Currently, about 137,000 new businesses are started every day. Out of the many small business statistics out there, this one is surprising for many. This means that millions of businesses take their first steps every year.
If you’re on the journey toward entrepreneurship and would like to make the best of the opportunity you’ve been given, it’s essential that you keep up with the data. Read on to discover more!
Top 10 Small Business Stats
- There are more than 30 million small businesses in the US.
- 99.9% of businesses in the US are small businesses.
- About 50% of small businesses are operating from home.
- 30% of small business owners work over 50 hours a week.
- 83% of small business owners earn less than $100,000 a year.
- Only 30% of small businesses break even.
- Over 95% of startups fail within five years.
- Women-owned small businesses earn $1.8 trillion in revenue.
- Immigrant-owned businesses make up 25% of new businesses in the US.
- As of 2021, Hispanics own 13.3% of US small businesses.
Small Business Statistics for the US
The small business industry in the US makes a significant contribution to the economy. It creates jobs, increases the employment rate, provides people with stability, and more, and the latest data proves it.
1. There are more than 30 million small businesses in the US.
As of 2019, there are over 30.7 million small businesses in the United States. They opened 1.8 million net new jobs and employed 59.9 million people in 2019 alone, which was 47.5% of the country’s workforce.
2. 99.9% of businesses in the US are small businesses.
Small businesses employ less than 500 workers and provide employment to millions of people. All across the States, communities rely on small businesses for jobs, goods, services, and the overall well-being of the economy.
3. Most small businesses in America have less than 500 employees.
According to the SBA, a majority of small businesses have significantly fewer employees than 500. In fact, 98.2% of small businesses have fewer than 100 employees, while 89% of total businesses in the country have less than 20.
4. The definition of small business is not consistent across the world.
In the US, the SBA defines a business as a “small business” when it has less than 500 employees. In comparison, Australia describes a small business as any business that has fewer than 15 employees. The European Union and the UK, on the other hand, describe small businesses as any company with less than 50 employees.
5. About 50% of small businesses are operating from home.
This number goes even higher for nonemployer firms — 60.1%. Since most people have an internet connection, setting up their businesses at home is convenient, especially for those businesses that don’t require a compulsory brick-and-mortar existence.
6. 30% of small business owners work over 50 hours a week.
The survival and growth issues of a small business are entirely different from the hardships of being employed and working for someone else. Data also suggests that 20% of small business owners also work 60-hour weeks or more. Additionally, 80% of them say they feel they’re working too much. Not to mention working the odd hours and weekends.
Small Business Growth and Financing
Most small business owners are optimistic, and 84% of them believe that their businesses will have success in the future. Let’s see what the data says!
7. The majority of small businesses start with less than $10,000 in capital.
According to small business stats, more than 73% of small businesses were also launched with no outside funding. Even though these entrepreneurs would probably like to have a larger capital to start their businesses, they use creative strategies to keep their expenses to a minimum.
8. 43% of full-time operating businesses had less than $50,000 in annual sales in 2020.
Small business revenue statistics showed that the pandemic was particularly hard on small businesses. Comparing the data with previous years, we discovered that only 37% of small businesses had less than $50,000 sales in 2018.
9. 83% of small business owners earn less than $100,000 a year.
Small business owners earn less than average CEOs. Typically, a CEO in a corporation would make more than $100,000 a year, while small business owners’ average annual salary in 2019 was $66,373. In fact, more than 30% of small business owners don’t take salaries to begin with.
10. Only 30% of small businesses break even.
According to the attest data, only 40% of small businesses are likely to be profitable.
However, around 30% of them can break even, while 30% of small businesses go into loss and start losing money.
11. Small and medium-sized businesses drive economic growth.
Small business facts show that more than 90% of businesses in the States represent small and medium-sized businesses. High in numbers, these businesses drive economic growth, create jobs, and bring in investment.
Small Business Failure Statistics
Becoming an entrepreneur is a risky step, especially when the stats reveal that more than half of small businesses fail within the first year. These stats may be bleak, but knowing them might save you from failure.
12. Over 95% of startups fail within five years.
Even though millions of businesses are launched each year, small business data suggests that not many of them survive. In fact, less than 50% of new small businesses fail within the first year. Out of the 50% of small businesses that make it through the first year, only 9% survive over ten years.
13. Approximately 1 in 12 small businesses close every year.
Setting up a small business is easier than sustaining its operations and profitability. This is why one in 12 small businesses wrap up their operations every year. These numbers have been trending down over the years, but they’re still pretty high.
14. 27% of small businesses don’t receive the required funding to continue operating.
The lack of funding is preventing these small businesses from growing, which is especially noticeable for women- and minority-owned businesses. Unfortunately, this leads to some small businesses closing their doors for good.
15. Most small businesses fail due to cash flow issues.
Running out of cash or failing to raise capital seems to be the leading cause of small business failure, with 38% of failed businesses citing it as a reason. Some other reasons behind business failure include:
16. Among failed small businesses, 35% of them didn’t have receptive market offerings.
The point of any business to establish its roots is to provide its audience with a product or service that fulfills a need or relieves a certain pain point. 35% of small businesses that fail are in this situation because they offer products or services that have no meaning for their customers.
Female and Minority Entrepreneurship
Hard work, determination, and dedication to your passion pay off. Women, minorities, and immigrants are breaking the glass ceiling and taking over the small business industry step by step.
17. More than 12 million women in the United States are small business owners.
Compared to the market that took shape more than a decade ago, it was difficult for women to own a business. Today, more than 12.3 million small businesses are owned by women in the US. Moreover, stats show that women-owned small businesses are responsible for employing close to ten million people.
18. Women-owned small businesses earn $1.8 trillion in revenue.
According to the small business statistics revealed by Women’s Business Enterprise National Council, women-owned businesses generate $1.8 million in revenues, which makes up just 4.3% of the total private sector revenue.
19. Immigrant-owned businesses make up 25% of new businesses in the US.
Interestingly, small business data shows that immigrant-owned businesses account for over 40% of new businesses in New York, New Jersey, and California. On the other hand, they make up less than 5% in North Dakota and Idaho.
20. As of 2021, Hispanics own 13.3% of US small businesses.
According to Hispanic small business statistics, the minority owns 3,966,625 small businesses, out of which 331,625 are with employees. Other minority-owned businesses include:
- American Indian and Alaska Native — 108,933 owned businesses
- Asian — 2,537,835 owned businesses
- African American — 3,075,551 owned businesses
How many small businesses were there in the US in 2020?
According to the SBA, more than 30.7 million small businesses are currently operating in the United States. They make up 99.9% of the total number of different types of businesses operating in the country.
Why do small businesses fail?
More than 35% of small businesses fail due to a lack of demand for their product or service. Cash flow issues such as a lack of liquid cash cause 38% of small businesses to fail. Other causes include human resource issues, cost, and competition.
Why are small businesses important?
According to the SBA, the small business industry in the US is responsible for over 59 million jobs and makes up the significant (99%) portion of overall businesses in the country. Considering the number of jobs they create and their contribution to the overall economy, small businesses are critical for the United States.
The Bottom Line
These small business statistics are crucial for aspiring entrepreneurs. The data will help pivot their journey, helping them make decisions that will contribute to their success. It’s essential to keep an eye on the latest numbers so that you can mitigate risks before they become bottlenecks.