Economic Security: Percent of new businesses in 2002 that survived to 2005

What does this measure?

  • New businesses are those that registered with the Department of Revenue and reported income in 2002.
  • By the end of 2004, 50 percent of sole proprietors and 67 percent of corporations, partnerships and Limited Liability Corporations (LLCs) survived (continued to report income).

Why is it important?

  • The first three years of a firm's life are critical, the rate of failure is highest in this period. New businesses are an important part of economic growth.
  • In addition to creating jobs, successful new businesses are an important vehicle for adopting new technologies and innovations.
  • Business closures could mean personal tragedy for the entrepreneur involved. A high level of business closure could discourage future entrepreneurship. However, some level of business closure is natural in competitive markets and can contribute to a more efficient economy.

How is Washington doing?

  • Half of sole proprietors and a little over two-thirds of other firm types (corporations, partnerships and sole proprietors) survive beyond the third year.

What is state government’s role?

  • Coordinate and partner to support business planning and training,
  • Support a competitive regulatory environment,
  • Provide communication and outreach to small businesses,
  • Facilitate efforts to assist in small business financing, and
  • Provide infrastructure financing.

Graph & Data Set

Graphical Image of Data. Data in table below.

  Sole Proprietors Partnerships

Year 1

100%

100%

Year 2

70%

80%

Year 3

50%

67%

For more information…
Contact: Washington State Department of Revenue