-year survival rate: 59.1%
• 5-year survival rate: 51.4%

5. Wholesale trade

• Composite risk score (higher = more risk): 74.1
• 1-year survival rate: 82.5%
• 2-year survival rate: 69.3%
• 3-year survival rate: 61.3%
• 4-year survival rate: 57.3%
• 5-year survival rate: 52.5%

4. Professional, scientific, and technical services

• Composite risk score (higher = more risk): 76.5
• 1-year survival rate: 82.9%
• 2-year survival rate: 69.1%
• 3-year survival rate: 60.8%
• 4-year survival rate: 58.0%
• 5-year survival rate: 52.3%

3. Administrative and waste services

• Composite risk score (higher = more risk): 89.4
• 1-year survival rate: 79.1%
• 2-year survival rate: 66.6%
• 3-year survival rate: 59.7%
• 4-year survival rate: 56.7%
• 5-year survival rate: 50.9%

2. Information

• Composite risk score (higher = more risk): 92.9
• 1-year survival rate: 79.2%
• 2-year survival rate: 65.2%
• 3-year survival rate: 56.1%
• 4-year survival rate: 54.2%
• 5-year survival rate: 48.3%

1. Mining, quarrying, and oil and gas extraction

• Composite risk score (higher = more risk): 100.0
• 1-year survival rate: 74.4%
• 2-year survival rate: 62.5%
• 3-year survival rate: 52.5%
• 4-year survival rate: 53.0%
• 5-year survival rate: 41.5%

Methodology

The data used in this report is from the U.S. Bureau of Labor Statistics Business Employment Dynamics Survey.

To identify the most risky industries to start a business, researchers at HireAHelper calculated a composite risk index based on the most recent one-, two-, three-, four-, and five-year survival rates for establishments in each industry, as of March 2021.