The US is known for making people’s dreams come true, particularly entrepreneurs. Small business statistics reveal that over half a million new businesses launch every year, making the US one of the best countries to start a business. Starting a small business may seem simple, but it requires immense research. That’s why we’ve compiled this list of all stats, facts, and trends you need to know before becoming your own boss.
But first, take a look at some of the most important figures regarding SMBs.
Top 10 Small Business Statistics for 2022
- Small businesses create 1.5 million jobs annually.
- 27.2% of small businesses in the US believe that the pandemic had a significant adverse effect on their business.
- 50.9% of small business owners are aged 50–88.
- In 2020, 45.2% of the small businesses in the US were owned by women.
- 46% of business owners are Gen Xers.
- 31% of small businesses in the US are non-operational due to the pandemic.
- Small business stats show there are about 31.7 million SMBs in the US.
- 42% of small businesses fail because there’s no market for what they offer.
- 83% of small business owners have a yearly salary below $100,000.
- 60% of SMBs owners expected their revenue to grow in 2021.
No matter if you’re thinking about starting your own business or you’re already a business owner, these stats will surely come in handy, so keep on scrolling!
Basic Small Business Facts and Stats
How many jobs do small businesses create each year, and why do people prefer to start their own business?
1. Small businesses create 1.5 million jobs annually.
(Fundera)
In the last thirty years, SMBs that existed for less than a year created approximately 1.5 million new jobs annually.
Furthermore, between 1993 and 2011, SMBs accounted for 64% of new job creations and close to 20% of gross job creation, as per SBA small business statistics.
2. It takes about six days to start a business in the US.
(Finances Online)
Conversely, it will take you fewer than 6 days to start a business in the UK (5 days), Belgium (4 days), Australia (3 days), Canada (2 days), and New Zealand (1 day).
3. Wanting to work for themselves is what motivates 49% of people who start their own business.
(Guidant Financial)
Small business statistics also reveal the following:
- 42% of business owners started their small businesses because of personal satisfaction
- 26% wanted to be their own boss
- 23% wanted to pursue their passion
In contrast, the main reasons for most entrepreneurs to open their own businesses are less personal. In fact, 10% do it because they don’t want to retire.
4. Millennials and Gen Zers are 188% more likely to start a small business as a side-hustle compared to Boomers.
(Oberlo)
New generations of entrepreneurs are more likely to side-hustle. Compared to Boomers, 48% are also more likely to have an idea that they’ll eagerly bring to the marketplace.
5. 804,398 new businesses were created in a single year, at the end of March 2020.
(Investopedia) (Statista)
A great many of these small businesses are bound to fail. Nevertheless, with the proper planning, flexibility, and funding, young enterprises also have a great chance of succeeding and growing.
6. Small business statistics reveal that 57% of SMBs changed their interaction with customers due to the pandemic.
(Salesforce)
To get faster and better service, 49% of SMBs expanded their customer service by using SMS and real-time messaging platforms. Moreover, 49% of SMBs made sure their customers had more flexibility when it came to payment terms.
7. On account of COVID-19, the state of Oregon will hand out $28 million in grants to small businesses.
(Oregon Live)
Oregon small business statistics are encouraging all SMBs with less than 100 workers that have been affected by COVID-19 will be able to apply for the mentioned grant.
8. 22.9% of small businesses in the US believe that the pandemic has had a significant adverse effect on their business.
(Statista)
43.7% believe COVID-19 had a moderate negative effect, 21% claim it had little to no effect, whereas 6.2% of respondents think the pandemic had a moderately positive impact on their business.
In contrast, a mere 1.8% of respondents believe it had a largely positive effect.
9. California is the state with the highest percentage of small businesses — 99.8%, per California small business statistics.
(Small Business Trends)
The Golden State has about 4,203,260 small businesses and 7,129,204 small business employees (48.8% of the workforce), making it the state with the largest number of SMBs in the US.
Next in line are Texas (2.6 million SMBs), Florida (2.4 million), and New York (2.1 million). On the flip side, Wyoming, North Dakota, and Alaska have the lowest number of SMBs.
