Jumping into a small business requires extensive research beforehand — hence why we’ve compiled together some of the most important statistics, trends, and information on how the small business market is currently going and what to expect in the near future.
The small business sector is open to anyone wishing to be their own boss. Nevertheless, this entails a lot more effort, time, and money on your part; with failure rates of new businesses still being high, it’s a risk not everyone is willing to take.
These small business statistics are both for current small-business owners and for those looking to become one in the near future.
So, get your facts straight and stay on top of the latest trends with these well-researched stats on how the small business sector is going at the moment.
Learn about the history, the current state, and the future of small businesses. How happy are small business owners? What are the lending statistics? How much do small business owners really work? Get the facts and the latest numbers below; these statistics are collected only from trustworthy sources and reports that provide the most accurate insight into the matter.
The business statistics gathered by salesforce for the Third Edition of the Small & Medium Business Trends Report revealed that 55% of small business owners choose to open their own business just so they could be their own boss. At 36%, the second reason why they started their small business was to have more flexible working hours and because the opportunity presented itself.
(FED Small Business)
This trend continues to mount with numbers going up (24%) in 2017 and (32%) in 2018. What’s more, this comes as a surprise as statistics reveal that satisfaction rates for using online lenders compared to working with small and large banks were fairly low.
Small business statistics reveal that 53% of small business owners shared that (on a scale of 1–10) they rank their overall happiness for owning their own business at 9 or more. This reveals that more than half of all business owners don’t regret starting a business and are genuinely happy with their decision.
Small business statistics (2018) reveal that in the 12-month period, ending in February 2018, employment in the private sector saw a 1.8% increase. Although it may not look much, this is actually an increase of 0.8% compared to the previous 12-month period (the year before) where private sector employment had only a small (1%) increase.
Small business statistics from 2019 shared by PayScale reveal that, on average, the salary of small business owners is just over $66,000. What’s more, the PayScale data also shows that 83% of all small business owners make less than $100,000 per year, whereas the percentage of those that do not take any salary at all was an unbelievable 30%!
This is especially the case when the business is still relatively new. In addition, facts also state that small business owners have to work extremely hard to get a small business off the ground. Moreover, stats show that 81% of these business owners work even during the night, whereas 89% work over the weekends.
Although the survival rate is fairly low for new small businesses, once they make it past the two-year mark their chances increase exponentially. Entrepreneurs are finding new, creative ways to push their revenue. Plus, the more they incorporate the latest technologies, the higher their chances of survival, as well as a higher ROI.
Nevertheless, there still seems to be a big difference between white-owned and minority-owned businesses; the gap is slowly decreasing over time. So, without further ado, here are the most essential statistics on revenue concerning small businesses.
Jumping into a small business comes with its own set of risks. Small business failure statistics show that there is a high failure rate; as much as 2/3 of small businesses don’t survive past the two-year mark; about half of all small businesses don’t make it past the five-year mark; finally, only 1/3 reach the ten-year mark.
What’s more, the US Bureau of Labor Statistics reveals that these statistics are consistent across all industries.
The NSBA survey revealed that a lot of SBs have a hard time growing due to their inability to acquire the necessary funding. Furthermore, one-in-four businesses are unable to finance sales, which, in the long run, forced business owners to lay off employees; this is but one of many reasons as to why most small business owners fund their businesses through friends, family, and their own cash.
Small business owner demographics reveal that men dominate the small business sector. Men account for 70% of all recently-launched small businesses, whereas women lag behind at only 30%.
Small business owners understand the importance of having an online presence; more than half own a working website for their business. Likewise, 39% of small business owners incorporate and invest in email marketing.
Despite having minimal budgets, small businesses take full advantage of the large variety of digital marketing channels.
According to SBA’s statistics from 2015, the great majority of approved loans were for white-owned businesses sitting at nearly 60%. On the other hand, minority-owned business loans reached barely 30%.
