Small businesses are the backbone of the American economy, and everyone with a specific start-up idea and the determination to succeed should be given a fair shot to advance professionally.
To compete in a highly competitive industry, small business owners must be exceedingly imaginative, tenacious, and bold. Otherwise, it might be difficult to stand out among the thousands of new small businesses that open every day.
That’s why I’ve put together a list of 10 small business statistics to provide entrepreneurs useful insight into the current small business landscape in the US.
Quick US Small Business Statistics for Entrepreneurs
- There are 32 million small businesses in the US
- Small businesses employ 61 million people
- Women own 43% of small businesses
- 19% of small businesses are minority owned
- 31% of small businesses closed down due to the COVID-19 pandemic
- 30% of small business owners work more than 50 hours every week
- It takes between four and eight days to establish a small business in the US
- Small businesses account for 99.9% of all businesses in the US
- 50% of US small businesses fail within a year
- Small firms with less than 100 workers account for the majority of employment in the United States
US Small Business Statistics
Below is an in-depth look at US small business statistics. These statistics can assist you in understanding what drives small businesses, how they operate, how they affect the economy, and many other details.
1. What is considered a small business in the US?
In the UK, a small business is any business that has an annual profit of less than £6.5 million, has a balance sheet that totals around £3.26 million, and employs 50 individuals or fewer. In the US, however, the Small Business Administration (SBA) defines a small business as a for-profit enterprise with no more than 500 employees and a maximum of $41.5 million in average annual receipts.
2. How many Americans are employed by small businesses?
Small businesses across the US employ a total of 61.2 million people, representing 46.8% of all employees in the country. Also, 25.7 million (81%) small businesses have no employees, while six million (19%) have paid employees.
3. Small business statistics by industry
The professional, scientific, and technical services industries are cumulatively responsible for a larger number of small businesses than any other sector with a total of 4.5 million enterprises.
The management of companies and enterprises industry accounts for the lowest number of small businesses with just 18,553 firms. They are followed by the utilities industry, which has a total of 12,157 small firms.
4. Small business ownership by demographics
Immigrants represent 55% of all unicorn start-ups in the US, that is, start-up companies with a value of over $1 billion. There are four million minority-owned businesses with a cumulative annual profit of $700 billion.
Below is a breakdown of small business ownership under key demographic groups:
- White/Caucasian — 24,759,883
- Hispanic — 3,966,625
- Black/African American — 3,075,551
- Asian — 2,537,835
- Veteran — 1,758,934
- American Indian and Alaska Native — 108,933
- Native Hawaiian and Other Pacific Islander — 45,153
5. Small business ownership by gender
Women own 11.7 million small businesses while 17.4 million firms are owned by men. There are, however, 1.4 million small enterprises that are equally owned by both groups.
6. How COVID-19 has affected small businesses across America
During the height of the COVID-19 pandemic, 3.5 million businesses were started and reached a total of 4.4 million. That’s a 24% increase from 2019 to 2020.
Here are some short statistics on how small businesses were affected by the COVID-19 pandemic:
- By balancing company style with safety, 37% of small enterprises remained open.
- 10% of small businesses shifted to remote operations during the pandemic.
- 59% of entrepreneurs expect the COVID-19 effect to have a two-year impact on their profit margins.
- Only 38% of essential small firms were open during the height of the pandemic.
- 7% of small businesses reopened after closing temporarily.
7. Small business financing
Sixty-four percent of entrepreneurs start out with $10,000 in capital. Also, more than half of small enterprises (56%) are funded by the entrepreneur’s own savings or loans from family or friends.
Roughly a quarter of all small businesses in America succeed despite starting off with no financing whatsoever.
8. Small Business failure statistics
More than half of small businesses fail within the first year, and more than 95% of small firms fail within the first five years. Of those small businesses that fail, 82% fail due to inadequate cash flow. Companies that operate on a seasonal basis are more likely to face this issue than others.
Forty-two percent of failing small enterprises provide items or services that aren’t novel or helpful to the market.
9. What challenges plague small businesses
Companies that conduct thorough competition research are more likely to adapt and enhance their offerings in order to stay ahead of the competition. They offer themselves a higher chance of success by impressing their consumers. That said, 19% of small businesses fail due to competition from rivals.
On the other hand, 23% fail because they do not have a qualified workforce, 17% fail because of a poor business model, while 14% fail because of poor marketing and advertising strategies.
10. Small business marketing statistics
Only 64% of small businesses have a functioning website. Ninety-two percent of business owners agree that having their own website helps with their digital marketing strategy, and 61% of small enterprises have a social media account.
The Final Word
For ambitious entrepreneurs, these small business statistics are critical. The information will assist them in pivoting their business journey and making decisions that will contribute to their success.
It’s critical to stay on top of the most recent statistics so you can eliminate hazards before they become bottlenecks.
Before you get started on your business journey, you need to find a reputable registered agent service that will help you with your business formation process and also keep your business in compliance with the Secretary of State’s office.
Read my review of the 11 best registered agents to find out which company is the best option for your LLC (limited liability company).
Sources
- Small Biz Trends
- US Small Business Administration
- JP Morgan Chase
- Oberlo
- US Federal Reserve
- Census.gov
- US Chamber of Commerce