August 5, 2019 12:00 PM PT

Small Business Statistics

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The United States has more than 30 million small businesses. These companies account for more than 99% of all businesses in the country. Keep reading for more surprising stats.

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The federal Small Business Administration (SBA) defines a small business as one with fewer than 500 employees. Today, 98.2% of all small businesses have fewer than 100 workers.

How many small businesses are there and who owns them? Find these answers and more in our guide.

Small Businesses in the US

How many small businesses are in the United States?
The United States is home to 30.2 million small businesses. That number represents 99.9% of ALL businesses in the US.

What percentage of jobs come from small businesses?
A total of 58.9 million people work for small businesses—that's 47.5% of the private workforce.

Small businesses add an average of 1.9 million jobs per year in the United States.

Which industry has the most small business employees?
The healthcare and social assistance industry has the most employees at 8.6 million employees. The utilities industry has the fewest number of small business employees.

Which state has the most small businesses?

  • California: 3.9 million small businesses and employs 7.0 million people.

  • Texas: 2.6 million small businesses and employs 4.7 million people.

  • Florida: 2.5 million small businesses and employs 3.3 million people.

  • New York: 2.1 million small businesses and employs 4.0 million people.

  • Illinois: 1.2 million small businesses and employs 2.5 million people.

Which states have the fewest number of small businesses?
Alaska has just 71,841 small businesses, the lowest in the US. Small businesses represents 99.13% of all businesses in the state.

States With the Fewest Small Businesses:

  • Alaska: 71,841 small businesses

  • North Dakota: 72,723 small businesses

  • Vermont: 77,683 small businesses

  • Delaware: 79,417 small businesses

  • South Dakota: 85,252 small businesses

How and Why Small Businesses Fail

What percentage of small businesses fail?
In the first year alone, 20% of small businesses fail. By the second year, that number grows to 30%.

How many small businesses fail?
Only 50% of small businesses make it to their fifth year, and only 1/3 make it to their 10-year anniversary.

The number of small businesses that make it 20 years is even lower: 20%.

Why do small businesses fail?
Small businesses fail for many reasons. The top five most common are:

  • Not enough capital
  • Not properly pricing products or services
  • Lack of a business plan
  • Inadequate management
  • Lack of marketing

Who Owns Small Businesses?

How many small businesses are family-owned?
About 20% of small businesses are family-owned. Half of all these businesses have equal ownership between men and women (a man owns one-half and a woman owns the other half).

How many small businesses operate out of the owner's home?
As many as 67% of business owners start their business in their own home to help keep costs down.

But 59% of business owners continue to operate out of their home even after getting established.

How many women own small businesses?
Today, there are around 11.6 million small businesses owned by women. These businesses have more than 9 million employees.

What types of small businesses do women own?
Women tend to own personal service businesses or retail businesses. They also own a large portion of businesses related to healthcare services.

What types of small businesses do men own?
Men tend to own more hands-on businesses, such as construction, machinery, and manufacturing businesses.

How many minorities own small businesses?
There are an estimated 8 million minority-owned small businesses in the United States. This figure includes small businesses with employees, as well as non-employer small businesses.

African Americans own 7% of small businesses, Asians own 4.3%, and Hispanics own 10.6% of small businesses.

How many millennials own small businesses?
The number of millennial-owned small businesses has hit a 24-year low. Only around 3.6% of adults ages 30 or younger own a business. They tend to specialize in:

  • Personal services businesses
  • Retail operations
  • Restaurants

How many business owners are over the age of 50?
Rather than thinking about retirement, almost 25% of adults ages 50 and over open their own business. Older owners tend to own businesses that require more capital to get started in industries like:

  • Machinery
  • Manufacturing
  • Real estate

What are the top challenges for small business owners today?
Owning a small business may fulfill a dream. But it comes with its fair share of challenges, including:

  • Economic uncertainty
  • Health insurance costs
  • Lower amount of customer spending

Small Businesses and Financing

How many small businesses have trouble getting funding?
Roughly 27% of small business owners claim that they've been unable to secure the necessary funding.

One in five small businesses claim that the lack of funding makes it difficult to finance a higher level of sales.

How many small businesses get loans from big banks versus small ones?
Just shy of 27% of small businesses received a loan from big banks, while more than 50% received loans from small ones.

How much money do small businesses need to get started?
The amount varies based on a number of factors. Employer-firms usually need more capital than non-employer firms.

19% of employer firms need more than $50,000 compared to only 4.6% of non-employer firms.

How much debt do small businesses carry?
An estimated 63% of employer firms carry debt. Typically, the larger the business (the more employees), the more debt a business carries.

Almost 75% of small businesses with more than 50 employees have some type of debt versus 60% of small businesses with fewer than 10 employees.

The Life of a Small Business Owner

How many hours do small business owners work a week?
84% of small business owners work more than the traditional 40 hours a week. In fact, many work an average of 60 hours.

How do small business owners spend their workday?
In a survey conducted by The Alternative Board, business owners said they spend as much as 25% of their day answering emails.

That's compared to the 20% of time they spend in meetings and 16% on customer service.

How much money do small business owners make on average?
The median income for small business owners is $60,501. That's just shy of the median household income in the US—$61,372.

Bottom Line

Small businesses make up the vast majority of business in the United States. But the life of these business owners contains significant challenges, from long hours to struggles to secure funding.

Still, small businesses make up nearly 50% of the nation's private workforce. If you have the drive to own your own business, be sure to take the necessary steps to succeed in the industry you choose.

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