23 Staggering Small Business Facts for 2023
Updated · Mar 06, 2023
Ever since the pandemic first broke out, small businesses and their welfare have become some of the most talked-about subjects.
After all, many had no choice but to shut down; and while some did so only temporarily, others closed permanently. Yet, new ones have already begun to pop up—at a rate higher than ever before.
To better understand their importance in the post-pandemic world, we have compiled a not-so-small list of small business facts, some of which are sure to astound you.
Staggering Facts About Small Businesses (Editor’s Choice):
- 4.4 million new businesses started in 2020.
- Small businesses usually have fewer than 100 employees.
- There are more than 400 million small businesses globally.
- Small businesses create 1.5 million jobs every year just in the US.
- One-third of businesses fail in the first two years.
- 32.5 million small businesses exist in the US.
- The pandemic destroyed 31% of small businesses.
Some General Statistics on Small Businesses in the US
We’ve all heard of the big boys.
At the end of the day, most of the world’s biggest enterprises are American.
But have you ever wondered how many small businesses there are in the US in 2022? Read on to find out.
1. 32.5 million small businesses exist in the US.
Okay, two things to consider here. First of all, the definition of “small business,” that is, what criteria should a business meet to be considered small. In the US, it has to have under 500 employees.
That’s it. For comparison, in the EU, only businesses with fewer than 50 employees are labeled “small.”
Now that you know the rules, here are the stats. The percentage of small businesses in the US is 99.9%. That means 32.5 million enterprises, as of 2021.
2. Small businesses are responsible for 64% of new jobs.
While it’s true that many small businesses are “nonemployer firms”, there are also many others that employ a significant number of people. To be more precise, they created an average of 1.5 million jobs annually prior to the pandemic.
3. 4.4 million new businesses started in 2020.
(Source: Sales Force)
While the pandemic undoubtedly had a primarily negative impact on small businesses, destroying up to 31% of them, it’s not all doom and gloom.
The most recent small business stats show us that even in 2020, right in the midst of the raging coronavirus, Americans didn’t lose heart, but instead, many decided to start a business. 4.4 million new companies popped up that year, 24.3% higher than in 2019 and the highest number ever recorded in general.
4. 98% of small businesses have under 20 employees.
(Source: Small Business & Entrepreneurship Council)
500 sounded like quite the substantial number, definitely not “small” in the least to us, so we dug deeper.
Turns out it’s set that high to ease access to government subsidies and preferential tax rates. In reality, the small business census shows that the majority of firms (~32 million) in the US employ fewer than 20 people. That’s a lot more realistic. Moreover, 96% (~31 million) have fewer than 10 employees.
5. One-fourth of small businesses are self-financed.
About 25% of budding business owners choose to fund their enterprise themselves, or with help from friends and family. As for the remaining three-fourths, they rely on business loans and credits.
6. 42% of new businesses fail due to a lack of market demand.
The leading cause for failure among startups is a lack of market demand. Put simply, this means the business chose to offer a product or a service that people did not think they needed, and/or that the business failed to advertise it adequately.
In second place, at 29%, comes insufficient financing. This usually either means that the business owner underestimated the resources they’d need to begin with, or that they simply ran out of cash due to poor initial performance.
7. In 2020, small businesses received $750 billion in loans.
(Source: U.S. Small Business Administration)
According to annual statistics on small business in the USA, SBA lending programs traditionally provide up to $28 billion in support of small enterprises. However, due to the devastating effect of the lockdowns caused by the pandemic, the US administration provided an additional quarter of a trillion dollars in aid to get small businesses back on their feet.
The Paycheck Protection Program gave out loans worth $525 billion, and the Economic Injury Disaster Program made another $211+ billion available to small firms. Through these and other programs, businesses received more than nine million loans in total.
8. Millennials and Gen Z are 188% more likely to start a new business.
(Source: Round Rock Chamber)
Different generations tend to differ in their worldview, which could be best confirmed by looking at this stat. While many extant businesses are run by older people, as of 2022, small business statistics clearly point out that millennials and Gen Z are an order of magnitude more likely to pursue a side hustle compared to, say, baby boomers.
