33+ Small Business Statistics to Know in 2023

The HYPE around small businesses is growing.

It’s part of the American dream, after all:

  • Starting your own business
  • Being your own boss
  • Breaking the chains of bureaucracy
  • Succeeding against all odds

We here at SpendMeNot have gathered some of the most important small business statistics:

Fascinating Small Business Facts (Editor’s Choice):

  • 50% of small businesses fail in the first five years.
  • The number of small businesses in the US is 32.5 million.
  • $704,581 was the average loan amount given by SBA in 2021.
  • Women own 14 million small businesses in the US.
  • 20% of small-medium businesses fail in their first year.
  • Half of the US small companies are home-based.
  • 57% of all small business owners in America are men.
  • Minorities own 19% of small businesses.
  • 55% of unicorn startups are founded by immigrants.

Transforming a vision into a productive and lucrative business can be an empowering and challenging journey.  If you plan on becoming a small business owner or already are one, you should take the time to learn more about the recent small business trends.

Being aware of the newest small business statistics can be a huge advantage!

Here’s where we come to help!

Impact of Small Business

1. 32.5 million small businesses exist in the US.

(Source: Sba.gov)

First, let’s answer how many small businesses are in the US?

32.5 million.

But what percentage of businesses are small businesses?

As of 2021, 99.9% of all US companies are small businesses. This is a huge chunk and makes them an essential part of the economy.

And looking globally, there were estimated to be approximately 213 million small businesses in the world.

Small Business Revenue Statistics

2. The average salary for small business owners is $66,236 a year.

(Source: PayScale)

How much does a small business owner make a year?

More than 85% of all owners earn less than $100,000. Statistics of US businesses show that while small business owners may work harder than CEOs, they don’t make much in comparison.

The average salary of a traditional CEO is around $156,170 annually. A recent study revealed that 30% of small business owners might not even take money.

It’s also of note that there’s a pay difference by location. Small business owners in Boston earn almost 87% more than the national average, while those in Chicago make 58.2% more. On the other end of the spectrum are Los Angeles (62.3% less) and Seattle (8.0% less).

Business Categories Popular With Small Businesses

3. EdTech and eCommerce are the most popular industries for startups in 2021.

(Source: Geomotiv)

One of the most important steps for startups is to identify industries that are set to experience great growth rates. You will be able to take advantage of these small business stats to further your business too.

The most lucrative industries for startups are those that are still likely to be around a decade from now. EdTech, eCommerce, streaming services make it to the top of the list while healthcare, leisure & entertainment, and logistics are all up there.

4. A 80% increase was seen in the warehouse and self-storage industry in 2021.

(Source: Guidant Financial)

We have witnessed a huge boom in the warehouses, storage units, and non-residential buildings industry. One notable franchise in this industry is UNITS, which had the most SBA loan approvals of any company in this industry during 2021.

Other popular industries included gas stations (57.86%), Beer, Wine, and Liquor Stores (50.53%), and hospitality (47.12%). Part of this growth could be attributed to the gradual recovery from the heights of the Covid-19 health and economic crisis. However, the increase in many of these industries has exceeded the pre-pandemic levels.

Success and Failure of Small Businesses

5. 50% of US small businesses last for more than five years.

(Source: Sba.gov)

So, what percentage of small businesses fail in the first year?

Surprisingly, only 20% are likely to shut down.

In the first two years, only 30% of startups are likely to fail.

The small business survival rate is 50% for five years or more.

The small business success rate for more than ten years is 66% and 25% for 15 years or more.

It is important to plan and manage the business accordingly to make sure that it survives.

6. Every year, 1 in 12 businesses close.

(Source: Bls.gov)

How many small businesses close each year?

The small business failure rate is only 1 in 12, which is a great margin. It means that 11 businesses out of 12 survive annually. However, this also implies that only 4 out of 100 businesses can survive past the decade mark.

The most common problem for failure is cash flow problems, which is a reason shared by 82% of small companies. This shows that if you’re planning to start a business, you should make sure to analyze your cash flow statements so that you aren’t among the failing companies.

Small Business Trends and Small Business Growth Statistics

7. Over 400,000 new businesses are started each month.

(Source: US Census Bureau)

According to the US Census Bureau, business applications for October 2021 were 432,101.

And how many new businesses start each year?

New business statistics show that over 4 million businesses are opened yearly. While a small business may not manage to survive in the long run, you should note that the competition remains stiff.

8. Nearly half of the private-sector workforce work for small businesses.

(Source: Sba.gov)

What percentage of employees work for small businesses?

Small business start-ups account for 46.8% of American private-sector employers. This means that 61.2 million people depend on small businesses for their earnings.

9. 78% of small business owners are optimistic about the future of their companies.

