Wisconsin had the second-best 10-year small business survival rate in the nation over the last decade. Only Iowa had a better ranking.
That’s according to a recent analysis from The Southern Bank Company, a financial institution based in Alabama that looked at data from the U.S. Bureau of Labor Statistics to compare the state-by-state business survival rates from March 2012 through that month of 2022.
Among Wisconsin’s 8,199 private sector businesses that opened in a 12-month period ending in March 2012, 43 percent — or 3,523 — were still operating a decade later, Bureau of Labor Statistics data shows. And those surviving businesses went from averaging 4.5 employees each to 10.7 workers.
The state’s 10-year small business survival rate has remained fairly stable over time. For example, 42.2 percent of the businesses that opened in a 12-month period ending in March 1994 were still open in 2004, but only 19.7 percent were still open by 2022, according to the Bureau of Labor Statistics.
Small business survival rates tend to decrease the longer small businesses are in operation, according to The Southern Bank Company. After the first year, roughly 80 percent of small businesses nationally remain in operation. That drops to roughly 50 percent by the fifth year of business.
Missy Hughes, chief executive of the Wisconsin Economic Development Corp., said declining survival rates over time are largely due to financial limitations.
She said many businesses have a "nest egg" during their first year, which helps them generate funding to get their company up and running.
"In years two, three (and) four, you really need your business to be self-sustaining and successful on its own because you’ll have used up that nest egg," Hughes said.
Hughes said one of the reasons Wisconsin may be near the top when it comes to 10-year small business survival is the support structure around the state’s small business community.
"Wisconsin has a really vibrant support system for our small businesses," she said. "Whether it's our small business development centers, or our local chambers of commerce, we really have a hands-on approach to helping our small businesses survive."
Community service key to Oshkosh business' longevity
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One Wisconsin business that knows a thing or two about longevity is Planet Perk at City Center, a coffee house in Oshkosh that opened at its current location in 2000. Ken Osmond purchased the business in 2008.
Osmond said competing against national chains like Starbucks and Dunkin' Donuts has been one of the biggest obstacles in his 15 years as owner. He says that’s become an even bigger challenge since the pandemic.
"Year over year since COVID, we're seeing about 50 percent more franchise and chain startups every year," he said. "With that increased competition, you have to find a way to differentiate yourselves in ways that those corporate entities can't."
Osmond said Planet Perk does that through community service efforts. During the early days of the pandemic, he says Planet Perk delivered an estimated 70 tons of free meals to needy families.
"We decided a long time ago to be a conduit for the community to do good. That's kind of our business profile," Osmond said.
That sense of service is at the heart of a new expansion the business has planned for July, called "The Planet Purrrk Club." The club will be adjacent to the business’ downtown Oshkosh location and feature five private offices, two conference rooms and a cat lounge. The cat lounge will house nine to 15 adoptable cats from the local Humane Society.
Osmond and his staff will be trained by the Humane Society to properly take care of the animals. No food will be allowed in the cat lounge, and day-to-day operations of the coffee shop will not change, he said.
"I learned that the Oshkosh Area Humane Society was running out of room for cats," Osmond said. "I thought, 'Most co-working spaces are sort of lifeless and impersonal. Why don’t we just add the cats to create a calming environment and at the same time help the Oshkosh Area Humane Society?'"
That’s just one example of how small businesses can help enrich Wisconsin communities, but Hughes said there are countless others. In fact, studies show that roughly two-thirds of every dollar spent at a small business stays in local communities.
"As we look at our downtowns, we really see vibrant places for people to come together whether it is at a coffee shop, or whether it's going downtown to buy presents for the birthday party you need to go to," Hughes said. "Being able to do that in your community is really part of why we all live in Wisconsin."