Postrecession start-ups have decreased 44.7 percent

Restaurant industry is top choice for new entrepreneurs

Costa Mesa, Calif., June 04, 2015 — Experian®, the leading global information services company, today announced that the number of businesses started each year after the recession has decreased substantially — nearly 45 percent (44.7 percent). According to an Experian analysis on business start-ups, in 2010 29.1 percent of all small businesses were newly formed, while in 2014 just 16.1 percent were start-ups.

“During the height of the recession, there was an influx of businesses opening, presumably due to layoffs and skyrocketing unemployment,” said Peter Bolin, Experian’s director of consulting and analytics. “While many of these consumers-turned-entrepreneurs may have started their own venture out of necessity as a way to bring in income, as the economy has improved the rate of new business start-ups has returned to a more consistent pace.”

INFOGRAPHIC: Spotlight on small business: A look at new start-ups

The analysis also found that the restaurant industry was the top choice for entrepreneurs looking to start new businesses. In 2014, there were 52.3 percent more restaurants opened than businesses in the next-highest industry. The remaining industries in the top five include personal services (6.9 percent), miscellaneous retail (6.6 percent), business services (6.3 percent) and general contractors (5.5 percent).

“It’s more important than ever to understand trends in the small-business sector because they are such a critical component to the growth and success of our economy,” continued Bolin. “By gaining insight into newly formed businesses, potential entrepreneurs and lenders can use the data to their benefit. Entrepreneurs can get an idea of which industries are most popular (and potentially more competitive), while lenders can better understand specific industries that are experiencing a higher growth rate.”

Despite the drop-off in business start-ups on a national level, California was one of the few states to see an increase in the number of businesses started in 2014, increasing by 17 percent since 2010. Furthermore, the top five states with the highest percentage of start-ups during the year were California (14.6 percent), Texas (10.3 percent), Florida (6.9 percent), New York (5.4 percent) and Georgia (3.9 percent).

On the other end of the spectrum, according to the U.S. Small Business Administration, on average 21 percent of businesses fail after the first year. However, more than 50 percent of businesses close after year five, and more than 75 percent will shut down operations after year 15.

“While owning a small business can be rewarding, it’s important to remember that the market can be quite unpredictable,” continued Bolin. “Making it past the first year does not guarantee success; you have to keep working at it. By making timely payments to creditors and suppliers, entrepreneurs can show the creditworthiness of their businesses and gain the necessary funding to help them grow and succeed.”

Additionally, the analysis found that while the restaurant and personal services industries were among the most popular, they also had the two highest rates of failure in 2014, at 9.2 percent and 8.1 percent, respectively. They were followed by special trade contractors (7.3 percent), general contractors (6.8 percent) and business services (6.0 percent).

Jordan Takeyama
Experian Public Relations
1 714 830 7561
Twitter: @JordanTakeyama

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Experian’s Business Information Services is a leader in providing data and predictive insights to organizations, helping them mitigate risk and improve profitability. The company’s business database provides comprehensive, third-party-verified information on virtually all U.S. companies, with the industry’s most extensive data on the broad spectrum of small and midsize businesses.

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