10. Small business statistics by SBA indicate there are about 32.5 million SMBs in the US.
(SBA) (Lendio)
81% of SMBs have no employees, while 19% have about 6 million paid workers.
What’s more, 77% of small businesses in the US are financed by personal funds, such as personal savings, another 34% are financed by bank loans, and 16% of SBOs borrow from family and friends to stay afloat.
Gender, Race, and Demographics of Small Business Owners
What’s the average age of SMBs owners, and which generation makes the highest percentage?
11. 50.9% of small business owners are aged 50–88.
(Small Business Trends)
When it comes to startups, the average age of leaders is 45, but regarding SMB, more than half of leaders are older than 50. What’s more, US veterans owned 2.5 million small businesses.
On the other hand, stats on small business owner demographics from 2020 suggest 33.2% of owners are 35–49 years old, and 15.9% are younger than 35.
12. In 2020, 45.2% of the small businesses in the US were owned by women.
(UENI)
In comparison, 54.98% of SMBs were owned by men. The percentage of women-owned businesses has been continuously growing. In fact, in three years there has been a steady growth of 5%.
Likewise, women from the US are 40% more likely to start their own business than women from the UK, for instance.
13. Small business statistics show 36% of small business owners are Black or African-American.
(Guidant Financial)
According to the same survey, 24% of respondents also identified as Hispanic or Latino, another 18% identify as Asian-American, 6% as Indigenous American, 4% as Middle Eastern or North African, and only 1% of SMBs owners identify as Native Hawaiian or Pacific Islander.
On that note, 10% of respondents belong to a mixed race.
14. 46% of business owners are Gen Xers.
(Guidant Financial)
Baby Boomers follow suit with 41%, 13% of SMBs owners are millennials, while Gen Z has the smallest percentage of business owners — merely, 1%.
5 Important Small Business Failure Statistics
What are the main reasons why small businesses fail?
15. 24% of SMBs single out the quality of labor as the main problem for their businesses.
(Statista)
Besides the quality of labor, 19% of SMBs blame taxes for their business problems, 13% point their finger at government regulations and red tape, while 8% think the cost of labor and poor sales are the main issues.
Additionally, 7% blame the competition, 6% blame the cost or availability of insurance and inflation, and 1% pin it on finance and interest rates.
15. What percentage of small businesses fail? About 1 in 12 businesses close each year.
(SBA)
Over the past 25 years, between 7% and 9% of SMBs closed down each year.
Why is that?
Well, mainly due to the lack of money. In a nutshell, cash flow problems have been the main issue for 82% of closed businesses.
16. 31% of small businesses in the US are non-operational due to the COVID-19 pandemic.
(Forbes)
Small business statistics on COVID show the pandemic has forced almost a third of small businesses to stop operating.
Sadly, merely 45% of business owners and managers will be able to afford to rehire the same number of workers once they reopen. The percentage is even lower for personal businesses — just 32%.
17. 80% of small businesses make it through the first year.
(Lending Tree)
It’s a widely known myth that as much as half of all new businesses file for bankruptcy in the first year.
Still, the small business failure rate increases with time, resulting in about 50% of them failing after the first five years. After that, only one in three businesses hit the 10-year mark.
18. 42% of small businesses fail because there’s no market for what they offer.
(Lending Tree)
Apart from that, the most common causes of small business failure include:
- Running out of cash — 29%
- Not having the right people on their team — 23%
- Getting outcompeted — 19%
- Pricing and cost issues — 18%
- Unfriendly user-product — 17%
- Poor marketing — 14%
- Lack of passion — 9%
- Legal challenges — 8%
- Failure to pivot — 7%
3 Crucial Small Business Growth Statistics
What do you need to do to make your business grow?
19. You need about $3,000 to start a microbusiness.
(Business News Daily)
Startup costs depend on many factors, yet you can probably fund your own microbusiness if you have some personal savings saved up.
You also need to keep in mind various expenses, from basic supplies and technology to web hosting, rentals, office furniture, and advertising.
