RUTHERFORD COUNTY, TN - Starting a business in Tennessee might be a daunting task, but according to a recent study, the odds are looking better than you’d think. A promising 78.3% of businesses in Tennessee survive their first year, according to a new business survival index. The study, conducted by Simply Business using 2024 U.S. Bureau of Labor Statistics data, highlights the hurdles and successes faced by startups across the nation.
The Volunteer State ranked 28th among the 50 states for business survival rates. While this places Tennessee in the middle of the pack, it offers a positive outlook for entrepreneurs in areas like Rutherford County, which is experiencing rapid population growth. Researchers also noted that nationwide, 79% of businesses survive their first year, and of those, roughly 85% make it to their second year—a glimmer of hope for those venturing into the private sector.
Rutherford County, with a current population of about 380,000 residents, is on the brink of an explosive growth phase. By 2030, the population is projected to hit 432,800, and within 15 years, it could soar by another 42% increase to reach over 511,000. Looking further ahead, by 2070 the area could boast a population exceeding 741,000, according to the UT Boyd Center for Business and Economic Research. Such growth not only promises a higher demand for goods and services but also presents opportunities for new businesses to thrive—assuming they can weather that critical first year.
Nationwide, Washington state leads the charge with the highest first-year business survival rates, thanks to its 8-million-strong population and steady 1.1% annual growth. Meanwhile, Minnesota trailed at the bottom of the rankings, despite its 5.7 million residents. Tennessee, with its 7.1 million population and overall projected 12.6% growth by 2040, finds itself in a sweet spot for entrepreneurial opportunity.
Even factors like climate can play a role in a state's business environment. Tennessee’s average summer temperatures hover around 83°F, while winters average 40°F. This relatively mild climate provides a favorable backdrop compared to the more extreme conditions in states like Minnesota or Washington.
As Rutherford County braces for continued growth, its entrepreneurs should find optimism in these statistics. If the county’s booming population and steady business survival rate hold true, the area could become a thriving hub for innovation and opportunity in Tennessee.
MORE ON STATES: 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. Continue reading for complete results on all 50 states.