(Source: Guidant Financial)

There are thousands of small businesses opening every single day. And the economic backdrop isn’t stellar. Despite this, 78% of small business owners are confident about their future in the market. Around 19% expressed doubt regarding their companies’ success, while 4% said they didn’t expect to survive.

Marketing for Small Business Statistics

10. 70-80% of consumers research small businesses before making a purchase or visiting them.

(Source: Blue Corona)

It is important for any business to have a website, even if they are small.

Websites can have a huge set of benefits – they lend credibility, visibility, and ensure a better customer experience. Most consumers prefer to go online and check the business out before they make a purchase. Small businesses need to make sure that they have a website in place so that customers can check it at will.

11. 71% of small businesses have websites.

(Source: TopDesignFirms)

Small business statistics for 2021 show that one-third of small businesses don’t have a website yet. The main reasons include irrelevance to industry, cost, and social media. Social media has made it easy to market your services and goods at a low cost. Almost half of the small businesses without a website (44%) plan to create one.

To give your website more credibility, we suggest posting a privacy policy statement. Have a look at our selection of the best free and paid privacy policy generators.

12. 73% of small business startups invest in social media marketing.

(Source: SmallBizTrends)

Digital marketing channels are more popular with small businesses due to their limited budgets. They plan to continue investing in the future too.

Small businesses need to realize that taking a holistic marketing approach is important. Investing in different mediums can be more helpful for small businesses since it can help you get your brand image out there.

13. Small businesses spend $534 a month on digital marketing.

(Source: Statista)

Startups and small businesses have limited resources to spend on their marketing resources. Statistics for business show that spending more than $6,000 on digital marketing yearly is common since they need to use their marketing resources efficiently.

Moreover, 93% of small business owners plan to keep or increase their marketing spending over the next 12 months.

14. 80% of startups don’t invest in content marketing.

(Source: Clutch)

A survey found that content marketing was the most underrated form of digital marketing. An incredibly high percentage of small businesses in the US don’t have any content marketing strategy in place.

This shows that one in four small businesses actually don’t use the most cost-effective way to build customer loyalty and engagement. You will be able to climb up the rankings on the search engines by making SEO-friendly content. In fact, 70% of customers state they would find it more appealing to learn about your products and services through articles and blogs than ads.

15. 92% of all small business owners think that websites are the most effective digital marketing strategy.

(Source: Iron Paper)

Some 89% of owners who use SEO techniques believe that they help their business. Indeed, small business growth statistics show that combining SEO and websites is the most important element of successful digital marketing.

Building a website with the right keywords can increase traffic by relevant users. It can also provide a dynamic experience for the users and produce high-quality content to keep them engaged.

The growth rate of small businesses shows that you will be able to increase leads this way, making sure that your profit increases too.

16. VR and AR are the least common small business marketing strategies.

(Source: Clutch)

VR and AR actually help bring consumers closer to the products since they are simulation technologies and give customers an accurate impression of the goods. But do they boost a small business growth rate?

Despite the benefits that VR and AR bring to the table, only 10% of small businesses believe so and use this strategy.

Small Business Owner Statistics

17. Home-based businesses make up for 50% of all American entities.

(Source: Sba.gov)

Just a few decades ago, working from home seemed like something incredibly far-fetched.

However, technology has advanced since then. The remote business model was further accelerated by the Covid-19 pandemic.

Operating a business from home is a manageable, great option for many business owners. Home-based business statistics have found that 50% of all entities are home-run. This includes 60% of companies that don’t have paid employees yet.

The most common business type for home-based operations is a sole proprietorship.

18. Most startup owners don’t have college degrees.

(Source: CNBC)

The majority of small business owners never went to college or are dropouts.

Only 26% of owners actually have a bachelor’s degree. Some 20% of small business owners graduated from high school but didn’t go to college. Around 5% didn’t even finish high school.

This shows that you don’t need to have a degree to start your own business.

19. 29% of small business owners were motivated to open a business because they wanted to be their own boss.

(Source: Guidant Financial)

This was the most common reason among small business owners. 29% of respondents to a survey suggested that they went into business for their own pleasure. They wanted to pursue their passions and create something from scratch.

20. 19% of owners work 60 hours weekly.

(Source: Fundera)

While being your own boss may seem like a lucrative option, it isn’t easy.

Small business owners have to work harder than any other employee. Over 80% of them work even at nighttime and almost 90% during the weekends. Some70% work at least 40 hours a week, while 19% dedicate over 60 hours to their business.

21. Over 43% of small businesses are owned by women in the US.

(Source: Sba.gov)

It is important to look at women vs. men. We can see that women are getting into the business game now more than at any other time in history.

The number of women-owned small businesses has increased 31 times since 1972. In 1972, just 402,000 firms (4.6% of all companies) were owned by women. In 2021, 14 million companies (43.2% of all firms) were owned by women.

