The Small Business Administration (SBA) defines a small business as a company that has no more than 500 employees. Small business statistics reveal that the number of businesses that fall into this category may be much higher than reported.
The concept of small businesses may differ from region to region. For instance, the EU considers any company with no more than 50 workers as a small business. Likewise, small businesses in Australia have fewer than 15 employees.
The vast majority of companies in the US have fewer than 500 workers. Also, almost all esteemed startups in the US fall into this category. Let’s take a look at some exciting facts and stats about small businesses.
Top Small Business Statistics and Facts (Editor’s Choice)
- It takes four days to start a small business.
- Small businesses create 64% of new jobs.
- 43% of cyberattacks are directed at small businesses.
- 31% of small businesses stopped working temporarily because of the COVID-19 pandemic.
- 44% of business owners belong to the Gen X generation.
- 42% of small enterprises fail due to the lack of market demand.
- 38.71% of small business owners have a college degree.
Small Business Statistics 2020
It’s astonishing how many people dream about having their own company. This would serve as a fantastic opportunity to bypass somebody else’s rules, concepts, pressure, accompanying stress, and even burnout.
Considering that a growing number of people want to be in the driving seat, it’s no wonder that they decide to go on this journey. If you’re thinking about becoming a business owner, check out these impressive stats and facts.
1. Small businesses account for 99.9% of all US businesses.
Small businesses account for almost 100% of American companies. The whopping 30.7 million is the figure that shows how many small businesses in the US there were in 2019. It’s more than obvious that they are the driving force of job growth in the States.
Since a small business is defined as an organization that has up to 500 employees, small companies are not the only ones in this category. Nearly all prominent startups in the US are also classified as small businesses.
2. Small businesses create 64% of new jobs.
Small business employment statistics uncover astonishing figures. Small companies create around two-thirds of new job positions.
This percentage further shows that 1.5 million people got their jobs thanks to small businesses.
3. 550,000 new businesses are launched every month.
On a yearly basis, this figure amounts to approximately 6.6 million. Unfortunately, not all companies make it in the long run, as the initial two years are vital for a business’s survival.
4. There were 30.7 million small businesses in 2019.
As the number of small businesses in the US by year reveals, 2019 has witnessed the highest number of small businesses so far — over 30 million. There has been a steady increase since 2017 and 2018 when there were 29.6 million and 30.2 million small businesses, respectively.
What’s more impressive about these companies is that they generate a whopping 1.5 million jobs annually.
5. For 55% of small business owners, the greatest motivation to start a company was to be their own boss.
Of the total percentage of small businesses in America, over 50% were started because their owners were motivated by the idea of being their own boss.
Likewise, 39% started their business because they wanted to follow their passion. Other reasons involve dissatisfaction with large firms and corporations and a lack of retirement preparation.
6. Launching a small business in America takes four days on average.
US small businesses statistics show that starting a small business in any state is relatively easy and straightforward. Namely, it takes four business days to launch a small business.
It’s not much of a surprise that, in the US, over 550,000 businesses are launched every month, amounting to 6.6 million on an annual basis.
7. Small businesses employ 58.9 million Americans.
Even though we’re talking about small businesses, the number of employees working in such companies is far from small. Namely, a little less than 60 million employees work in small companies. According to the SBA definition, a small business may have up to 500 workers.
However, the great majority of such companies (98.2%) have up to 100 employees. These figures further imply that almost all American workers are employed in one of the small companies across the US.
8. A small business has 10 employees on average.
The average number of employees in a small business is 10. This average is related to companies that have at least one employee. Small businesses typically have between one and 19 employees, and they account for the majority of small businesses with employees other than business owners.
Small businesses with more than 19 employees account for just a fraction of the overall number. They typically have between 20 and 499 employees. Figures that show how many employees there are in a small business go as follows:
- 5,305,960 small businesses have 1–19 workers
- 629,025 small businesses have 20–499 workers
9. 43% of cyberattacks are targeted at small businesses.
Cybersecurity mustn’t be taken lightly. Any company can become a victim of a cyberattack, regardless of its size, importance, or influence on society.
Big corporations have come to realize the danger of the online world, and they have taken measures to protect themselves. Unfortunately, the same can’t be said about small businesses.
Small business cybersecurity statistics show that small businesses frequently fall victim to cyberattacks. What’s more, 60% of hacked businesses shut down within only six months. The reason behind these shocking figures is that, unlike big corporations, small businesses can’t afford proper protection against cyberattacks.
10. Only 14% of small businesses manage to mitigate cyberattack risks effectively.
It’s no secret that efficient protection against cyberattacks can be rather costly. Therefore, small businesses don’t manage to take all the necessary steps. However, not all business owners take cybersecurity seriously, which explains why cybercriminals have been so successful.
So, if you are curious about how many small businesses in the US really manage to mitigate the risks of cyberattacks, the answer is only 14%.
