Missouri is one of the states with the most closed businesses during the pandemic

JEFFERSON CITY, Missouri – COVID-19 leads to volatile market for new businesses in 2020, and a new study shows that nearly a quarter of those who open their doors in Missouri at the dawn of the pandemic have been closed for a year later.

Missouri has the fifth-highest business failure in its first year in the country with nearly 23 percent of new businesses closing in its first year, with a 55 percent failure rate after five years in business also among the highest. in the country, according to a report. He was also in the state’s top 20 for a 10-year business failure rate.

The study, compiled by the online business platform LendingTree, ranked the states based on data from the US Bureau of Labor Statistics for March 2011-21, with first-year statistics looking at businesses that have opened their doors around downtime and restrictions. background of the initial jump. of the COVID-19 pandemic in the United States

According to these data, start-ups are rapidly closing their doors is a national trend: the United States saw that about 18 percent of private sector businesses closed in the first year. After five years, that number rose to nearly 50 percent to 65.5 percent after a decade of business.

Although the widespread economic impact of the pandemic included business closures, food restrictions and health orders across the country, the national closure rate for the first year between March 2020 and March 2021 was around 18.5 percent.

“Although the Americans opened these businesses at the beginning of the crisis, they did better than the people who started one last year,” the report said. “In fact, the business failure rate in March 2020 for businesses that opened a year earlier (in March 2019) was 21.6% – more than three percentage points higher.”

The national five-year closure rate is 49.75 percent, while more than 65 percent of new businesses in the United States have closed within a decade.

The highest rate of business failure in the first year was reported in Hawaii, with a quarter of companies folding in their first year. Washington, DC, Rhode Island and Kansas report similar statistics to join Missouri in the top five areas of the report.

The state of Washington came in with the lowest first-year closure rate of about 11 percent. However, the closure rates for 5 and 10 years exceed the rest of the nation by 60 and 82 percent, respectively.

Washington, D.C., and 31 states have higher first-year closures than the national average.

“Businesses may collapse for a variety of reasons, including financial constraints, labor problems and owner burnout,” the study said. “In addition, the percentage of businesses that fail can vary greatly depending on the country or industry.”

The report is also deepening in various industries and their degree of closure over several years. The oil, gas and oil extraction sector is struggling everywhere with 25.6 percent of business closures in one year, 58 percent in five years and 75 percent in a decade. The real estate and leasing business is the most likely to survive the first year in business with a closing rate of 11.6%, followed by agriculture and retail at 12.3% and 12.4% respectively %.

While other industries have climbed the rankings over the years, agricultural enterprises have remained low compared to other sectors, ranking last for both five and 10-year closures by a wide margin. According to the Missouri Department of Agriculture, agriculture remains Missouri’s best-known industry, accounting for about 10 percent of the state’s jobs.

The most common reason for closing the doors of new companies is due to lack of money, according to the analysis, as about 38% of closed startups indicate the obstacle in a study by CB Insights. Another LendingTree study cited in the report shows that 40% of future small business owners cite cash flow as their biggest barrier to entry.

Other possible problems identified in the study are the lack of demand for a product or service and strong competition.

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