The mass exodus of young people from traditional jobs is a further testament to this. 52% say they’d rather not work for someone else in what can often be described as less than ideal labor conditions.
9. Over 80% of small businesses utilize digital platforms.
(Source: U.S. Chamber of Commerce)
To nobody’s surprise, most businesses in 2022 rely on digital platforms for their advertising. Furthermore, the Chamber of Commerce’s small business census shows that 79% use social media to directly communicate with customers, while 75% sell products online.
While the ubiquity of digital platforms has been a thing for a while, the pandemic further exacerbated the need for them, with many customers choosing to shop at establishments that made a clear effort to provide a safe environment.
In this regard, delivery and contactless alternatives have been the key factor to a business’s success in the COVID-19 era.
Average Small Business Revenue, or Are Small Businesses Profitable
While Apple recently became the first US company to reach three trillion dollars market capitalization, most American businesses tend to stay in the thousands range. Still, that’s not to say they aren’t profitable.
The following small business facts will cast light upon everything money-related when it comes to running your own business.
10. Nonemployer businesses make an average of $44,000 yearly.
(Source: The Kickass Entrepreneur)
Based on company size, the revenue of a small business can range between tens of thousands to tens of millions yearly.
As we already mentioned, any enterprise with anywhere between 0 to 500 employees is technically considered “small.” The smallest businesses, which have no employers, report an average revenue of about $44,000 per year.
On the other end of the spectrum, some companies with 100–500 employees make ~$40 million.
11. Small businesses experienced 15.7% revenue growth prior to the pandemic.
(Source: Zen Business)
The average small business growth rate prior to COVID-19 was a sound 15.7% in 2019. It should be noted this number varies significantly by industry. For instance, construction businesses grew 23.3%, while agricultural and mining businesses saw a ~19% increase in revenue.
12. A fifth of small businesses fail in their first year.
While being your own boss can sound enticing, running a company, a successful one at that, can be more difficult than many aspiring businessmen imagine. At least that’s what the numbers show—as of 2022, the small business failure rate during the first year of operation is a disheartening 22.5%.
What’s more, it doesn’t get any easier long-term, so even if you survived your first year, you should still be very careful. Less than half of all small businesses reach the milestone of five years of age, and less than a third get to ten.
13. 25% of small businesses make it to 15 years.
The success rate of small businesses could be hard to measure as it’s somewhat subjective. Do we look at how long the company has been around, or whether its profits have been going up?
Even then, where do we set the threshold for success? Still, statistics indicate that about a quarter of small businesses survive for at least 15 years. We think that’s quite an achievement already, so we’ll call it success!
14. 31% of small businesses owe $100,000+.
(Source: US Federal Reserve System)
A recent report on small business revenue statistics reveals that only 29% of employer firms have no debts. 40% owe up to $100,000 and 31% have outstanding debts of at least $100,000.
Furthermore, 18% of companies have $250,000+, while 5% have $1 million or more in debt.
Most firms with debts (59%) used a personal guarantee as collateral, meaning the business owner as an individual is responsible for paying the loan if the business goes under. 49% used business assets and 31% chose to secure their debts through personal assets. 17% of firms with debts do not have collateral.
15. 46% of Americans prefer to shop local.
This has to be one of our favorite small business facts!
Not only does nearly half of the population prefer to support local stores in wake of the pandemic, but many shoppers say they find items at smaller businesses to be of better quality. They rate customer service in local establishments as superior to that of large businesses, too.
Key Statistics on Small Business Ownership
The fun thing about small businesses is that anybody can create one… and many people do. In fact, tens of millions of Americans can brag about being their own bosses.
What’s it like to be one of them, you can read below.
16. Small business owners make an average of 35k to 75k per annum.
(Source: Ignite Spot)
Small business stats can often be very unspecific like this, though at least they give us a faint idea of what to expect.
Considering that a “small business” could mean anything from a home-based nonemployer microoperation to a 500-employee-big enterprise, the massive variance in owners’ income is not that surprising. Naturally, location is a crucial factor, too.
17. Immigrants own 18% of small businesses.
Immigration lies in the US’ foundation, so it’s no wonder that to this day, many foreigners choose to pursue the American dream and create their own business across the country.