11. 44% of small enterprise owners are 39–54 years old.
Not all people are ready to be entrepreneurs. Some are more daring and courageous, while others seem to fear the risk of failing. In terms of generations, Gen Xers and Baby boomers appear to be most audacious and confident to start a small business.
According to small business owners statistics, members of Generation X account for 44% of US small enterprises. Baby boomers (55 to 73 year-olds) are next in line at 41%, followed by Millennials (23 to 38 year-olds) at 12%. Only 2% of small business owners are 74 and older.
12. Millennials are 188% more likely to have a side business.
The younger the owner, the less afraid they are to engage in a side job. Statistics on small businesses reveal that new generations of business owners are quite prone to side-hustling.
On the other hand, our millennials in the workplace numbers show that this age group, along with Gen Z, Namely, is more likely to launch a side business than Baby boomers.
13. 27% of small business owners are women.
The number of female business owners increased by 4% year after year only to reach a figure of 27% in 2020, according to small business growth statistics.
Even though this growth is somewhat slow, it’s consistent. The number of women in small businesses has been rising steadily since 2017.
Men still make up the majority of small business owners (73%), which some may find a bit discouraging. But, what is undoubtedly shameful is the fact that women-owned businesses make 61% less than those owned by men.
In figures, female-owned companies make only $150,000 per year compared to $400,000 that male-owned businesses generate.
14. Only 8% of small business owners regret launching their companies.
Statistics on a small business show that a vast majority of business owners are happy with their decision to start a business. Only 8% of small business owners regret doing it, while 92% are satisfied with their choice.
15. 19% of small business owners work over 60 hours per week.
All business owners want their small business to be lucrative and prosperous, especially at the very beginning.
Therefore, it’s normal for some owners to work over 60 hours a week. What’s more, 89% of them work weekends, whereas 81% work at night.
Small Business Failure Statistics
One of the greatest fears of business owners (and people seeking to launch a business) is a breakdown, i.e., how long a business will last before it eventually fails. As small business failure stats indicate, the initial few years appear to be the most difficult and decisive.
In fact, the figures and percentages speak for themselves. Check them out to gain insight into the small business survival rate.
16. 20% of small businesses fail within one year.
The beginning is always the hardest, and companies are no exception. This could be one of the primary reasons why people are afraid of business ventures. It takes time and a lot of effort for a business to prove its stability and quality and gain clients’ trust. Success and profit never come overnight.
A small business success rate suggests that the longer the company is on the market, the most likely it will stay in business. The first several years are the hardest. That’s the reason why 30% of companies fail in the first two years. Still, only 0.5% reported accepting outside funding.
Similarly, 50% of small businesses fail after the first five years, while 70% fail after 10 years. This leaves us with 30% of companies that last more than 15 years. According to the Bureau of Labor Statistics’ small business failure rate, these statistics are relatively consistent, regardless of the industry.
17. 42% of small businesses fail due to the lack of market demand.
The first thing business owners have to consider is whether their potential customers need their products. The leading cause of business failure is a lack of product demand on the market. Nearly half of businesses fail because of this very reason.
Another typical cause is a lack of funds. Namely, the failure rate of small businesses shows that 29% of small businesses fail because of finances.
Other reasons include being outperformed by the competition, unfriendly products, and cost-related problems. But what might be somewhat surprising is that the inability to find a good team may severely impact the survival rate. Namely, many small business owners listed this as a significant issue that has negatively affected their business.
18. 52% of business owners list labor quality as a major problem for small businesses.
Answering the question of how many small businesses in the US manage to survive is not easy because many factors contribute to the outcome. Still, over 50% of small business owners cited poor labor quality as the greatest challenge they face.
In fact, they named the lack of quality workforce as the primary problem for their business’s success as it’s rather challenging to find qualified employees.
19. The COVID-19 pandemic forced 31% of small businesses to close.
As for the United States’ small business statistics, almost one-third of small businesses are temporarily non-operational. More than 70% of small businesses had to close in March 2020, when America became the new coronavirus epicenter.
Over 60% of them were forced to close because of the health authority and government’s orders when the country was on lockdown to reduce the spreading of the virus.
20. Retail and business services comprise 13% of the small business industry.
Small businesses successfully cover plenty of different industries. According to US small business statistics, retail and business services make up 13%, while construction and contracting comprise 12% of the total share.
Among the top five are the food and restaurant industry, as well as residential and commercial services. Each comprises 9% of the total share. These industries have been hitting the top positions for several consecutive years and show no signs of slowing down.
Marketing and Advertising Small Business Statistics
Every year, 6.5 million small businesses emerge across the States. This colossal figure shows that small businesses need to find a way to stand out. Digital marketing and social media are excellent tools to allow your enterprise to bloom.
However, not all business owners are aware of the significance of investing in marketing. Additionally, they’re still doubtful about digital marketing and social media’s efficiency in the long run.
