Construction Business Failure Rate: 1, 5 and 10-Year Survival in U.S. Data

What is the construction business failure rate in the first year?

About one in five. 20.3% of construction establishments that opened in the 12 months to March 2024 had closed by March 2025, slightly below the 22.1% all-industry rate.

BLS tracked 64,892 construction establishments that first reported employees between April 2023 and March 2024. In March 2025, 79.7% were still operating and 13,203 had closed (BLS Business Employment Dynamics, Table 7). Across all private industries, first-year survival for the same cohort was 77.9% (BLS, Table 7, total private).

First-year survival in construction has ranged from 78.7% (2019 cohort) to 85.9% (2017 cohort) for every cohort opened from 2014 to 2024. The long-run average since 1994 is lower, at 77.2% vs 78.7% for all industries, because of the weak cohorts of 2006 to 2010.

Establishment survival: The share of establishments that first reported employees in a given 12-month period (ending in March) and still report employees in a later March. BLS dates an establishment from its first positive employment (BLS age and survival FAQ).

What percentage of construction businesses fail within 5 years?

43.5% for the latest cohort to reach five years, against 48.6% for all private industries. Over the full record, the five-year closure rate in construction has ranged from 40.2% to 66.8%.

Of the 57,753 construction establishments that opened in the 12 months to March 2020, 56.5% were operating in March 2025 (BLS Table 7). The 2020 cohort opened between April 2019 and March 2020, just before the two-month 2020 recession dated by the NBER, and still beat the all-industry rate of 51.4%.

The weakest five-year record belongs to the cohort that opened in the year to March 2006: 33.2% survived to March 2011. The strongest belongs to the 2017 cohort, at 59.8%. Averaged across 27 cohorts, construction five-year survival is 48.3%, close to the SBA Office of Advocacy all-industry figure of 49.2% for 1994 to 2022 (SBA Advocacy FAQ, February 2026).

What percentage of construction businesses fail within 10 years?

57.4% for establishments opened in the year to March 2015. Fewer than half of that cohort remained after 8 years; the all-industry cohort crossed that line after 6.

Ten-year survival for the 2015 construction cohort was 42.6%, against 34.7% for all private industries (BLS Table 7). Construction cohorts opened 2009 to 2011 averaged 34.8% ten-year survival; cohorts opened 2005 to 2007, which met the housing collapse in their first years, averaged 25.5%.

Once a construction business passes five years its odds improve. Of 2015 openings alive at five years, 74.1% reached ten, compared with 69.1% across all industries. The SBA reports an all-industry average of 69.5% for the same five-to-ten step (SBA Advocacy FAQ).

The longest records show how few businesses last decades. 16.1% of construction establishments opened in the year to March 2005 were operating 20 years later, and 10.3% of the 1994 cohort were still operating in March 2025.

How does construction compare with other industries?

Construction now sits mid-table: 10 of 19 private sectors on five-year survival for 2020 openings, above the all-industry average. On the 1994 to 2020 average it ranks 13 of 19.

For establishments opened in the year to March 2020, five-year survival ranged from 45.7% in information to 61.8% in agriculture, forestry and fishing (BLS establishment age and survival data, 19 sectors). Construction, at 56.5%, sat above professional and technical services (50.8%), transportation (52.7%) and health care (52.6%), and below retail trade (59.8%) and accommodation and food services (59.3%).

The ranking has moved. On the average of all cohorts from 1994 to 2020, construction five-year survival (48.3%) ranks 13 of 19, below retail (55.8%) and accommodation and food services (53.6%).

The Census Business Dynamics Statistics, which follow firms rather than single locations, show a higher exit rate for construction than for the economy as a whole: 11.1% of construction establishments exited in the year to March 2023 vs 9.4% across all industries, a ratio of 1.18 (Census BDS 2023). From 2014 to 2023 the ratio averaged 1.19. The two sources measure different things, discussed in the methodology.

Has construction business survival improved over time?

Yes, sharply. Five-year survival rose from 34.4% for 2005 to 2007 openings to 58.6% for 2015 to 2017 openings, a gain of 24.2 points, while the all-industry figure moved from 46.2% to 50.8%.

