The '8 Out of 10' Myth: What the Data Actually Says About Black Business Survival

You have heard the number. Eight out of ten Black-owned businesses fail within the first eighteen months. It shows up in pitch decks, grant applications, panel discussions, and well-meaning advice. It is quoted with total confidence, usually to underline how hard the road is.

It is not true. Worse, there is no study behind it at all.

We went looking for the source, the way we will look for the source of every number published in this publication. The claim appears to be a mutation of an older claim about all businesses, attributed vaguely to "Bloomberg" in blog posts from the early 2010s. No Bloomberg study, dataset, or article making that claim has ever been produced. And the arithmetic alone kills it: according to the Bureau of Labor Statistics, about 34 percent of all new business establishments close within their first two years. For Black-owned firms to fail at 80 percent in eighteen months, they would have to close at several times the rate of every other group combined. They do not.

Here is what the data actually says.

What happens to new businesses, overall

The BLS tracks every new establishment with paid employees. Of the businesses that opened in the year ending March 2024, 22.1 percent had closed within one year. Of the March 2020 cohort, 48.6 percent had closed by year five. Of the March 2015 cohort, 65.3 percent had closed by year ten.

Those are closures, not failures. Census research found that owners of about a third of closed firms considered the business a success at closing. They sold it, retired, or moved to something better. Closing is an exit. It is not always a defeat.

The real gap by race

The only national survival-by-race figures come from the SBA Office of Advocacy, which linked Census business-owner data to BLS records. For young employer establishments measured over two years (2017 to 2019), survival was:

• Black-owned: 73 percent
• Asian-owned: 78 percent
• All firms: 79 percent
• Hispanic-owned: 82 percent

Black-owned firms had the lowest survival, about six points below average. That gap is real and it matters. It is also nowhere near a cliff. Roughly three in four young Black-owned employer firms were still operating two years on.

Bank data tells the same story from another angle. The JPMorgan Chase Institute followed nearly 150,000 businesses and found that after the first year, 15.5 percent of Black-owned firms exited, against 9.7 percent of white-owned firms. The gap then narrowed every year, and by year four the exit rates were within about a point of each other.

The number underneath the number

Ask why the early gap exists and the data points at one thing: cash on hand.

The Institute's study of 597,000 businesses found the median firm holds 27 days of cash buffer, meaning it could keep paying its bills for 27 days if every dollar of income stopped. A quarter of firms hold 13 days or fewer.

Broken out by owner race for first-year firms, the buffers were:

• Black-owned: 12 days
• Hispanic-owned: 14 days
• White-owned: 19 days

First-year revenue shows the same divide: a median of $39,000 for Black-owned firms against $94,000 for white-owned firms.

Then comes the finding that should shape every program, fund, and policy aimed at Black founders. When the Institute's researchers put revenue and cash buffer days into their survival model, the effect of race disappeared. It was no longer statistically significant. When they modeled a world where every firm had the same median revenue and the same median buffer, the Black-white exit gap in year three closed entirely.

Read that again. The survival gap runs through capitalization and runway. Not talent. Not effort. Not the quality of the businesses.

Why we are starting here

Blk Founders exists to cover Black entrepreneurship with the seriousness it deserves, and seriousness starts with numbers that can survive a source check. The folklore statistics, even the ones repeated with good intentions, do damage. They tell founders the game is rigged beyond hope, and they tell funders and policymakers the problem is something vague and cultural instead of something specific and fixable: too little cash, arriving too late, at too high a price.

The real numbers are less dramatic. They are also far more useful, because they point at the work. Get more first dollars in. Lengthen the runway. Measure the buffer, not the mythology.

That is the standard this publication will hold itself to, starting with this piece.