Small business owners make up the majority of businesses in the United States. From restaurants and grocery stores to farms, real estate agencies, and mechanics, local businesses with fewer than 100 employees are considered small businesses.
These small businesses are run by different people and no two businesses are the same. From the number of employees to the revenue per company, small businesses come in all shapes and sizes. Let's take a closer look at some small business facts.
- As of 2020, there are 31.7 million small businesses in the United States, which is 99.9% of all businesses in America. (US Small Business Administration)
- More than half of small business owners are 55 or older. (US Census Bureau)
- 9.1% of small business owners have experience. (result)
- One of the most common reasons people start their own business is to become their own boss. 66 percent of Cox business respondents cited this as a reason for starting a small business. (Cox business)
- last year 82% of small businesses; 50% survive the five-year stage; Only 35% survived ten years. (Bureau of Labor Statistics)
General Small Business Statistics
Whether a business is classified as a small business is largely determined by the revenue it generates and the number of employees. The Small Business Administration sets standards by industry. For example, a small lumber company may have fewer than 500 employees, but a soft drink manufacturer may have 1,250 employees. In terms of revenue, there is a wide range by industry, with the average small business earning between $1 million (or less) and $41.5 million.
Small businesses exist in every industry. Freelance writers such as retail salespeople, hairdressers, tax professionals, lawyers and private sector doctors can also qualify as small business owners.
There are 33.2 million small businesses in the United States, which make up 99.9 percent of all American businesses, according to the Small Business Administration. Even some of the big name chains you see may operate locally and qualify as small businesses. Guidant Financial surveyed 4,500 current and future business owners and found that 41 percent of those surveyed were franchise owners.
Small business industry
Small businesses exist in every industry, but some dominate. Below is a chart based on a Guide Financial survey showing the biggest players in the small business world
|Source: Guidant Financial 2022 Small Business Trends Survey
|Food and restaurants
|Sold in parts
|Health, Beauty and Fitness
|Residential and Commercial Services
Business Ownership Statistics
The business world is diverse, but some groups are more likely to start a business. Note that the statistics in this section apply to all US business owners, not just those classified as small businesses. However, remember that 99.9 percent of all American businesses are small businesses.
Business ownership by gender
Today, men own more small businesses than women. According to the Census Bureau's latest annual business survey, one in five US employers is owned by a woman. However, women's businesses grew by 0.6% year-on-year.
Business ownership by nation
Just as there are gender differences in the small business community, there are also ethnic differences. The U.S. Census shows that businesses are run not only by men, but primarily by white men. The table below shows the ownership of the different groups.
|Source: Zippy Business Owner Demographics and Statistics in the United States
|Hispanics or Latin Americans
|Black or African American
|American Indians and Alaska Natives
Business ownership by age
Small businesses are owned and operated by people of all ages. However, it is not surprising that older generations are more entrepreneurial than younger ones. Seniors have more time to build credit, making financing easier. They have more experience in the world of work and more time to save money to invest in their business.
Business Ownership at the Education Level
A college degree doesn't necessarily prepare you to run a business, but it does make the financial part easier. Also, going to college can build a network and support system that can provide the capital or connections needed to start a business.
As you can see in the table below, graduates make up the largest percentage of business owners (52%). But a bachelor's degree is not necessary in all fields, and associate's degrees are a big part of the business world.
Small business financial statistics
Small businesses have unique financial needs compared to large businesses. Average small business revenues are different, salaries are different, and borrowing needs are different.
Business income statistics
A small business's income depends largely on its industry and location. Of course, a restaurant in a big city like Los Angeles or New York will be more profitable than a restaurant in rural America. According to the 2019 US Census Statistics Survey of American Business (released in 2022), the median income for the self-employed in covered businesses was $55,858. Fortunately, most established companies (63%) say they are profitable.
Just as there is a wealth gap between men and women, there is also a large income gap. Biz2Credit Women-owned businesses have an average annual revenue of $475,707, while male-owned businesses have an average annual revenue of $675,643.
Small business financial statistics
While 78 percent of startups use only their own funds to launch their businesses, many small businesses need funding at some point. All told, there were $645 billion in outstanding small business loans in 2019. This number is so high in part because the average SBA loan is $417,316
While loans are an option for businesses that need large amounts of financing, business credit cards are another popular way businesses use them for expenses. Interest rates on credit cards are much higher than business loans, so they are not the best option for long-term financing. However, they are sometimes cheaper and offer bonuses and benefits that commercial loans do not.
Small business success statistics
Despite America's entrepreneurial wealth, the path of the small entrepreneur is not an easy one. Unfortunately, according to the Bureau of Labor Statistics, 18 percent of businesses fail within the first year, 50 percent after five years, and 65 percent fail within 10 percent.
The geographical location can also be the cause of this decline. Zippia found in 2010 that as of 2019, Washington, Michigan, and Kansas were the three states with the biggest declines in business. On the other hand, California, Louisiana and Massachusetts have the highest success rates.
Another factor in the success of a small business is the industry. Not surprisingly, the healthcare industry has the highest success rate, with 60 percent of small businesses remaining open after the fifth year. On the other hand, warehousing, transportation and construction jobs achieved success rates of 30 percent to 40 percent after five years.
So why do small businesses fail? A survey by CBinsights shows that the main reasons companies fail are lack of funding and lack of access to additional security. Obsolescence and obsolete products are two other reasons why some companies fail.
|Source: Bureau of Labor Statistics
|in the year
|after 5 years
|after 10 years
The statistics in this guide are both encouraging and terrifying for business owners. Starting your own business can feel like a big risk and a big reward, but you don't have to spend a lot of money and time before you know your business is profitable. Read our guide to starting your own business to learn how to formalize your idea and start living your passion.
- What is a small project?
The definition of a small business usually depends on the company's revenue and the number of employees associated with the industry. There are no restrictions on revenue or number of employees, but small businesses have a limited number of employees and are not owned by many companies. They are often run by local people in the community and employ other members of the community.
- How do I start a small business?
There is no way to start a small business. In general, you need a good idea or product to sell, capital to get a storefront, licenses if needed, and different licenses depending on your industry. Starting a business is no easy task, so make sure you understand the industry you are working in and the pros and cons of owning a business.
- What time is Small Business Saturday?
Every year, Small Business Saturday celebrates small business owners. It takes place on the Saturday after Thanksgiving, roughly as a sequel to Black Friday. You can often find great deals at local businesses and it's a great way to support your community.
- Why is small business important?
Small businesses are so busy that many essential services would not exist without them. From retailers, farmers, restaurants, funeral home owners and everything in between, small business owners are part of every industry.
- What is a small project?