Grouping three cohorts at a time removes some year-to-year noise. Construction cohorts opened 2005 to 2007 averaged 74.6% first-year and 34.4% five-year survival. Cohorts opened 2009 to 2011, during and just after the recession, averaged 71.3% and 46.9%. Cohorts opened 2015 to 2017 averaged 84.0% and 58.6% (CB&C calculation from BLS Table 7).

Two forces are visible in the data. Builders that opened just before the crash met a collapse in housing demand: U.S. housing starts fell from 2,068.3 thousand in 2005 to 554.0 thousand in 2009, a drop of 73.2% (Census New Residential Construction). Fewer businesses also opened afterward, from 86,247 construction establishments in the 2006 cohort to 40,927 in 2010, so the post-recession cohorts were smaller and entered a recovering market.

How many construction businesses open and close each year?

Roughly 90,000 to 100,000 of each in recent years. In 2025, BLS counted 96,000 construction establishment openings and 98,000 closings; in 2024, 95,000 and 101,000.

The BLS Business Employment Dynamics annual series counts every construction establishment that went from zero to positive employment (an opening) or from positive to zero (a closing) between one December and the next (BLS BED time series). Openings outnumbered closings from 2012 to 2023 except 2020. Closings led in 2024 and 2025 by 6,000 and 2,000, the first two-year run since 2010 to 2011.

Over the decade 2016 to 2025, construction recorded 933,000 openings and 865,000 closings: 1.08 openings per closing and a net gain of 68,000 establishments. In 2009 the ratio fell to 0.55. Across all private industries the 2025 ratio was 1.11.

Openings include seasonal reopenings and closings include temporary shutdowns. The narrower BLS measures, births and deaths, exclude those. Construction births totalled 90,000 in 2024 against 98,000 deaths, the first year since 2012 with more deaths than births (BLS BED time series; definitions from the BLS Handbook of Methods). Deaths are confirmed only after four quarters with no employees, so 2025 deaths are not yet published (BLS BED release, fourth quarter 2025).

For scale, BLS counted 944,223 private construction establishments as a 2025 annual average (BLS QCEW). State-level counts of commercial contractors are in the commercial builders by state report, and the commercial builder opportunity index ranks where demand is growing.

Are construction firms more likely to close in a recession?

Yes, more than other businesses. In 2009 the construction establishment exit rate reached 19.9%, 1.71 times the all-industry rate, and construction firm deaths hit 88,250.

The NBER dates the Great Recession from December 2007 to June 2009, an 18-month contraction (NBER business cycle dates). Census BDS shows the construction establishment exit rate rising from 12.0% in 2006 to 19.9% in 2009, a jump of 7.9 points, while the all-industry rate moved from 10.1% to 11.6% (Census BDS 2023 release).

BLS annual data show the same shock: construction closings ran at 21.8% of establishments in 2009 and openings at 12.0%. Businesses that opened just before the downturn fared worst; first-year survival for the cohort opened in the year to March 2008 was 64.5%, against 75.2% for all industries.

The 2020 recession was two months long (February to April 2020) and left a smaller mark. Construction closings in calendar 2020 were 89,000, against 84,000 in 2019, and openings recovered to 104,000 in 2021. Credit conditions for builders are tracked separately in the construction lending tracker.

Does firm size or age matter?

Both matter, and age and size overlap. Firms aged 1 to 5 accounted for 51.2% of 2023 construction firm deaths, and firms with 1 to 4 employees for 94.1%.

In the year to March 2023, 28.1% of establishments at one-year-old construction firms exited. The rate fell to 12.1% at age five, 10.3% at 6 to 10 and 7.8% at 26 or older (Census BDS 2023). In nine of the ten age groups, construction exit rates were a little higher than the all-industry rates; at age one the gap was 2.4 points.

Size tells a similar story. Construction firms with 1 to 4 employees had an establishment exit rate of 16.5% in 2023 and produced 60,789 of the 64,629 construction firm deaths. Firms with 5 to 9 employees had an exit rate of 2.2%, and firms with 20 to 99 employees 1.4%, below the all-industry rates for those sizes (3.7% and 2.7%).