These statistics are for non-SBA loans coming from big banks, institutional lenders (such as life insurance companies and savings banks), and more. The facts reveal that around 42% of all loan requests from credit unions were approved, whereas some 60.7% of alternative lenders were also approved; small banks approved another 48.75% of loan requests, whereas insurance companies and savings banks approved 62.8% of loan requests.
(FED Small Business)
Small business loan statistics reveal that there has been a 3% increase in the number of small businesses applying for funding since 2017.
Cash continues to be the leading form of funding for small businesses in 2019. What’s more, it is (not so closely) followed by 401K business financing (13%) with friends and family taking third place (12%). The previously popular, crowdfunding, no longer makes the ranks sitting at less than 1%.
The United States is a leader when it comes to small businesses. There is considerable growth in the number of entrepreneurs and the potential for continuous growth in the future. The laws and regulations for businesses, however, seem to be taking up too much time and causing too much stress for business owners. Still, that doesn’t stop small companies from being an overwhelming majority in the US, employing more people than large corporations across the country.
Small business owner statistics reveal that minority-owned businesses are increasing in the US. The leading small business owners among the minorities are Hispanics (3.3 million), African-Americans (2.6 million), and Asians (1.9 million). There are numerous reasons for this increase, yet minority-focused grants for small businesses are the main driver.
Of all the industries, healthcare and social assistance have the most significant concentration of small businesses. In contrast, US small business statistics show that sectors with the least concentration include hunting, forestry, fishing, and agriculture; they have only 113,000 businesses in total. Lastly, utilities account for only 112,000 small business ventures.
The NSBA Workforce Survey 2017 revealed that if small business owners were provided tax incentives for improving their employee’s education and training, they would do so. At the time of the survey, 83% of small business owners didn’t know of any tax incentives for training, whereas 17% did.
This lack of preparedness leads to small business owners spending approximately 6 hours a week organizing, managing, and complying with laws and regulations concerning their business. Yearly that’s 300 hours spent on laws and regulations and making their business compliant. This figure grew by 50% since 2016 when small business owners spent approximately 4 hours a week on making their company compliant with laws and regulations.
What’s more, these small businesses (99.9% of all US businesses) employ an additional 58.9 million encompassing 47.5% of all US employees. Companies that have less than 100 employees are the ones that have the largest share of employment in the small business sector.
The leader in the number of small businesses in the US is none other than the US South. Startup statistics reveal that, in 2017, 27% of all small businesses were located in the South. Second in line came the mid-Atlantic region at 22%. From there, the numbers drop drastically with the Pacific region sitting at 15%, the Mountain region at 13%, Great Lakes at 12%, and (at the very bottom) New England with a measly 5%.
The small business structure breaks down into two groups — LLC businesses (35%) and S-Corp companies (33%) in one group, and corporations (19%), sole proprietorships (12%), and partnerships (2%) all sitting in the lower bracket.
Globally small businesses are thriving and will continue to thrive.
With approximately 90% of all companies worldwide being made up of small to mid-sized businesses, it’s become evident that there is a huge desire for freedom and independence. The statistics below reveal how small businesses are doing globally. Take a look and find out what is and isn’t proving fruitful for entrepreneurs and which future trends to keep an eye on.
(FEDS Small Business)
The statistics for small businesses reveal that in 2018 there was a reported net revenue growth of 35%, including a rise in employment (23%). These numbers increased significantly from 2017 when revenue growth was just 28% and employment growth another 19%.
Many small business owners are seeing the benefit of using a CRM system for attracting new customers and retaining current customers. Of all those surveyed, 62% have had their CRM system for less than two years.
(The World Bank)
The World Bank revealed that approximately 50% of all employees worldwide are employed by small and mid-sized enterprises; by 2030 there will be a need for an additional 600 million new jobs, and small businesses could, in fact, be the solution.
As reported in 2018, there are more than 25 million small and medium-sized enterprises in the EU. Of these, 93% are micro-SMEs.
A study by the US Bank revealed that cash flow is the leading problem to business failure. Moreover, the problem is not only the overall money that comes into the business but also the timing of it as well. This kind of problem can be resolved with proper organization, especially if the issue is more about the timing rather than the amount of money flowing into the business.
