41 Small Business Statistics: Everything You Need To Know
From eCommerce stores and brick-and-mortar boutiques to finance consulting, art galleries, and craft breweries, small businesses are as varied as they are numerous. With more than 32.5 million small businesses in the US, it’s obvious that the market is highly competitive, and that living out the dream of being your own boss might not be quite as easy as it seems. So, what can you do?
If you have your own company (or plan to start one soon), then the best way to make a sound business plan is to familiarize yourself with a few small business statistics. Learning the ins-and-outs of the industry and how other similar firms made it work can help your own company grow and thrive. After all, small enterprises are the backbone of the American economy, and every person with an idea and the drive to succeed should be given a proper chance to better themselves professionally.
If you don’t want to read through a bunch of boring research papers, don’t worry—we’ve got you covered. For those readers who are looking for quick answers, we’ve also prepared a small
FAQ section at the end of the article. If you’ve been wondering about questions like how long do small businesses last, how many small business jobs are generated each year, and why are small businesses important for our economy, you can find all the answers after the stats.
Fascinating Entrepreneurship Statistics:
90% of new American billionaires are self-made.
Despite the economic hardship brought on by the Covid-19 pandemic, some people enjoyed an unprecedented wealth surge, with a record high of 493 new billionaires added to Forbes’ annual list of the richest people in 2021. That brings the total number of billionaires in the world to 2,755. Among the newcomers are 88 Americans, most of whom are self-made. Young entrepreneurs are likely to be encouraged by these figures, which show that certain industries and investments can thrive even in times of major economic turmoil.
15 million Americans are full-time self-employed.
These entrepreneurial statistics from FreshBooks underscore a significant shift towards independent work. According to a separate study from Intuit’s QuickBooks, 28.2% of American workers had some form of self-employment in 2019. One out of every five workers plans a complete change of career once they get into entrepreneurship.
62% of adults believe entrepreneurship is a good career.
There seems to be a growing understanding of the benefits of entrepreneurship among people worldwide. According to Global Entrepreneurship Model entrepreneurs statistics from 2018/2019, more than half of them feel that starting one’s own business is a good career move. There may also be some misconceptions because an astonishing 40% of respondents think it’s easy to start a business, and 49% believe they have what it takes to do it.
There are 582 million entrepreneurs in the world.
Although this is a significant rise compared to previous years, there is still quite a lot of room for improvement. Namely, entrepreneurship stats can help countries gain a better understanding of the market needs in certain areas and create a more fertile ground for this development. It is a great way to spot both the flaws and benefits of certain industries and act accordingly.
55% of entrepreneurs say their biggest motivation for starting their own business was the idea of being their own boss.
What’s more, 39% wanted to pursue their passion, and 25% just did it because the opportunity presented itself. For 25% of entrepreneurs, corporate America was the biggest problem, while 11% decided to start their own business after being laid off. According to entrepreneur data, another 10% did it because they weren’t ready to retire, and 4% were inspired by various life events.
30% of entrepreneurs only have a high school degree.
It may seem surprising, but almost a third of all small business owners never got any further than high school. This may offer reassurances to young people who are worried they won’t accomplish anything without going to college. Only 18% of small business owners hold a master’s degree, while 4% managed to get a doctorate.
In Brazil, 53% of the entrepreneurs operate on their own.
Entrepreneur statistics from 2018 tell us more than half of business owners in the biggest country in South America don’t have any employees or intend to hire any. With this number, Brazil is the world leader, leaving Madagascar a distant second with just 30% of solo operators.
The highest number of self-employed professionals (19.6%) work in the construction/trades field.
It appears that construction is the most popular profession for entrepreneurs, followed by retail with 10.9%, real estate with 10.7%, and consulting with 10.3%. The creative professions are in 7th place according to entrepreneurship growth statistics, while marketing is at the very bottom with 1.7%.
With a Global Entrepreneurship Index of 83.6, the US is the best country for entrepreneurs.
The Global Entrepreneurship Index (GEI) is a numerical presentation of the climate a country creates for the development of small businesses. This index takes into account numerous factors to create one comprehensive overview of the situation. Switzerland takes an unexpected second place with 80.4, followed by three English-speaking countries – Canada, the UK, and Australia. Chad is bottom of the list with an index of just 9.
59% of entrepreneurs who apply for a loan use it to expand their business.
Entrepreneur demographics for 2018 show us that 43% of owners use the funds to cover their operating expenses, and 26% need them to refinance other loans. It appears that loans play a huge part in the world of small businesses, as enterprises rely heavily on them both to keep afloat and make crucial steps towards the future.
83.1% of US business owners started their companies.
In the true entrepreneurial spirit, 83.1% of owners built their companies from scratch. A significantly smaller percentage (11.3%) purchased their businesses, while 7.2% inherited them or received them as gifts.
Stats on Small Businesses
The number one reason why businesses fail is there’s no market need.
According to research from CBInsights, 42% of businesses fail for this simple reason. The second most common reason that affects 29% of businesses is the lack of funds – in a word, bankruptcy. The third reason with 23% is the lack of chemistry and teamwork between employees.
20% of small businesses fail in the first year.