Construction has more very small firms than the economy as a whole: 67.0% of construction employer firms had fewer than 5 employees in 2022, vs 63.0% of all employer firms, and 91.9% had fewer than 20 (Census SUSB 2022). Construction firms average 1.02 establishments each, so establishment survival is a close proxy for firm survival in this industry.

Where do the popular contractor failure statistics come from?

Several widely shared figures trace back to the same BLS table, quoted for different cohorts or older vintages. One, the claim that 96% of construction companies fail within ten years, has no dataset behind it.

• "96% of construction companies fail before reaching 10 years" (Projul): no source is given, and the BLS ten-year closure rate for the 2015 cohort is 57.4%, 38.6 points lower.
• "Why 83% of construction companies fail" (busybusy): the page uses the 2001 cohort's 20-year survival of 17.2%, which matches BLS. Its line that almost half of that cohort closed within three years compares with a BLS three-year closure rate of 44.0%.
• "More than 20%" closed in the first year, 12,886 from the 2022 cohort (Footbridge Media): the current BLS vintage shows 18.9% and 12,630 closures for that cohort. The difference may reflect an earlier BLS vintage.
• 14.1% of the 69,296 establishments opened in 2001 still operating in 2025 (ConstructConnect): matches BLS (14.1%), but describes one pre-recession cohort, not current odds.
• 35.9% of 43,277 businesses opened in 2011 still operating in 2022 (TGC CPA): the current vintage shows 35.8%, a minor revision.
• Construction businesses failed at "nearly 1.5 times" the rate of other sectors, citing Census (Levelset): the Census BDS ratio of construction to all-industry establishment exit rates averaged 1.19 from 2014 to 2023 and reached 1.71 in 2009.
• Five-year survival of 56.5% and ten-year survival of 42.6% (TrustPro): match the current BLS vintage.

The pattern: most figures are real BLS numbers, but several describe older cohorts that lived through the 2007 to 2009 recession and are presented as today's odds. Quoting the cohort and the measurement date avoids the confusion.

The numbers in one list

1. 79.7% of U.S. construction establishments opened in the year to March 2024 were still operating in March 2025 (13,203 of 64,892 had closed).^[1]
2. Five-year survival for U.S. construction establishments opened in the year to March 2020 was 56.5% in March 2025, vs 51.4% for all private industries.^[1][2]
3. Ten-year survival for U.S. construction establishments opened in the year to March 2015 was 42.6% in March 2025, vs 34.7% for all private industries.^[1][2]
4. Averaged over all cohorts since 1994, U.S. construction one-year survival is 77.2% vs 78.7% for all industries, and ten-year survival is 31.6% vs 33.9% (CB&C calculation).^[1][2]
5. The lowest first-year survival in the 1994 to 2024 construction record was 64.5%, for establishments opened in the year to March 2008, 10.7 points below all industries.^[1][2]
6. U.S. construction five-year survival rose 24.2 points between the 2005 to 2007 cohorts (34.4%) and the 2015 to 2017 cohorts (58.6%).^[1]
7. Half of the 2015 U.S. construction cohort was still operating after 7 years; the all-industry 2015 cohort fell below half after 6 years.^[1][2]
8. Among 2015 construction openings that survived five years, 74.1% reached ten, vs 69.1% for all private industries.^[1][2]
9. U.S. construction recorded 141,000 establishment closings and 78,000 openings in 2009, 0.55 openings per closing.^[5]
10. From 2016 to 2025, U.S. construction had 933,000 establishment openings and 865,000 closings, 1.08 openings per closing.^[5]
11. The Census BDS construction establishment exit rate peaked at 19.9% in 2009 (all industries 11.6%) and was 11.1% in 2023 (all industries 9.4%).^[8]
12. In 2023, 28.1% of establishments at one-year-old U.S. construction firms exited, vs 7.8% at construction firms aged 26 or older.^[8]
13. Firms with 1 to 4 employees accounted for 94.1% of the 64,629 U.S. construction firm deaths in 2023.^[8]
14. 67.0% of U.S. construction employer firms had fewer than 5 employees in 2022, vs 63.0% of all employer firms.^[13]

Calculations

Download the calculations (CSV)