22. 1,17 women-owned businesses were opened per day in 2018 and 2019.

(Source: American Express)

The average growth rate of small businesses owned by women is outstanding. The progress of creation has taken an especially fast turn in recent years. Reports show that the small business owner demographics are dramatically different from how they were before.

Between 2002 and 2007, only 714 businesses were opened by women on average. As the recession and recovery period occurred between 2007 and 2012, the average number increased to 1,143.

After the recession, only 952 businesses were opened by women, business owner statistics show.

23. The total revenue by women-owned businesses is around $1.9 trillion.

(Source: American Express)

The contribution by businesses run by women has steadily grown over the years. In 2008, 1.7% of businesses owned by women (207,900) made more than $1 million. This has increased by 46% in the last 11 years. And small business facts from 2021 reveal the total contribution of women-led firms has now reached $1.9 trillion.

24. 19% of small businesses are owned by minorities.

(Source: Sba.gov)

Minorities own more than 6  million small businesses. This is an increase from 2015 when only 15% of business owners were part of any minority ethnic group. Small business ownership statistics show that African American business owners have jumped by a significant 400% between 2017 and 2018.

25. Veterans own 6.6% of US firms.

(Source: Sba.gov)

The latest reports show that 2.14 million businesses are under the ownership of veterans.

The most veteran-owned businesses are in Alaska – 9.8%.

26. More than 20% of small business owners are immigrants.

(Source: Score)

Although just 13% of the US population is made up of first-generation immigrants, this cohort owns 20.6% of America’s small business.

New Jersey, New York, and California have the biggest contribution of immigrants pursuing the American Dream.

27. 55% of unicorn startups were founded by immigrants in the US.

(Source: NFAP)

Out of 91 startups that have been valued over $1 billion, 50 had at least one immigrant owner. This is one of the most interesting facts about small businesses.

The biggest name among these unicorn startups is Uber. There are 9,000 employees across America and more than 3 million active drivers.

Other companies include Mu Sigma, WeWork, and SpaceX, with 3,500, 6,000, and 7,000 employees, respectively.

Financing Small Businesses

28. It takes only around 6 days to start a business.

(Source: Dynadot)

It doesn’t take that long to start a business. In fact, you just need six days to have your business up and running in the US. In other countries, it can take significantly longer to start a business. It can take 38 days for China, 30 days for India, and 13 days for Ireland and UK citizens to start a business.

If you think you need help, you can always use an online legal service to start your business.

29. $10,000 is the average amount of capital needed for startups.

(Source: Sba.gov)

The Wells Fargo Small Business Index study confirmed that you just need $10,000 for startup capital on average.

Another survey by Kauffman Firm found that $80,000 is the average small business startup capital that owners need per year.

However, you should note that one-third of non-employer companies and 12% of employer companies actually start without capital. The need for capital depends on the idea of the business.

Small Business Cost

30. $1,000-$5,000 can be enough to start home-based franchises.

(Source: CNBC)

One-third of small businesses are created with around $5,000 in startup capital. However, most of these franchises are based at home, business facts from 2020 show.

The small business bureau found that you don’t need large investments to open micro-businesses either. You only need low upfront investments for businesses like sole proprietorships. They can be started with as little as $1,000-$3,000 worth of capital.

Certain financial services companies such as Credibly, also offer easy access to business capital.

31. 56% of small business startups find talent hunting their biggest challenge.

(Source: Indeed)

Finding the right employees for small business owners can be a struggle.

Small business employment statistics show that 35% of SME owners find it harder to find the right employees now as opposed to five years ago. Another 24% agreed that it was harder than it was ten years ago.

32. Almost 40% of SMBs give higher salaries to get employees.

(Source: Indeed)

Small businesses don’t have a lot of resources when it comes to finances. Nevertheless, SMB stats show that 37% of them offer higher salaries to appeal to more candidates. Stats on small businesses show that lucrative salaries, alongside other benefits, such as vacation opportunities and policies, are seen as an advantage over working for bigger companies.

Best Bank for Small Business

33. In 2021, $704,581 was the average loan amount given by SBA.

(Source: Congressional Research Service)

SBA lending statistics show that the US Small Business Administration approved 51,856 7 loans totaling $36.5 billion. The average approved loan amount was $704,581.4.

34. Around 13% of loans for small businesses get approved by big banks.

(Source: Biz2Credit)

Small business loan stats show that 13.2% of small business loans were approved in January 2021. In comparison, big banks approved a record-high 28.3% of the funding requests they received in January 2020.

At the End of the Day

All small business statistics from 2020 and 2021 show one thing – it’s a trend that is not to be underestimated.

As technology grows, it is getting easier for more and more people to start their own businesses. 2022 is certainly going to be interesting in terms of the development of small businesses.

Want to stay up to date with the newest trends? Visit SpendMeNot.com.

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