Wisconsin’s 10-year survival rate for small businesses was the second highest in the nation in the past decade. Only Iowa got a better ranking.
That’s according to a recent analysis by Alabama-based financial institution Southern Bank Company, which references data from the U.S. Bureau of Labor Statistics, showing business by state from March 2012 to the same month in 2022. Survival rates were compared.
Of the 8,199 Wisconsin private companies that opened in the 12 months to March 2012, 43 percent (3,523) were still operating ten years later, according to data from the Wisconsin Bureau of Labor Statistics. And the number of employees in the surviving companies each went from an average of 4.5 to he 10.7.
Ten-year survival rates for small businesses in the state have remained fairly stable over the long term. For example, according to the Bureau of Labor Statistics, 42.2% of businesses that opened in the 12 months ending March 1994 were still open in 2004, but only 19.7% were open by 2022. stayed.
Small business survival rates tend to decline the longer they’ve been in business, according to Southern Bank Company. After his first year, about 80 percent of small businesses across the country remain open. It drops to about 50% by the fifth year of operation.
Missy Hughes, chief executive of the Wisconsin Economic Development Corporation, said the drop in survival rates over time is largely due to financial limitations.
He said many companies have a “stay home” in their first year, which helps generate the money to get the company up and running.
“By the second, third and fourth year, the eggs in the nest are used up, so it’s really necessary for the business to stand on its own and thrive,” Hughes said.
Hughes said one reason Wisconsin may be near the top when it comes to 10-year small business survival rates is because of the state’s small business community-centric support structure.
“Wisconsin has a very active support system for small businesses,” she said. “Whether we are a small business development center or a local chamber of commerce, we take a hands-on approach to helping small businesses survive.”
Community service is key to business longevity in Oshkosh
One Wisconsin business that knows a lot about longevity is Planet Park at City Center, a coffeehouse in Oshkosh. This coffee house opened at its current location in 2000. Ken Osmond acquired this business in his 2008.
Osmond said competition from national chains such as Starbucks and Dunkin’ Donuts was one of the biggest obstacles in his 15 years as owner. Since the pandemic, that has become an even bigger challenge, he says.
“Franchisor and chain startups have increased by about 50% each year since COVID-19,” he said. “As competition intensifies, companies must find ways to differentiate themselves in ways others cannot.”
Osmond said Planet Perk does it through its community service efforts. Early in the pandemic, Planet Park delivered an estimated 70 tons of free meals to poor families, he says.
“We decided a long time ago to be a conduit for the community to do good, and that’s kind of our business profile,” Osmond said.
That service ethos is at the heart of a new expansion the company plans for July called “The Planet Purrrk Club.” The club is adjacent to downtown Oshkosh and features five private offices, two meeting rooms and a cat lounge. The cat lounge houses 9-15 cats adopted from the local humane society.
Osmond and his staff will be trained in proper animal care by the Humane Society. No food is allowed in the cat lounge, and the coffee shop’s daily routine will remain the same, he said.
“We learned that the Oshkosh Community Humane Society is running out of room for cats,” Osmond said. “I thought, ‘Most coworking spaces are lifeless and impersonal. Why not add a cat to create a calming environment and at the same time support the humanitarian association in the Oshkosh area?'”
This is just one example of how small businesses enrich Wisconsin communities, but there are countless others, Hughes said. In fact, research shows that about two-thirds of the money spent in small businesses stays in the community.
“When you look downtown, you really see vibrant places where people gather, whether it’s coffee shops or going downtown to buy presents for the birthday party you have to go to.” said Hughes. “Being able to do that in your community is part of why we all live in Wisconsin.”