Summary

• 79.7% of the 64,892 construction establishments that opened in the 12 months to March 2024 were still operating in March 2025, a first-year closure rate of 20.3% (BLS).
• Five-year survival for the 2020 construction cohort was 56.5% and ten-year survival for the 2015 cohort was 42.6%, 5.1 and 7.9 points above all private industries.
• Over the full record the picture flips: averaged across every cohort since 1994, construction trails all industries by 1.0 points at five years (48.3% vs 49.3%) and 2.3 points at ten years.
• The housing bust explains most of the gap. Construction cohorts opened 2005 to 2007 averaged 34.4% five-year survival, 11.8 points below all industries; cohorts opened 2015 to 2017 averaged 58.6%, 7.8 points above.
• Construction ranks 10 of 19 private sectors on five-year survival for 2020 openings, up from 13 of 19 on the 1994 to 2020 average.
• Closings outnumbered openings in 2024 (101,000 vs 95,000) and 2025 (98,000 vs 96,000), the first back-to-back deficit since 2010 to 2011.
• Census BDS counted 64,629 construction firm deaths in 2023, up 18.7% from 2022; 94.1% were firms with 1 to 4 employees and 51.2% were firms aged 1 to 5.

Frequently asked questions

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Methodology

Selection criteria. The primary source is the BLS Business Employment Dynamics (BED) establishment age and survival tables, which follow every private establishment covered by unemployment insurance from the March it first reports employees. Construction (NAICS 23) is compared with the private-sector total and with 18 other sectors. Census Business Dynamics Statistics (BDS) supply firm-level exits by firm age and size. SBA Office of Advocacy, SUSB, QCEW, Business Formation Statistics, Census housing starts and NBER recession dates add context. All Tier 1 files were downloaded directly from the publisher and are stored unmodified (BED flat files are kept as a construction and total-private subset of the full file).

Inclusion and exclusion. A figure is included only if it appears in a file or page opened on 2026-10-06. Nonemployer businesses (sole proprietors without staff) are outside all of these datasets. Commercial pages that repeat failure statistics are cited only as examples of claims and are checked against the current BLS vintage; claims without a dataset are flagged, not used. A Forbes article that appeared in search results could not be opened and is excluded.

Definitions. Survival rate: the share of a cohort's establishments still reporting employees in a later March. Closure rate: 100 minus survival. Openings and closings: establishments moving from zero to positive employment and back, including seasonal moves. Births and deaths: openings and closings that are not seasonal, with deaths confirmed after four quarters at zero. BDS firm death: a firm whose every establishment exited.

Conflicting numbers. BED and BDS differ in unit (establishment vs firm), timing and denominators. BED shows recent construction cohorts surviving better than the all-industry average, while BDS 2023 shows construction exit rates slightly above the all-industry rate at each firm age. Both are reported. CB&C's all-industry five-year average (49.3%) differs slightly from the SBA's 49.2% because the SBA covers cohorts to 2022 on an earlier vintage. Where a commercial page quotes an older BLS vintage, the current value is shown beside it.

Derived metrics. Closure rates, gaps, cohort-group means (unweighted means of three annual cohorts), long-run averages, half-lives, conditional survival, openings-per-closing ratios, annual birth and death sums, BDS ratios and shares are computed in scripts/derived.py and listed with formulas and fact-sheet row numbers in derived_metrics.csv.

Limitations. A closure is not always a failure: sales, mergers, relocations and retirements also end an establishment record. Survival can reflect who chose to start a business as much as market conditions. BED annual counts are rounded to thousands. BDS 2023 is the latest firm-level year; BED survival data run to March 2025. Construction includes residential, commercial and heavy civil contractors and specialty trades together.

Last updated 2026-10-06. Data vintage: BED survival tables through March 2025 and BED time series through the fourth quarter of 2025 (released 2026-07-29); BDS 2023 (released 2025-09-25); BFS through August 2026 (released 2026-09-11).

This report presents published data with its limitations. It is not legal, financial or investment advice.