21. Just 64% of small enterprises have their website.
Small business stats uncover that 92% of small business owners believe that a website is the most efficient marketing strategy. However, only around two-thirds of them have a website.
Those who have invested in a website expect that investment to pay off. Namely, 79% of businesses with a site hope to grow by 25% within the next three to five years.
22. Only 61% of small businesses invest in social media marketing.
According to small business marketing budget statistics, business owners have mixed feelings about advertising. Some have come to realize how important an online presence is, while the same can’t be said for others.
Namely, 47% of small enterprises invest less than $10,000 a year in advertising and digital marketing. It’s more than evident that some entrepreneurs don’t understand the connection between marketing and lead generation. Furthermore, the same percent of small businesses in America handle marketing on their own.
35% of small businesses say they are too small and insignificant to have a website. This further suggests that over one-third of small businesses seem to lack confidence in what they do.
23. 64% of small business owners seek business advice on social media.
It’s rather interesting that almost two-thirds of business owners are keen on seeking business advice on social media, but only 61% are willing to invest in social media marketing.
Small Business Revenue Statistics
We all know that big corporations make millions per year. But have you ever wondered how much small businesses make? You will be surprised by the figures, as they are far smaller than you might have expected. However, they are far higher than the average salary in the US.
Check them out.
24. A small business owner earns $71,813 annually on average.
Contrary to popular belief, business owners don’t make millions. In fact, the average business owner’s salary amounts to slightly over $71,000 a year. About 86% of owners earn less than $100,000 per year, as small business revenue statistics show.
Furthermore, entrepreneurship figures indicate businesses that have no employees make significantly less per year. Their annual salary amounts to $46,978.
25. Just 40% of small businesses are lucrative.
It would be slightly ludicrous to expect a huge profit right after starting a business. Prosperity takes a lot of time and effort. However, not all companies manage to live up to their owner’s expectations.
At some point, only 40% of companies become lucrative. 30% begin losing their money, while the remaining 30% break even.
26. 72% of small business owners are confident in the bright outlook for their businesses.
Despite the coronavirus pandemic, the success rate of small businesses shows that over 70% of business owners are quite optimistic about their companies’ future. What’s more, business owners want to grow their businesses and are ready to work hard to achieve their goals.
27. 64% of small businesses began with a capital of only $10,000.
The average amount of money needed to start a business is $10,000 or even less. As for the United States small business statistics, over two-thirds of businesses were launched with that amount.
Furthermore, 75% of small business owners used their savings to launch their business. What might be surprising is that, in some cases, a business can be started with as little as $100, provided that a great deal of time, devotion, and energy is invested.
28. There are 4.1 million small businesses in California.
The number of small businesses by state signifies that small companies aren’t equally present in all US states. The Golden State appears to be home to the highest number of small businesses.
With over four million businesses, California surpassed Texas by around 30%. Other states with an impressive number of small businesses include Texas (2.8 million), Florida (2.7 million), New York (2.2 million), and Illinois (1.2 million).
Global Small Business Statistics
Small businesses aren’t widespread in the US only. They have a vital role in the global economies as well. Like in America, they comprise the great majority of businesses and create a vast number of jobs.
Since 600 million jobs will be in demand by the next decade, small businesses are the perfect opportunity for the governments to cover the ever-growing labor force.
29. Small and medium-sized businesses represent 90% of all businesses worldwide.
Have you ever wondered how many small businesses are there in the world? You will be surprised to hear that a vast majority of companies are actually small businesses, amounting to 90%.
Such a figure further indicates that small businesses generate 60%–70% of job positions and account for 55% of the total GDP in developed countries.
30. 26% of small businesses were forced to close from January to May.
Over a quarter of small businesses were forced to shut down for four months. The most affected countries were Bangladesh and India, where the percentage of closed small businesses amounted to 50% and 47%, respectively.
31. There were 5.82 million small businesses in the UK in 2019.
Small businesses dominate the global business scene, and the UK is a part of it. There were 5.82 million small businesses in the UK in 2019, accounting for 99.3% of the entire business population.
The total number of employees was 13.2 million, whereas the turnover was £1.5, according to small business statistics in 2019.
32. Small businesses in Canada accounted for 97.9% of the total business population in 2018.
The total number of businesses in Canada amounted to 1.2 million in 2018. Small businesses account for the majority of them, reaching 97.9%.
There were 22,266 (1.9%) medium-sized businesses and 3,010 (0.2%) big companies. Small businesses employed 8.4 million people or 69.9% of all private sector workers.
What These Small Business Statistics Mean
Even though the stats on small businesses may seem a bit frightening, don’t let them discourage you. Launching a business is a considerable risk, and you’ll undoubtedly encounter some significant challenges along the way.
Scrutinizing the causes and reasons that lead to a business failure may enable you to have a better perspective on the situation. Unfortunately, there isn’t a single recipe for success. You have to work hard to discover what will make your business soar. The stats are here to guide you on your path to success.