13 facts from new study [Video]

HONOLULU (KHON2) — Hawaiʻi has long been celebrated for its entrepreneurial spirit, with small businesses playing a vital role in the state’s economy. However, recent data indicated that starting a business in the Aloha State comes with significant challenges.

According to a 2025 LendingTree analysis of U.S. Bureau of Labor Statistics (BLS) data, Hawaiʻi has one of the highest first-year business failure rate in the nation, with 25.4% of new businesses closing within their first year.

Here’s what the study reported.

Top 10 insights into small business failures in Hawaiʻi

1. Fourth highest first-year failure rate in the U.S.: With a failure rate of 25.4%, Hawaiʻi faces notable challenges for small businesses with a one-year failure rate that’s above the national average of 21.5%.

2. Economic factors contributing to failures: High operational costs, including expenses for shipping, real estate, and utilities, significantly impact business sustainability in Hawaiʻi.

3. Limited market size: The state’s geographic isolation and smaller population can limit customer bases, and that affects revenue potential for new businesses.

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