Sources, ranked by quality

Tier 1: primary and official sources (17)

• [1] U.S. Bureau of Labor Statistics. Business Employment Dynamics, Table 7. Survival of private sector establishments by opening year: Construction. Cohorts opened in the years ending March 1994 to March 2025, tracked to March 2025. Accessed 2026-10-06.
• [2] U.S. Bureau of Labor Statistics. Business Employment Dynamics, Table 7. Survival of private sector establishments by opening year: Total private. Cohorts opened in the years ending March 1994 to March 2025, tracked to March 2025. Accessed 2026-10-06.
• [3] U.S. Bureau of Labor Statistics. Establishment Age and Survival Data (index of Table 7 files for 19 private industry sectors). March 1994 to March 2025. Accessed 2026-10-06.
• [4] U.S. Bureau of Labor Statistics. Business Employment Dynamics: Frequently asked questions regarding establishment age and survival. Methodology, current. Accessed 2026-10-06.
• [5] U.S. Bureau of Labor Statistics. Business Employment Dynamics time series flat files (bd.series, bd.data.0.Current). 1992 Q3 to 2025 Q4 (deaths to 2025 Q1), files dated 2026-07-29. Accessed 2026-10-06.
• [6] U.S. Bureau of Labor Statistics. Business Employment Dynamics, Fourth Quarter 2025 (USDL-26-1268). Fourth quarter 2025, released 2026-07-29. Accessed 2026-10-06.
• [7] U.S. Bureau of Labor Statistics. Handbook of Methods: Business Employment Dynamics, Concepts. Methodology, current. Accessed 2026-10-06.
• [8] U.S. Census Bureau. Business Dynamics Statistics 2023 data tables (sector by firm age, sector by firm size, sector, economy-wide). 1978 to 2023 (March to March), released 2025-09-25. Accessed 2026-10-06.
• [9] U.S. Census Bureau. Business Dynamics Statistics variable definitions (variables_bds.csv). Methodology, 2023 release. Accessed 2026-10-06.
• [10] U.S. Census Bureau. Business Dynamics Statistics: Methodology. Methodology, current. Accessed 2026-10-06.
• [11] U.S. Census Bureau. 2023 Business Dynamics Statistics (BDS) Release Notes. 2023 release, dated 2025-09-22. Accessed 2026-10-06.
• [12] U.S. Small Business Administration, Office of Advocacy. Frequently Asked Questions About Small Business (February 2026). Survival averages for 1994 to 2022 cohorts; openings and closings for 2023. Accessed 2026-10-06.
• [13] U.S. Census Bureau. Statistics of U.S. Businesses 2022: U.S. and states, NAICS sectors, detailed employment sizes. 2022 (released 2025). Accessed 2026-10-06.
• [14] U.S. Bureau of Labor Statistics. Quarterly Census of Employment and Wages, 2025 annual averages, NAICS 23 Construction (open data CSV). 2025 annual average. Accessed 2026-10-06.
• [15] U.S. Census Bureau. Business Formation Statistics, August 2026 release (CB26-148) and monthly time series CSV. January 2024 to August 2026, released 2026-09-11. Accessed 2026-10-06.
• [16] National Bureau of Economic Research. US Business Cycle Expansions and Contractions. 1854 to 2020. Accessed 2026-10-06.
• [17] U.S. Census Bureau. New Residential Construction: New Privately-Owned Housing Units Started, annual data (starts_cust.xlsx). 1959 to 2025. Accessed 2026-10-06.

Tier 3: journalism and expert commentary (7)

• [18] ConstructConnect. 6 Reasons Why Construction Companies Fail. Cites BLS data to March 2025. Accessed 2026-10-06.
• [19] Footbridge Media. Why So Many Contractors Fail In The First Year. Cites BLS data for the 2022 cohort. Accessed 2026-10-06.
• [20] busybusy. Why 83% of Construction Companies Fail. Cites BLS data for the 2001 cohort. Accessed 2026-10-06.
• [21] Projul. 12 Reasons Construction Companies Fail (And How to Avoid Each One). Undated statistic, page dated 2019-12-09. Accessed 2026-10-06.
• [22] TrustPro. Contractor Failure Rates: The Real 2026 Numbers. Cites BLS data to March 2025, page updated 2026-09-24. Accessed 2026-10-06.
• [23] Levelset. 7 Reasons Why Construction Companies Fail (and How To Avoid Them). Undated Census comparison. Accessed 2026-10-06.
• [24] TGC CPA. The Construction Industry's High Failure Rate: Avoiding Common Pitfalls. Cites BLS data to March 2022. Accessed 2026-10-06.