Small business statistics by Goldman Sachs revealed that nearly 90% of all small business owners offer their employees growth opportunities through education and professional development. It has also been confirmed that employers that offer such opportunities for their employees have higher revenue than those that do not. There is a variety of training options, but one-on-one training is the leader at 66%. In-house group training and off-site training were offered by just over 40% of business owners.
Statista revealed that a website alone isn’t enough. They also found that SEO is considered incredibly important (sitting at 89%), according to business owners.
There really is no stopping small businesses from being successful as long as owners are ready to keep up with technology and trends; despite many small businesses failing before they make it to their second year, it’s worth keeping in mind that success greatly depends on how much the entrepreneur is ready to invest in the latest technologies. Focus on customer security and satisfaction has also proven to be of great importance.
Small business statistics from the Small & Medium Business Trends Report reveal the challenges small business owners have to face in the next two years. The majority of small business owners (68%) feel that maintaining financial growth is their top challenge; 58% said so for meeting the expectations of customers; and another 55% said that hiring new employees and retaining them was, in fact, their biggest challenge.
Small business growth statistics 2017 reveal that, since 1997, the number of women entrepreneurs has increased by 114%. These results were published by a study conducted by American Express. Nevertheless, women still lag behind men, but this consistent growth may have a chance to overtake them in the near future. To add, some statistics reveal that women-owned small businesses often outlast male-owned small businesses. Currently, women own 11.6 million firms in the US and employ almost 9 million people.
Small business growth statistics (2018) reveal that the survival rate for the healthcare and social assistance industry is the highest. This industry is not only surviving well but is expected to grow by an additional 20% making it the fastest-growing sector as well.
The healthcare industry is doing so well that approximately 85% of new small businesses (in this sector) survive their first year. This number goes down to 75% for the second year. By the sixth year, 60% of small businesses make it in the healthcare industry.
Even though the smallest of the small businesses have experienced significant growth, those that make more than $1 million in revenue have seen the fastest increase.
Digital platforms and the variety of tools for online sales allow companies both big and small to reach more customers. Small business marketing statistics reveal that even the smallest companies can have a wider reach and substantial growth by going digital and applying eCommerce marketing. This will drive revenue, increase ROI, and boost overall financial performance.
The majority of small business leaders feel that trust is crucial to running their business. With 54% of customers not trusting big companies, this makes for a significant advantage for small businesses.
How often do small businesses fail depends solely on the actions of the small business owner.
Today, using artificial intelligence reveals that a business is keeping up with the advancement of technology. Although less than 10% of small businesses are currently using AI, approximately 32% plan on doing so, whereas 46% feel their business is ready for its implementation.
According to Clutch’s Small Business Survey in 2018, just 61% out of all small businesses around the globe have a website. Although not many of them see the point of hosting a website (at the moment), in the near future, more than half of all small businesses will funnel more funds into their website and find new ways to improve it.
The longer you manage to keep your business up, the higher the chances of it standing the test of time. The highest failure rate for small businesses is in the first two years. Meaning, for a business to really establish itself on the market, it must pass the previously-mentioned two-year mark; look at it as a form of initiation for each new small business. After that, it gets significantly easier to stay operational.
(The Kickass Entrepreneur)
Although this varies largely on the number of employees and the industry itself, a small business without any employees has an average revenue of $44,000. Companies with 20–99 employees have an average revenue of just over $7 million. Lastly, those with 100–499 employees have a potential average revenue of almost $41 million; meaning, the numbers are definitely not in favor of small enterprises.
Approximately 99.9% of all US businesses are small businesses and employ around 47.5% of all US employees; a whopping 58.9 million employees when you put that in numbers.
It’s pretty clear that small businesses are currently on the rise. Not only because of the number of people looking for new opportunities (to work for themselves) but also due to the increasing number of consumers that trust smaller companies over larger corporations.
The most significant small business growth is seen in the US. Nonetheless, the trend is increasing surely but slowly around the globe as well, as our small business statistics demonstrate. Overall, the future for small businesses in the US (and around the globe) is looking bright indeed!