In Manufacturing, 37.6% of Employer Firms Have Been in Business 26 Years or More. In Restaurants and Hotels, 12.7%

Census counts every employer firm in the country by age. Cut by industry, the share that has been open a generation or more runs, trade by trade, from about one in eight to about one in two.

How Census dates a business

The Business Dynamics Statistics count every employer firm in the United States each year, sorted by the age of the firm. Census dates a firm from the year its oldest location first had employees, so a business that adds a second shop keeps the age of its first. The records start in 1978, and firms that were already operating then are counted separately as older than the data. This piece adds those to the firms Census lists as 26 years or more, so “26 or older” means every firm that age, however far back it goes. The figures are for 2022. The release also carries 2023, which is left out here: a release’s newest year is the one most open to revision.

The oldest and youngest trades

Across all sectors, 20.7% of employer firms were 26 or older in 2022. Utilities had the highest share of any trade at 49.5%, followed by manufacturing at 37.6%, other services at 33.9% (repair shops, salons, dry cleaners and civic groups among them) and wholesale at 30.8%. At the other end, 13.0% of transportation and warehousing firms and 12.7% of accommodation and food services firms, the restaurants, bars and hotels, had been in business that long. Head offices and holding companies, which Census files as their own sector, sat at 64.7%; they are shown but not ranked, since nobody opens one as a trade.

At the young end: in transportation and warehousing, 49.5% of firms were five years old or younger, the highest of any trade. In utilities, manufacturing and wholesale, fewer than one in four were. Only five trades had more firms aged 26 or older than aged five or younger: utilities, manufacturing, wholesale, other services, and mining, oil and gas. Everywhere else, the newcomers outnumbered the long-timers.

Only five trades had more firms aged 26 or older than five or younger. Everywhere else, the newcomers outnumbered the long-timers.

Older firms hold more of the jobs

In every sector, firms 26 or older held a bigger share of the jobs than of the firms. Across all sectors they were 20.7% of firms and 61.7% of jobs. In manufacturing the figures were 37.6% of firms and 77.5% of jobs; in accommodation and food services, 12.7% and 42.0%. In 12 of the 18 trades, firms of 26 or more years employed more than half of the sector’s workers. Accommodation and food services and construction were among the six where they did not.

The older share has grown. In 2004, the first year the data can count every firm of 26 or more years, 15.1% of employer firms were that old, against 20.7% in 2022. It rose in every trade except educational services, which went from 21.6% to 20.4%. Manufacturing went from 25.3% to 37.6%, and accommodation and food services from 9.7% to 12.7%.

What to take from this if you run a small one

If you are in a trade where a third or more of the firms have been around for a generation, you are competing alongside businesses that have had decades to build their customer lists and supplier ties, and most of the jobs in your sector sit with them. If you are in a trade where newcomers outnumber the long-timers, a large share of the firms around you are in their first five years. Either way, the useful question is the same one: what would your business need to have in place to be among the firms still counted in this table twenty-six years from now?

Three limits worth holding. This is a snapshot of ages, not a survival rate: it counts the firms operating in 2022, and it cannot say what share of firms that opened in a given year are still open. It counts employer firms only; owners with no employees are outside it. And a firm working in more than one sector is counted in each, so the sector figures cannot be added up.

Published by The Lonely Entrepreneur — the community and coaching platform for entrepreneurs who are building alone. lonelyentrepreneur.com

This article is for educational purposes and is not a substitute for professional financial or legal advice.