The US is known for making people’s dreams come true, particularly entrepreneurs. Small business statistics reveal that over half a million new businesses are launched 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 Eye-Opening Small Business Facts and Stats
- Small businesses create around 1.5 million jobs annually.
- Microbusinesses account for 75.3% of all private-sector employees.
- About 1 in 12 businesses close each year.
- 80% of small businesses make it through their first year.
- You need about $3,000 to start a micro-business.
- 86.3% of small business owners have a yearly salary below $100,000.
- Women-led businesses generated $1.8 trillion in revenue in 2018.
- 60.1% of no-employee businesses are home-based.
- 44% of business owners are Gen Xers.
- There are 5.9 million private sector businesses in the UK.
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 scrolling.
Basic Small Business Statistics
1. Small businesses create 1.5 million jobs annually.
In the last thirty years, SMBs that existed for less than a year created 1.5 million new jobs annually. Furthermore, between 1993 and 2011, SMBs accounted for 64% of new job creations and close to 20% gross job creation.
2. Wanting to work for themselves is what motivates 49% of people that start their own business.
Small business statistics from 2019 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
3. Millennials and Gen Zers are 188% more likely to start a small business as a side-hustle compared to Boomers.
New generations of entrepreneurs are more likely to side-hustle; compared to Boomers, small business trends from 2019 show that 50% are also more likely to have an idea that they’ll eagerly bring to the marketplace.
4. 774,725 new businesses were created in a single year, at the end of March 2019.
Unfortunately, a great many of these small businesses are bound to fail. Nevertheless, with the right planning, flexibility, and funding, young enterprises also have a great chance of succeeding and growing.
5. Microbusinesses account for 75.3% of private-sector employees.
Small business stats reveal that microbusinesses — those that have up to 10 employees — are the most common type of small businesses in the US. Moreover, there are more than 3.7 million microbusinesses that provide 11.5% of jobs in the private sector.
Small Business Failure Statistics
6. About 1 in 12 businesses close each year.
If you were wondering what the small business success rate is, over the last 25 years, between 7% and 9% of SMBs closed down each year. What’s more, cash flow problems have been the main issue for 82% of closed businesses.
7. 31% of small businesses in the US are non-operational due to the COVID-19 pandemic.
Small business statistics reveal that COVID 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%.
8. 80% of small businesses make it through the first year.
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.
9. 42% of small businesses fail because there’s no market for what they offer.
Apart from that, the most common causes of 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%
Small Business Growth Statistics
10. You need about $3,000 to start a microbusiness.
Startup costs depend on many a factor, yet if you have some personal savings saved up, you can probably fund your own microbusiness. In fact, half of all business owners get to fund their own startups.
Bank loans are also a good option for financing a business, although a quarter of businesses use no financing whatsoever.
11. The business service industry is the most lucrative for small businesses.
Printing, PC servicing, and office product sales had a $9.5 billion revenue in 2018 alone. Small business statistics for 2020 by the SBA indicate that it would be a good idea to start a business in this industry in 2020 as well. Additionally, the food and restaurant industry, the retail industry, and the health, beauty, and fitness industries are also highly profitable.
12. It’s projected that the healthcare and social assistance industries will grow by 21% by 2024.
If you want to secure your small business growth, the safest route is the healthcare and social assistance industries. Not only do these industries have the lowest failure rates, but they also have the fastest job growth rate compared to other industries.
Small Business Revenue Statistics
13. 86.3% of small business owners have a yearly salary below $100,000.
More often than not, SMB owners work way over the national average of 36.8 hours per week yet receive no overtime compensation. So, how much do small business owners make? Sadly, 30.07% of small business owners don’t even take a salary, whereas the average CEO salary in the US is $163,000.
14. Women-led businesses generated $1.8 trillion in revenue in 2018.
Small business statistics from 2018 highlight that this is merely 4.3% of the private sector revenue. Moreover, businesses led by women of color generated $386.6 billion. Lastly, women-led businesses employ some 9.2 million people in the US.
15. As of 2016, there are 36,161 single-employee companies that have a million to $2.49 million in revenue.
Industries that are most likely to generate this kind of revenue and become a part of small business success stories include professional services, construction, retail, real estate rental and leasing, and healthcare and social services.
Small Business Trends
16. Cash is still the most popular form of business financing.
According to the most recent statistics, 37% of business owners use cash to start their enterprises. However, 401(k) business financing and assistance from friends and family are also among the leading SMB financing trends, with 13% and 10% respectively.
17. 60.1% of no-employee businesses are home-based.
Working remotely full-time has become a rather common occurrence. Half of all SMBs operate from home. Home-based business statistics for 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.
18. 44% of business owners are Gen Xers.
Baby Boomers follow suit with 41%, whereas Millennials and the Silent Gen have the smallest percentage of business owners. In addition, recent data also shows that the number of female-led businesses grew to 27%.
19. 47% of SMBs spend under $10,000 per annum on digital marketing.
According to small business marketing budget statistics, this means that the majority of small businesses have extremely small to non-existing budgets. The money they invest usually goes towards social media marketing, email marketing, and creating a website.
20. 31% of small business owners have an Associate’s degree.
Despite small business owners getting higher education, the great majority has 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. Only 4% of business owners in 2020 had a Ph.D.
Global Small Business Statistics
21. A few years ago, it took 29 days to start a business in India, but it should be minimized to 5 days.
Only recently you needed 29 days and over 12 procedures to start a business in India. Today, you need 18 days and 10 processes, and the government is working on cutting it down to 5 days and an equal number of processes.
22. There are 5.9 million private sector businesses in the 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 less than 50 employees.
23. Every year there are 5 million new small- to medium-sized enterprises in China.
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 38 million small- to medium-sized businesses.
24. China also has more “unicorn” startups than the US.
If we combine the number of privately-held startups from China and the US, small business statistics reveal that they have the most “unicorns” in the world. However, in 2019 China had 206 unicorns, outnumbering the US by 3.
What percentage of US businesses are small businesses?
99.9% of businesses in the US are SMBs. The definition of a small business varies from country to country. According to the Small Business Administration (SBA), small businesses have less than 500 employees, whereas the EU defines a small business as a company with less than 50 employees.
How many small businesses are there in the US in 2020?
There are 30.2 million small businesses that employ 58.9 million people and account for 47.5% of the country’s total workforce. Construction, real estate, rental, and leasing are among the industries that have the largest number of companies.
How many small businesses in the world are there?
Small businesses are important in every economy, but they have a huge role in developing economies. 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.
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.
- 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 is another thing that 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 and more owners.
- S corporations — entities that pass the taxable business income through to their shareholders.
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.