Report: 33% of small business owners worry they’ll close every week

It’s easier than ever to start a business: often all you need is a laptop and a business plan. But today’s business environment tests owners’ resilience in new ways.

The familiar challenges of securing financing, managing expenses and building a loyal customer base now exist alongside emerging cyber and legal risks. With sustained economic volatility showing little sign of easing, many entrepreneurs face the added challenge of protecting both their business interests and their personal financial well-being.

To understand how entrepreneurs are responding, ERGO NEXT surveyed 501 new (in their first year of operation) and established (operating 1-5 years) small business owners across the United States. The results reveal a nuanced picture of entrepreneurship, where growing awareness of risk coexists with enduring optimism.

This report is the first of three installments in ERGO NEXT’s Building Through Uncertainty series, which examines how today’s entrepreneurs perceive risk and position their businesses for long-term success.

Key findings

• 58% of new entrepreneurs say their business has felt at risk of failing during their first 12 months
• 27% of entrepreneurs say the risk of a cyber attack or data breach is a top concern
• 43% of entrepreneurs wish they had understood their insurance coverage needs sooner
• 40% of entrepreneurs say they were surprised by the number of risks they weren’t aware of
• 50% of entrepreneurs are “very confident” they’ll still be in business in 5 years

The first year danger zone

For new business owners, the first year is often the most precarious: 58% of new entrepreneurs say their business has felt at risk of failure during their first 12 months. Just 23% say their business has never felt at risk.

For many, those concerns aren’t fleeting. A third of all small business owners (33%) worry about unexpected issues and risk of closure at least once per week. For new business owners in business less than one year, that number jumps to 44%, compared with just 22% for established entrepreneurs in business one to five years.

That heightened sense of vulnerability carries into new entrepreneurs’ outlook for the future. They’re looking ahead with more caution than their more established peers:

• 80% of new business owners expect business risks to increase over the next one to two years, compared with 53% of established business owners.
• 78% of new business owners feel their business is more exposed to challenges today than when they first launched, versus 49% of established owners.

Those findings suggest that while surviving the first year of business doesn’t eliminate uncertainty, it does change entrepreneurs’ relationship with it.

As owners gain firsthand experience navigating challenges, many develop a more realistic understanding of the risks that could threaten their business and the protections they wish they had put in place sooner.

Insurance stands out as one of the most common lessons learned. When asked what they wished they had done earlier to better protect their business, 43% of entrepreneurs cited understanding what insurance coverage they needed.

Top risk concerns for small business owners

Small business owners are most focused on risks that could put their profitability and reputation on the line.

For nearly half of all entrepreneurs (46%), economic downturn or inflation is a top concern. Macroeconomic pressures are some of the hardest risks to control, and when margins are already tight, even small shifts in cost or demand can be destabilizing.

However, entrepreneurs are also keeping a close eye on risks that stem from the day-to-day realities of running a business in a digital-first environment. More small businesses now operate in the cloud than on Main Street, which adds risk exposure. In addition to traditional physical liabilities, such as property damage and workplace injuries, business owners now worry about a new class of more complex and less visible risks.

The most pressing operational and compliance concerns include:

• Cyber attack or data breach (27%)
• Making a mistake that costs a client money (25%)
• Issues with contracts, licenses or regulatory requirements (24%)

Just 32% of survey respondents operate fully in person, meaning many are more exposed to digital, financial and regulatory risks. For these entrepreneurs, a single mistake, security incident or compliance issue can cause significant financial, legal and reputational liabilities that could ultimately put them out of business.

The emotional toll and enduring optimism of entrepreneurship

Understanding business risk is one thing. Living with it every day is another.

The small business risk landscape is becoming increasingly complex, exposing business owners to a wider range of threats than many anticipated when launching their companies.

For the many entrepreneurs who operate independently or with only a few employees, there is often no one else to absorb the pressure when unexpected challenges arise.

As a result, risk can take a significant emotional toll:

• 40% of all entrepreneurs were surprised by the number of business risks they weren’t aware of when they started their company
• 27% of all entrepreneurs didn’t expect worrying about business risks would be so emotionally draining

The good news is the emotional burden of risk often becomes more manageable as businesses mature.

While 72% of new entrepreneurs say expanding their business has made them feel more vulnerable to risk, that figure drops to 44% among established business owners, suggesting confidence and stability often strengthen with experience.

When business becomes personal

The financial and emotional pressures of running a company often spill into entrepreneurs’ personal lives: 29% say balancing business demands with their personal life is a top source of stress.

For solo entrepreneurs and sole proprietors in particular, the line between personal household and business finances is often blurred, leaving them more financially exposed when unexpected events occur, either at home or at work.

For example, an unavoidable car repair or healthcare bill can force difficult tradeoffs between personal needs and business priorities.

When cash is constrained, insurance may feel like a nice-to-have rather than an immediate necessity, leading some entrepreneurs to delay or forgo coverage. In fact, 25% of entrepreneurs say they have made personal purchases instead of paying for business insurance.

However, the overlap between business and personal finances is exactly why insurance matters.

The right protections can help entrepreneurs weather unexpected challenges without jeopardizing their business goals or personal financial security. For many small business owners, that peace of mind may be more accessible than they realize, as coverage is often less costly than expected.

Entrepreneurs continue to bet on themselves

Business owners may worry about what could go wrong, but they haven’t lost faith in what could go right.

Despite mounting macroeconomic pressures and growing awareness of risk, optimism remains a defining characteristic of entrepreneurship. Half of all entrepreneurs (50%) are very confident they’ll still be in business in five years.

That confidence may be rooted in a natural tendency toward optimism, but it’s also shaped by experience. More than three-quarters of entrepreneurs (77%) say they’ve become more proactive at identifying and managing risks as their company has matured. 

Worrying about tomorrow, believing in the future

One theme appears consistently throughout the data: Economic and business challenges have not diminished the entrepreneurial spirit. Even as many business owners regularly worry about keeping their doors open, they still believe the rewards of entrepreneurship outweigh the obstacles.

Their confidence to take calculated risks often comes from knowing the business is protected against setbacks that can be anticipated and managed.

Secure the future of your small business with ERGO NEXT

Proactively preparing for uncertainty can make it easier to focus on opportunity.

With ERGO NEXT Insurance, small business insurance is within reach for entrepreneurs at every stage. It only takes 10 minutes to apply, and policies start at less than $20 per month — making it easier to protect your business while continuing to invest in its future.

Start a free quote with ERGO NEXT.

Methodology

ERGO NEXT Insurance surveyed 501 U.S. small business owners, founders and sole proprietors about their business risk profiles. The respondent pool consisted of 250 entrepreneurs in their first year of business and 251 entrepreneurs in their first 2-5 years of business. The survey was conducted April 29 – May 12, 2026.

Photo credit: AI photo illustration