States Where New Businesses Are Most Likely to Succeed

Washington & California lead the country in new business survival rates

Source: Simply Business analysis of U.S. Bureau of Labor Statistics data | Image Credit: Simply Business

New business success varies widely across the United States, with some states providing a more favorable environment for startups to thrive. Based on survival rates for the first three years of operation, Washington and California stand out as the nation’s leading states.

Washington claims the top spot, with businesses in the state enjoying an 86.4% chance of surviving their first year, 89.3% in their second year, and an impressive 91.8% in their third year. These figures highlight Washington’s robust support for young businesses, likely fueled by its thriving tech ecosystem and a generally favorable economic climate.

California ranks second, with survival rates of 86.0% in the first year, 89.8% in the second, and 91.4% in the third. Despite challenges such as high costs of living and regulatory complexities, California’s strong economy, innovation hubs, and access to venture capital contribute to its high ranking.

Outside of the West Coast, West Virginia—whose economy is deeply rooted in energy production, natural resources, and manufacturing—ranks third, boasting the highest third-year survival rates at 91.9%. North Carolina—a major banking center and home of the Research Triangle—follows closely with similar numbers. At the opposite end of the spectrum, Minnesota businesses face the toughest challenges in their early years, with only 72.3% surviving their first year and 80.2% their second.

These regional differences highlight the importance of local economic conditions in shaping a startup’s odds of success. For entrepreneurs planning their next move, this analysis offers insight into where businesses are thriving and where challenges are more pronounced. Factors like industry presence, regulatory environments, and access to resources can create opportunities—or hurdles—that significantly affect survival rates in the critical early years. Choosing the right location isn’t just about personal preference; it can mean the difference between failure and success.

This analysis was conducted by Simply Business—an online insurance marketplace for small businesses—using 2024 data from the U.S. Bureau of Labor Statistics. For complete results, see the original post: States Where New Businesses Are Most Likely to Succeed.