New business statistics compiled in March 2020 show that only 80% of small businesses managed to get through their first year. On average, about half of all companies survive more than five years, while only about a third reach the 10-year mark.
46% of people who start small businesses are between the ages of 41 and 56.
This is based on a 2021 Guidant Financial study which surveyed more than 2,400 current and aspiring small business owners. Baby boomers make up 41% of small business owners. Interestingly, 13% of entrepreneurs were millennials, followed by zoomers (1%).
62% of small businesses don’t have any staff.
This stat makes sense considering a lot of entrepreneurs feel it’s quite difficult to find the right, high-quality staff for their companies. As such, many decide to simply go solo. The same report shows 28% of businesses have 1-5 employees, while only 10% have over five employees.
In 2015, small business employment made around 45% of total private employment in the US.
There were over 124,000 jobs in the private sector, compared to nearly 60,000, according to statistics on small businesses. The biggest share in individual industries is agriculture and forestry, fishing & hunting with 85.1%. The smallest share of small businesses was in the company and enterprise management with 12.2%. Aside from that, there were also 24,155 small business jobs not classified in any specific industry.
Small companies were responsible for 97.6% of exported goods in the US in 2015.
In total, 295,834 companies exported goods from the US in 2015. Out of that number, 97.6% were actually small businesses, which amounts to 287,835 firms overall. Despite the sheer number of entrepreneurs in the US, these small businesses only earned 32.9% of the country’s total export income – 800.3 trillion.
In a period of 21 years (from 1992 to 2013), small businesses accounted for 63.3% of new jobs in the US.
Entrepreneurship has a positive effect on the national economy, as more than half of net new jobs came from these small businesses. In the aforementioned period, there were only two recessions, from 2001 to 2002 and 2007 to 2009, when the share was -47% and -61%, respectively.
Small businesses failure rate has declined by 30% since 1977.
These small business statistics come from Scott Shane, a professor at Case Western Reserve University. He explains the numbers by arguing that business owners got smarter, choosing profitable sectors and using reliable business-management technology. Apart from that, there is also a lower number of newly-created businesses and, therefore, less competition.
62% of small business owners use personal funds to deal with various financial challenges.
Entrepreneurs deal with numerous financial challenges on a daily basis, and the COVID-19 pandemic didn’t make things any easier. The vast majority deal with these challenges by using money from their own pocket. Entrepreneurship statistics mention that 55% of owners had to cut staff hours or downsize to deal with the crisis. Unfortunately, 38% of owners made late payments or didn’t pay at all.
79% of small businesses have an outstanding debt.
A majority of enterprises are in debt, with 56% owing less than $100,000. 44% of companies owe anywhere from $100k to 800 million, while 8% of companies owe over one million. This is according to an entrepreneur facts and statistics survey from 2021, although the outstanding debt is being carried over from at least one year earlier.
Office of Advocacy statistics show 60.1% of small businesses without paid employees are home-based.
Many famous companies started off in their homes, garages, and basements. Stats show this is still the most popular location for small businesses and startups waiting for their big break. Of course, the situation changes when there are employees who demand certain working conditions, which is why only 23.3% of small employer firms are actually home-based.
Statistics about Online Shopping in Small Businesses
As the internet is becoming more accessible these days, many businesses move to an online platform to expand their market reach. To no one’s surprise, small enterprises strive to capitalize on eCommerce trends.
With 27% of the global population turning to online shopping, customers expect small businesses to support online transactions and have an eCommerce presence. This trend will likely continue after the pandemic ends.
30% of small business firms plan to use said technology to provide customers with automatic recommendations. Research predicts that this application will have a three-year growth rate of over 892%.
However, this behavior changed during the COVID-19 pandemic, as 34% of digital buyers now read fewer reviews. 31% read more of them, while 35% look up the same number of reviews as before.
Millennial and Gen X customers have the highest tendency to support local small businesses, with 45% of them shopping online to do so. The majority (56%) of people who decide to shop in-store at small businesses are over the age of 45.
Statistically Biggest Challenges for Small Business Owners
Guidant Financial discovered that five of the most common effects COVID-19 had on established small businesses included lost revenue (23%), reduced budgets (11%), temporary closures (11%), reduced personal wages (10%), and temporary pivot (7%).
According to Statista, 44.9% of small business owners experienced moderately negative effects of the pandemic. On the other hand, 6.9% claimed that the COVID-19 pandemic had a moderately positive effect on their business while 1.8% experienced significant positive effects.
By the end of the fifth year of operations, the small business survival rate was 48.9%, with 33.6% continuing activities for over ten years. Only 25.7% of small businesses survived for at least 15 years.
Of the 9,693 US-based firms the FED Small Business surveyed, 64% would apply for another round of government aid if offered. 39% claimed that they wouldn’t survive without government assistance until sales returned to normal.
The second biggest challenge that stifles small business growth is employee recruitment and retention, with 19% of small businesses having experienced it. Other hurdles include marketing and advertising, time management, administrative work, and benefits management.
Sources:
https://www.smallbizgenius.net/by-the-numbers/small-business-statistics/
https://www.smallbizgenius.net/by-the-numbers/entrepreneur-statistics/
https://www.hostinger.com/tutorials/small-business-statistics
Leave a Comment