Restaurants are the most popular type of startup for new entrepreneurs, new research finds.
In 2014, the number of restaurants opened was more than 50 percent the number of businesses started in the next most popular industry for startups, according to a study from Experian, a global information services company.
Specifically, 10.6 percent of all new small businesses launched last year were in the restaurant industry, which is more than double the second-most popular industry, personal services.
Overall, the five most popular industries for startups last year were:
- Restaurants – 10.6 percent
- Personal services – 6.9 percent
- Miscellaneous retail – 6.6 percent
- Business services – 6.3 percent
- General contractors – 5.5 percent
However, just because entrepreneurs are most interested in these types of businesses doesn't mean these industries will have the best chance at success. The analysis found that while the restaurant and personal services industries were among the most popular, they also had the two highest rates of failure in 2014.
The other industries where startups struggled the most were special trade contractors, general contractors and business services. [How to Start a Restaurant ]
Peter Bolin, Experian’s director of consulting and analytics, said it's important to understand trends in the small-business sector because they are such a critical component to the growth and success of the economy.
"By gaining insight into newly formed businesses, potential entrepreneurs and lenders can use the data to their benefit," Bolin said in a statement. "Entrepreneurs can get an idea of which industries are most popular (and potentially more competitive), while lenders can better understand specific industries that are experiencing a higher growth rate."
Overall, the number of new small businesses being started each year is on the decline. The analysis revealed that16 percent of all small businesses in 2014 were newly formed, down from 29 percent in 2010.
"During the height of the recession, there was an influx of businesses opening, presumably due to layoffs and skyrocketing unemployment," Bolin said. "While many of these consumers-turned-entrepreneurs may have started their own venture out of necessity as a way to bring in income, as the economy has improved the rate of new business startups has returned to a more consistent pace."
The study was based on a sample population of 1 million small businesses between 2010 and 2014.