Locally-owned businesses with fewer than 100 employees are considered small businesses, from restaurants and grocery stores to farms, real estate agencies, and machinists.
These small businesses are run by different types of people and no two businesses look alike. Small businesses come in all shapes and sizes, from the number of employees to the revenue each business generates. Let’s take a closer look at some facts about small businesses.
important point
- As of 2020, there are 31.7 million small businesses in the US, representing 99.9% of all US businesses. (U.S. Small Business Administration)
- More than half of small business owners are over the age of 55. (U.S. Census Bureau)
- 9.1% of small business owners are veterans. (Score)
- One of the most common reasons people start their own business is to be their own boss. Sixty-six percent of Cox Business survey respondents said this was the reason they started a small business. (Cox business)
- 82% of small businesses survive one year. 50% survive to his fifth year. Only 35% survive 10 years. (Bureau of Labor Statistics)
General SME Statistics
Whether a business qualifies as a small business is usually defined by its revenue and number of employees. The Small Business Administration outlines industry-specific parameters. For example, a small company in the logging industry employs less than 500 people, while a small soft drink manufacturer employs as many as 1,250. In terms of revenue, this also varies widely by industry, with small businesses averaging between $1 million (or less) and $41.5 million in annual revenue.
Small businesses exist in almost every industry. Freelance writers can qualify as small business owners, retailers, cosmetologists, tax professionals, lawyers, and even medical practitioners.
According to the Small Business Administration, there are 33.2 million small businesses in the US, or 99.9% of all US businesses. Even some of the big name chains you see are locally operated and may qualify as small businesses.Guidant Financial targets 4,500 current and future business owners , and found that 41 of the respondents surveyed own a franchise business.
Small and medium-sized enterprises
Small businesses exist in almost every industry, but there are a few dominant ones. Below is a chart showing some of the biggest players in the small business world, based on research by Guidant Financial.
| food and restaurant | 12% |
| retail | 11% |
| business service | 11% |
| health, beauty and fitness | 9% |
| residential and commercial services | 7% |
business ownership statistics
The business world is diverse, but certain groups are more likely to start businesses. Please note that the statistics referenced in this section are for all business owners in the United States, not just those business owners who are considered small businesses. But let’s not forget that small businesses make up his 99.9% of all US businesses.
Business ownership by gender
Men now own more small businesses than women. The Census Bureau’s latest annual business survey found that only one-fifth of U.S. employer businesses are owned by women. However, the number of women-owned businesses increased by 0.6% from the previous year.
Business ownership by race
Just as there are gender differences in the small business community, so are racial differences. The U.S. Census found that not only are most businesses male-owned, most of them are run by white men. The chart below breaks down ownership by different groups.
| White | 70.8% |
| hispanic or latino | 14.4% |
| Asian | 6.2% |
| black or african american | 6.0% |
| do not know | 2.1% |
| American Indians and Alaska Natives | 0.5% |
Business Ownership by Age
Small businesses are owned and operated by people of all ages. Still, it’s no surprise that older generations tend to own more businesses than younger generations. . They also have more real-world experience, saving them more time to invest in their business.
| Over 40 | 63% |
| 30-40 years old | 30% |
| 20-30 years old | 7% |
Business ownership by education level
Having a higher education level does not necessarily qualify you to run a business, but it can make the financial component easier. You can build a network and support system that can provide the funding and contacts you need.
As you can see in the chart below, those with a bachelor’s degree are the most likely to be business owners (52%). However, not all industries require a bachelor’s degree, and those with an associate’s degree also make up a large portion of the business world.
| high school | Ten% |
| fellow, colleague | twenty one% |
| Bachelor’s degree | 52% |
| master’s degree | 9% |
Small business financial statistics
Small businesses have unique financial needs compared to large corporations. Each small business has different average earnings, payroll and borrowing needs.
business income statistics
How much a small business earns varies greatly depending on the industry and location of the company. Of course, a restaurant in a big city like Los Angeles or New York City would earn far more than a lone diner in rural America. Release), the median income from incorporated businesses for the self-employed was $55,858. Thankfully, the majority of existing businesses (63%) report being profitable.
Just as there are differences in ownership between men and women, there are also substantial differences in income. According to Biz2Credit, women-owned businesses have an average annual revenue of $475,707, while male-led businesses have an average annual revenue of $675,643.
SME loan statistics
While 78% of startups are using only their own capital to get started, many small businesses will eventually need funding. After all, he had $645 billion in outstanding small business loans in 2019. This number is very high, partly because the average SBA loan amount is $417,316.
While loans are an option for businesses with large financing needs, business credit cards are another popular method used by businesses to pay for expenses. Interest rates on credit cards tend to be much higher than those on business loans, so they’re not the best option for long-term financing. However, they may also offer more accessible rewards and benefits that business loans do not.
Small Business Success Statistics
Entrepreneurship is thriving in the United States, but the path to becoming a small business owner is not easy. Unfortunately, according to the Bureau of Labor Statistics, 18% of his businesses fail within his first year, 50% after five years, and 65% by the tenth year.
Geographic location can also contribute to this failure. As of 2019, her three states of Washington, Michigan and Kansas were her three states with the highest rates of business failure, according to Zippia’s research. California, Louisiana, and Massachusetts, on the other hand, have the highest success rates.
Another factor in small business success is industry. Unsurprisingly, the healthcare industry has the highest success rate, with 60% of his small businesses still operating beyond his fifth year. Warehousing, transportation, and construction, on the other hand, have the worst five-year success rates of 30% and 40%, respectively.
So why do small companies fail? A study by CBinsights revealed that the main reason companies fail is that they don’t have enough money and can’t secure more money. rice field. Product obsolescence and declining competitiveness are two other common reasons some businesses fail.
| Within 1 year | 18% |
| After five years | 50% |
| 10 years later | 65% |
Conclusion
The stats in this guide are both encouraging and daunting for aspiring business owners. Starting your own business can feel both high risk and high reward, but you don’t have to invest a lot of money and time into your business before you know if it will turn a profit. Read our guide to getting started and learn how to formalize your ideas and make a living out of your passion.
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