Professional Employer Organizations — Business Survival Rate
An estimated 48% of professional employer organizations businesses survive their first 5 years, based on U.S. Census Bureau Business Dynamics Statistics. The annual business closure rate is 13.7%.
Is Professional Employer Organizations a Good Business to Start?
With a 48% five-year survival rate, professional employer organizations is near the national average (~50%). This means roughly half of new entrants will still be operating after 5 years — typical business risk that rewards solid planning and execution.
The annual exit rate of 13.7% indicates moderate turnover. Success depends on differentiation, location, and operational efficiency rather than inherent industry advantages.
Entry vs. Exit Rates
Annual rate of new businesses opening versus existing businesses closing.
Net negative: more businesses closing than opening (-0.7 pp spread).
Job Creation & Destruction
The industry is losing jobs faster than creating them — which may indicate automation, consolidation, or declining demand. Total employment: 6,230,890 workers across 26,532 firms.
Want to know how much professional employer organizations businesses actually make?
See full revenue benchmarks for Professional Employer Organizations →Frequently Asked Questions
- What percentage of professional employer organizations businesses fail?
- Approximately 52% of professional employer organizations businesses fail within their first 5 years. The annual closure rate is 13.7%, with 2,814 firms closing permanently in 2023.
- Is the professional employer organizations industry growing or shrinking?
- The professional employer organizations industry is currently shrinking with a net job creation rate of -3.9% per year. New businesses are entering at 13.0% while 13.7% close annually.
Source: U.S. Census Bureau, Business Dynamics Statistics (2023). Survival rate estimated from annual exit rates.