Welcome, business enthusiasts and curious minds alike, to our treasure trove of ‘small business statistics 2023’!
Now, before we venture into this labyrinth of percentages, numbers, and dollar signs, let’s establish one thing: in the universe of American enterprise, ‘small’ is ironically the new ‘big’. For every corporate Goliath hogging the limelight, there are countless Davids making a massive splash under the radar.
So, strap in, perhaps grab a cozy beverage of your choice (we won’t judge if it’s a cheeky one), and prepare for a journey that may alter your perspective on the underdogs of the U.S. business landscape.
Brace yourself for some mind-boggling, eyebrow-raising, and yes, occasionally shock-inducing revelations about the not-so-small world of small businesses!
Small businesses make up a staggering 99.9% of all businesses in the United States – While major corporations frequently steal the headlines, data from the U.S. Small Business Administration underlines that the overwhelming majority of US businesses are actually small entities. As a matter of fact, the total count of small businesses in America stands at an impressive 33.2 million.
- 18% of small businesses fail within their first year, while 50% fail after five years and approximately 65% by their tenth year in business.
The primary reason that new businesses fail is because of a lack of cash money. In fact, 38% of small businesses fail because they either run out of cash or are unable to drum up more financial support (CB Insights, 2021). The second most likely reason that new businesses fail is that there’s no market need for their product. Stats show that 35 percent of new businesses fail because of this. Other key causes for the failure of startups include getting outcompeted by rivals, having a flawed business model, and facing regulatory or legal challenges. Pricing issues, having a mismatched team, and mistimed product launches are also some of the main reasons new businesses fail.
- The small business’s “industry” is a major factor in its success rate. The healthcare industry has the highest success rate, with 60% of small businesses staying afloat beyond their first year. Construction, transportation, and warehousing have the worst rates of success at 30% and 40%, respectively, following the fifth year.
What is considered a “small business” – According to the US Small Business Administration’s definition of a small business, small businesses are defined by firm revenue. A roofing contractor earning an annual revenue of $16.5 million or less is considered a small business.
- The number of small businesses in the United States as of 2022 is 32.5 million.
A significant 8 in 10 small businesses operate without any employees – In line with the data mentioned earlier, of the 33.2 million small businesses, 27.1 million are single-owner operations without any staff.
Almost 50% of all employees in the U.S. are part of the small business workforce – Interestingly, even though over 80% of small businesses are nonemployers, they provide employment to 61.7 million individuals. This constitutes 46.4% of the total US workforce—a significant proportion when you consider that less than 20% of small businesses have any employees. This emphasizes the critical role that small business expansion plays in a country that leans so heavily on them for job opportunities and, consequently, sustenance.
If you have over 20 people at your small business you are in the top 2% of all small businesses, employees-wise – Merely 16% of small businesses employ between 1-19 individuals. While the majority of small businesses operate without any staff, 16% of small businesses have a workforce ranging from one to 19 individuals. And of the 33.2 million small businesses, a mere 650,003 businesses employ between 20 and 499 individuals.9. According to the Small Business Administration, US small companies created 8.7 million new jobs between March 2020 and March 2021 (SBA, 2022). This is 400,000 less than the preceding year, when US small businesses created 9.1 million new positions.
There are many reasons why people might be motivated to open their own businesses. Among the most common motivations, 29 percent of respondents said that they were opening their own business because they wanted to be their own boss (Guidant Financial, 2021). The second most popular reason for starting your own business is dissatisfaction with corporate America. 17% of respondents chose this as their primary motivation. Other common reasons include wanting to pursue one’s own passions, a presented opportunity, feeling inspired, and simply not feeling ready to retire.
“You just can’t find good people anymore” – In fact, 52 percent of the respondents stated that the most important problem for small businesses was labor quality (CNBC, 2019). Small biz owners say that it’s hard to find qualified individuals to hire. For businesses that have more than 50 employees, 63 percent of owners find it harder to find qualified hires.
- 50% of all small businesses are operated from home.
- Small businesses account for 44% of US economic activity.
- 19% of small business owners work over 60 hours a week.
- Small businesses employ 59 million people in the U.S.A.
- 64% of small business owners begin with only $10,000 in capital., and Micro businesses can get off the ground with just $3,000 in capital.
- Approximately a quarter of small businesses begin with no financing whatsoever.
- 86.3% of small business owners earn an annual salary of less than $100,000.
- Only 40% of small businesses are profitable.
- Only 35% of businesses in the construction industry survive their fifth year.
More graphs and statistics about small businesses in the United States: