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What percentage of UK businesses fail?

A few years ago I took my family to Kenya and we got the most spectacular view of Kilimanjaro. If you actually want to climb it you have to go round to Tanzania, to Kilimanjaro National Park, where the welcome at the gate is a karibu sana. A warm one. And the person on that gate checks exactly one thing: that you have paid to come into the park. Not your kit. Not your food, your guide, your physical fitness, or whether your head is anywhere near the right place for the highest point in Africa. You paid. In you go.

Starting a business in the UK works the same way, and I think about that gate every time somebody tells me they have just registered a company. Incorporate, register for taxes, open a bank account, all of it quick and fairly painless. Nobody inspects the kit.

A note on the film: the business-failure percentages spoken in the talk are not the ONS figures. For UK survival rates, use the dated ONS figures on this page.

What percentage of UK businesses fail?

Start with a cohort, not two unrelated totals. The Office for National Statistics Business demography release follows businesses born in the same year. Its latest five-year result says 38.4% of UK businesses born in 2019 survived into 2024. The population is businesses registered for VAT or PAYE on the Inter-Departmental Business Register, not every company on the Companies House register.

In this series, a business is active when it had turnover or employment during the year. A business death means it ceased to trade, identified through deregistration of its administrative units. The ONS estimates reactivations and revises the latest death figures, so this is a more appropriate survival measure than dividing today's Companies House live-register count by a separate incorporation total.

The same release recorded 317,000 business births and 280,000 business deaths in 2024 (the deaths figure is provisional). Those figures describe annual churn across businesses of many ages; they are not a survival rate and should not be divided into each other. Nor does the five-year figure tell us that every non-survivor failed financially. Some closures are planned or voluntary, and the release does not assign a reason to each death.

Why cash still deserves your attention

The ONS survival statistic does not tell us why each business stopped trading. In my work with owners, though, cash timing is the recurring practical problem: money runs out before the idea has had enough time, or before profit has turned into cash. That is practitioner experience, not a causal finding from the ONS data.

The detail underneath it is the part that stays with me. An owner can fund the business, work it and still close without recovering the capital they put in. The survival percentage cannot predict that outcome for any one company, but weekly cash visibility can make the warning harder to miss.

The squeeze arrives from one of three directions, and it helps to know which one you are in. The revenue side, which is whether enough is coming in at all. The cost side, which is whether what comes in survives contact with what you spend. And working capital: stock, what customers owe you and what you owe, and when the money comes in against when it goes out. A quiet trap, that one, because a business can be perfectly profitable and still run out of cash. Behind all three sits a question most owners never get asked: is this business funded properly for what it is trying to do? You want the answer while you can still act on it, not on the morning a payment fails. It is a position you can measure, not a feeling.

The Kilimanjaro rule

I climbed Kilimanjaro back in 2002 with a friend. We took the popular route up the mountain, otherwise known as the Coca-Cola route: A-frame huts, some great food, proper hospitality. On summit day we got a spectacular view when we made it up to the summit crater, and a couple of hours later we came round the crater to the high point at 5,895 metres. For the last few steps it was particularly difficult to take a single step in that thin air. One step. Then a wait, then another.

Kilimanjaro is not one of the tallest mountains on the planet. What gets you is the amount of ascent in a very short space of time, and that is why the figure I have seen quoted for the five-day trek is that only 30% of people make the summit. Three and a half days up, a day and a half down. Give yourself one extra day and, on the same figures, it is still only one in two.

And yet there are guided companies out there that claim one hundred per cent success rates. Same mountain, same thin air. The difference is conditioning: how they work with their clients before the climb and then on the climb itself.

That is the whole rule. Entry is easy and it is meant to be easy; the mountain does the selecting afterwards. So the question is never whether you were allowed in. It is whether anybody is watching your vital signs on the way up.

What the survivors watch weekly

One of my motivations as a finance director has been finding the way to give an owner real visibility from the day they start and right across the life cycle of the company. Not only what the cash position is today, but the things that squeeze that cash, push a business towards a distress point and eventually close it.

In practice that is four things, watched often enough to act on. What is genuinely yours: the bank balance plus what you are owed, less everything you owe, VAT, PAYE and suppliers included. What a month of running this business costs. How many months of cover those two give you, which is your cash cushion. And the timing: what is due in, what is due out, in which order. Weekly is the rhythm. A quarter is far too long to find out.

The word for all of that is an alarm system: something that tells you where you are at each point in time, so you have time to remedy it. An alarm that goes off early is a plan. One that goes off at the end is just bad news arriving on schedule. The warnings are often there first.

You can build every bit of this in a spreadsheet, and if you will genuinely keep it up to date every week, do that and ignore me. If you will not, that is the reason Own Your Numbers exists. It reads your Xero, works out your cash, net cash, cost base and cushion, and sends you the answer every Monday with a risk rating and the few things to do this week. That is the Weekly Cash Score. A minute to read, and it cannot change a thing inside your Xero.

Because in the simplest terms: let's stop guessing and start owning.