Small Business Survival: A Study of New Entrepreneurial Business Endeavors

Successful small business ventures make large contributions to the United States economy in terms of job creation, productivity, and growth. However, not all startups are successful; in fact, many fail in the early years of operations. This study investigates individual-specific and business-specific characteristics that may contribute to the failure of newly founded businesses. Using the 2007 Survey of Business Owners and Self-Employed Persons (SBO) micro-data, I explore the determinants of survival and/or cessation of operations of small businesses founded in the United States between 2003 and 2005. I find that businesses owned by women, minorities and less-educated entrepreneurs are more susceptible to failure while firms that are family-owned, have multiple owners, employ workers and have government sales have lower probability of failure.