Still, this stat is particularly noteworthy because immigrants only make up about 13% of the population, but own 18% of small businesses, which suggests their entrepreneurial spirit is stronger than that of most locals.
That said, the majority are concentrated in a few key industries. For instance, 65% of all taxi drivers in the US are immigrants. Dry cleaning businesses and gas stations are also dominated by foreigners.
18. The average number of employees in a small business is ten.
(Source: Small Business Trends)
Considering the vast majority of small businesses have no employees whatsoever, this stat obviously refers to one having at least some staff to begin with.
More specifically, 5.3 million of them employ between one to ten people and 629,000 companies employ 20 to 500 people.
19. Small businesses employ 60.6 million Americans.
(Source: U.S. Small Business Administration)
That comprises approximately 47.1% of the US private labor force. For the purpose of this analysis, we can divide small businesses into three comparable categories—those with fewer than 20 employees, those with 20 to 99 employees, and those with 100 to 499 employees. They provide jobs to about 20 million people each.
20. 51% of small business owners are 50+ years old.
(Source: Small Business Trends)
This actually has a fairly simple explanation—if a business is successful, it’s likely to stick around, which means its owner will age along with it. Only 15% of current small businesses belong to Americans younger than 30.
21. Women own only 21% of businesses.
(Source: U.S. Small Business Administration)
As of 2022, small business owner demographics show that women lead ~1.1 million employer businesses throughout the US, mainly in the service industry (health care, social assistance, food services). However, this number does not include nonemployer businesses (i.e., firms without a single employee). If we count those as well, there are a total of 9.9 million female business owners.
22. 99.9% of businesses are small.
There are about 32 million firms currently operating throughout the US, but statistics comparing small business vs large corporations show that only 21,139 of them are classified as “large”. The vast majority are smaller firms that employ just a few people each. Still, due to their sheer numbers, they provide jobs to nearly half of the private workforce.
23. 89% of business owners are likely to work during the weekends.
Running your own operation means you might often need to invest more of your time working than a salaried employee would. A majority of small business owners work nights and/or weekends.
Furthermore, 70% reported they do more than 40 hours, and 19% claimed they reach more than 60 hours every week. Regardless, the independence of not having to answer to a boss is clearly worth it to many. There wouldn’t be over 30 million small firms otherwise!
Small businesses are a crucial part of the American economy. No matter how gargantuan certain Silicon Valley companies become, they can’t carry the whole country on their shoulders alone.
Plus, there’s always the caveat that most people would prefer not to live in a corporate dystopia, be it a robot-controlled or metaverse-based one.
The good news is that young people are very much into the idea of running their own business. In an age where older people ceaselessly lament diminishing real-life social interactions, investing in a local, community-oriented business, can be a great way to foster such relations.
This concludes our collection of small business facts. We worked on it with almost as much love as budding business owners work on their operations with, so we hope you enjoyed it.
1. Oberlo4. Small Business & Entrepreneurship Council 7. U.S. Small Business Administration 10. The Kickass Entrepreneur 13. Investopedia 16. Ignite Spot 19. U.S. Small Business Administration 22. Hourly
3. Sales Force6. Oberlo 9. U.S. Chamber of Commerce 12. Fortunly 15. Semrush 18. Inc. 21. U.S. Small Business Administration
1. Oberlo2. Fundera
3. Sales Force4. Small Business & Entrepreneurship Council 5. Fundera 6. Oberlo 7. U.S. Small Business Administration 8. Round Rock Chamber 9. U.S. Chamber of Commerce 10. The Kickass Entrepreneur 11. Zen Business 12. Fortunly 13. Investopedia 14. US Federal Reserve System 15. Semrush 16. Ignite Spot 17. Small Business Trends 18. Inc. 19. U.S. Small Business Administration 20. Small Business Trends 21. U.S. Small Business Administration 22. Hourly 23. LinkedIn
78.5% survive their first year, ~50% their fifth, and less than a third—the first decade.
About 30% of businesses lose money. Another 30% manage to break even, and about 40% succeed in becoming profitable.
Small businesses generate 43.5% of economic activity in the US. This number used to be higher in the 1990s, at 48%. Small businesses are responsible for $5.9 trillion of the country’s GDP.
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