20. Warehouses, non-residential buildings, and storage units are the most lucrative for small businesses.
(Guidant Financial)
Warehouses, non-residential buildings, and storage units witnessed a substantial growth of 80.73% in 2021. Moreover, unlike property business failure rates that reached 63%, the self-storage properties fell by a mere 8% over a ten-year period.
21. A good growth rate for a small business ranges between 15% and 45%.
(Baremetrics)
Following the growth rate can tell you how fast your company is growing. You can follow it on a weekly, monthly, or yearly basis.
The growth rate will also depend on the industry. For example, drone companies and fraud detection companies have the largest annual growth rate, 30.4%, and 24.6%, respectively.
Small Business Revenue Statistics
How big or small is the annual small business revenue?
22. 83% of small business owners have a yearly salary below $100,000.
(Fundera)
70% of SMB owners work over 40 hours per week, and 19% work over 60. Yet, they receive no overtime compensation. Another 81% of owners work at night and more than 89% work on the weekends.
So, how much do small business owners make? Sadly, 30.07% of small business owners don’t even make a salary, whereas the average CEO salary in the US is $155,291.
23. The average annual revenue for SMB with no employees amounts to $44,000.
(The Kickass Entrepreneur)
On the other hand, the average annual revenue for SMB with employees amounts to $4.9 million.
24. Small business revenue in 2020 witnessed a decrease of 52% amidst the pandemic.
(Small Business Trends)
In Q2 2020, the average revenue of small businesses amounted to $193,865. This was a significant drop in numbers compared to 2019 when SMB revenue reached $405,030.
Based on the same data, there has been a 54% decrease in payroll expenses as well. In 2019, businesses spent on average $137,126 on payroll, whereas in Q2 2020, they spent about $62,599 on average.
25. Based on the latest small business statistics, 60% of SMBs owners expected their revenue to grow in 2021.
(Small Business Trends)
In comparison, during 2020, only 34% believed their companies would have grown in revenue.
On that note, 21% of small business owners planned to hire new people during 2021.
Small Business Trends
What are the most recent SMB trends?
26. 39% of business owners use cash to start their enterprises.
(Guidant Financial)
Cash is still the most popular form of business financing. That said, 401(k) business financing and assistance from friends and family are also among the leading SMB financing trends, with 20% and 10%, respectively.
27. 60.1% of no-employee businesses are home-based.
(SBA)
Working remotely full-time has become a relatively common occurrence. Half of all SMBs operate from home.
In fact, home-based business statistics from 2019 reveal that this is especially the case with single-employee businesses. Moreover, 23.3% of small employers and 0.3% of large employer firms are also home-based.
28. 96% of SMBs use social media as their primary marketing strategy.
(Fundera) (Hubspot)
Small business marketing budget statistics show that in 2018, businesses spent $27 billion in total on social media advertising. And in 2021, marketing spending was expected to increase by 14%.
Likewise, by 2022, mobile advertising spending should reach over $240 billion.
29. 31% of small business owners have an Associate’s degree.
(Quick Sprout)
Despite small business owners getting higher education, the great majority have an Associate’s degree.
Furthermore, 30% of small business owners have a high school diploma, whereas 18% have a Master’s and another 17% have a Bachelor’s degree. Merely 4% of business owners in 2020 had a Ph.D.
Global Small Business Statistics
How many SMBs operate in the world?
30. Every year there are 5 million new small- to medium-sized enterprises in China.
(Statista)
Since China’s economic reforms, small businesses have been the main driving force of this country’s economy. With the 10% year-over-year growth rate, there were more than 43.03 million small- to medium-sized businesses in 2020.
31. There are 936 unicorn companies in the world.
(CBinsights) (Tracxn)
The US is the leader with 489 unicorn companies, followed by:
- China (172 unicorns),
- India (62 unicorns),
- the UK (43 unicorns), and
- Germany (27 unicorns).
The largest number of $1bn value startups in the US can be found in the fintech sector (79 unicorns), with cryptocurrencies leading the way. San Francisco, California, currently has the highest unicorn activity in fintech (25 unicorns).
32. There are 5.9 million private sector businesses in the UK.
(GOV.UK)
According to the small business statistics for the UK, they account for 99.9% of all businesses. The majority of these businesses, 5.82 million, are small businesses that have fewer than 50 employees.
33. In 2020, 58,000 businesses in Canada became inactive due to the pandemic.
(CFIB)
By the end of the pandemic, 1 in 5 businesses in Canada could permanently close. What’s more, 1 in 6 small business owners is considering the possibility of permanently closing their businesses.
So far, Ontario has the smallest number of fully opened businesses.
FAQs
What is the percentage of small businesses in the US?
99.9% of businesses in the US are small businesses. That said, the definition of a small business varies from country to country.
According to the Small Business Administration (SBA), small businesses have fewer than 500 employees. In contrast, the EU defines a small business as a company with fewer than 50 employees.
How many small businesses are there in the US in 2020?
There are 31.7 million small businesses that employ 60.6 million people and account for 47.1% of the country’s total workforce.
California has the highest number of small businesses (4.2 million), followed by Texas (2.6 million SMBs), Florida (2.4 million), and New York (2.1 million).
Professional, scientific and technical services, construction, real estate, and retail are among the industries that have the largest number of companies.
How many small businesses in the world are there?
Data shows that 90% of global businesses are small businesses. They provide 50% of the total employment, creating 7 out of 10 jobs and accounting for 40% of the GDP in developing economies.
The pandemic had the biggest impact on Spanish, Italian, and UK SMEs. In other words, 33% of Spanish and 30% of Italian and UK small- and medium-sized enterprises saw a decrease in revenues due to COVID-19.
How do small business owners pay themselves?
Generally, owners’ salaries are taken from the business’ profit. Yet, how business owners pay themselves mostly depends on how the business is structured.
For instance:
- Individual entrepreneurs pay themselves on a draw.
- Partners pay themselves on distribution or guaranteed payments.
- C and S corporation owners pay themselves on distribution payments or salaries.
Do small business owners get tax refunds?
Getting a tax return depends on the structure of a business. Entities that can get a tax return include:
- Sole proprietorships that report their income and expenses on the owner’s individual tax return.
- Unincorporated businesses with two or more owners.
- S corporations — entities that pass the taxable business income through to their shareholders.
What is the success rate of small businesses?
The success rate of small businesses within the first year amounts to 80%. This means that only 20% of SMB fail within the first 12 months. Be that as it may, 50% of SMB survives within five years, and merely one-third of small businesses survive within 10 years.
Restaurants have the highest failure rates when it comes to the industry. In contrast, alternative energy, health care, and information security have the highest survival rates.
What percent of US businesses have less than 50 employees?
While most small businesses in the US have less than 500 workers, 98.2% of small businesses have fewer than 100 employees, and 98% of small businesses have less than 20.
That said, small businesses in the US create about 1.5 million jobs each year, accounting for 64% of new jobs.
Conclusion
Small business statistics reveal the truth — SMBs are slowly, but surely, growing and conquering the business world. The US is most definitely the leader in all trends, but the rest of the world isn’t too far behind.
Nevertheless, the risks of starting an SMB are still great — hence why we hope this list of stats helped you plan your business strategies to assist you in becoming a successful entrepreneur.
Sources:
- Baremetrics
- Business News Daily
- CBinsights
- CFIB
- Finances Online
- Forbes
- FreshBooks
- Fundera
- Fundera
- Fundera
- Fundera
- GOV.UK
- Guidant Financial
- Guidant Financial
- Guidant Financial
- Guidant Financial
- Hubspot
- Investopedia
- Lending Tree
- McKinsey
- Oberlo
- Oregon Live
- Quick Sprout
- Salesforce
- SBA
- SBA
- SBA
- SBA
- Small Business Trends
- Small Business Trends
- Small Business Trends
- Statista
- Statista
- Statista
- Statista
- The Kickass Entrepreneur
- Tracxn
- UENI
- World Bank
