Turning your business idea into a flourishing multi-million dollar corporation may seem incredibly challenging—but these small business statistics prove it’s not impossible.
If you are thinking of starting your own company, the first thing you need to do is familiarize yourself with the latest business trends. Learning the industry’s ropes and finding out how other startups made it big can help your own company move toward the path of success.
Luckily for you, we’ve gathered the most recent small business trends that can provide you with some quick answers to your most pressing questions.
Top Small Business Stats | Editor’s Choice
- The average age of successful startup founders is 45.
- Around 28% of small businesses spend less than $500 on website maintenance.
- The global average time required to start a business is 19.5 days.
- A small business CEO makes $64,647 on average per year.
- In 2018, there were 12.3 million women-owned businesses in the US.
- There are 2,346,200 small businesses owned by Latino women.
Small Business Statistics 2020
1. The restaurant services industry is among the first to recover from the pandemic. It’s currently down 57% compared to pre-pandemic numbers.
According to Yelp’s Q2 report, some of the industries are starting not only to recover but to be more in-demand than others. By the end of June, the food industry’s interest was up 148%; it’s no wonder that people are mostly interested in takeouts. The food industry is one of the most common small businesses in general.
2. COVID-19 rendered 31% of small businesses currently non–operational.
Even in stable living conditions, uncertainty is a significant factor for business miscalculations and mishaps, so it can eventually be the reason for the failure.
3. There are approximately 30,748,033 small businesses in the US.
(Small Biz Trends)
According to small business industry statistics, a total of 59,915,217 people are employed in one of the small-scale companies, making those businesses one of the major forces behind America’s economic power.
4. Banks approved only 13.6% of small business loans in August 2020.
For comparison, they approved 26.9% of small business loans in 2018. Although this may not seem much, short business loan approval reached the highest point in 2018 since the 2008 recession. Considering the economy’s current state, August’s loan approval rate was only slightly lower than in July 2020 (13.8%), according to small business lending statistics.
5. The average age of successful startup founders is 45.
Contrary to the myth of college-aged entrepreneurs setting up business better because of their fresh perspective, Wharton’s recent study shows that cases like Bill Gates, Mark Zuckerberg, and Steve Jobs are exceptions rather than a rule in the startup world. The average age of a successful entrepreneur is around 45. These entrepreneur statistics show why older entrepreneurs have had a chance to get more industry experience before they branch out and fund their own business.
6. Small business cybersecurity statistics show that the insider threat-related incidents alone cost SMBs an average of $7.68 million per incident.
It’s important to note that each incident’s cost depends on the company’s size and the scope of the attack. However, averaging at over $7.5million per disturbance—if small business data breach statistics are trusted— it is undoubtedly a worrisome statistic and a clear indication that investing in cyber protection is always a better path than taking risks with security.
7. Around 28% of small businesses spend less than $500 on website maintenance.
(Top Digital Agency)
According to small business website statistics, a shocking one in ten businesses doesn’t invest in marketing. While investing in advertising when you’re just getting your business off the ground might seem like an unnecessary cost, marketing can lift your businesses’ presence from a local to a global level.
Small Business Growth Statistics
8. 15% of Americans shop via Facebook.
Using social media for small business statistics has indicated that an average Facebook user tends to click on 11 advertisements per month. Out of those users, 74% are high-income Americans, making them more likely to spend money on a product, according to Facebook advertising statistics.
9. 37% of small businesses offer higher salaries than larger companies to swoon employees, according to small business employment statistics.
Over one-third of small businesses have to resort to offering higher salaries to their employees so that they can win them over. They also provide many other benefits like vacation policies and other opportunities that may give them an edge over more prominent competitors. As a result, these businesses face challenges with their finances.
10. More than 40% of all SMBs attribute some of the customer growth to digital tools.
The latest small business technology trends are making a case for a highly increased use of digital tools to push your company in the right direction. Businesses with a digitalized presence are also five times more likely to reach an international audience.
11. The total business population grew by 200,000 (3.5%) between 2018 and 2019 in the UK.
Interestingly, there was an overall increase of two-thirds since the beginning of the millennium — 69% or 2.4 million. The highest growth rate was recorded in periods of 2003–2004 and 2013–2014, according to small business statistics for the UK.
12. Immigrants started 55% of all unicorn startups in the United States.
If we analyze small business statistics in the US, we conclude that immigrants started a total of 50 out of the 91 businesses valued at over $1 billion today. In the past two years, many of these companies have increased their workforce. Elon Musk’s SpaceX employs 7,000 people, and Mu Sigma has over 3,500 people.
The US Business Statistics
13. The global average time required to start a business is 19.5 days.
It takes just under a week to set up your own business in the US—four days, to be exact. While it doesn’t seem that long, it’s quite a bit longer than what it takes to start a business in other countries. On the other hand, according to global small business statistics, it takes only one day in New Zealand and Georgia to start a business.
14. There are 30.2 million small businesses in the US.
For those wondering what percentage of the economy is a small business, the number of small businesses in the US is 30.2 million, which makes up 99.9% of all companies. Out of these businesses, 8 million belong to minorities.
Additionally, small businesses yield a GDP of 43.5%. Small business job creation statistics indicate that these companies also created 1.9 million jobs in 2015 alone and continuously contribute to local communities by providing job opportunities and financial security. These sheer numbers prove that small businesses are a vital part of the country’s economic landscape.
15. 47.5% of all employed people are part of a small business.
Small business statistics show that small businesses are responsible for employing 58.9 million people in the United States. However, it should be noted that this is the overall percentage, so some industries have a higher share of small business employees.
For example, over 85% of employees in the agriculture, forestry, and fishing industry work for small businesses, while 26.4% of workers in the information science industry do the same.
16. 50% of all small businesses in the United States are operated from home.
Thanks to the internet and the advancement of technology, Americans now have the luxury of working from home. According to the latest small business trends, half of all small businesses are operated from home. Out of these, 60.1% do not have any paid employees. The most common type of these business structures is the sole proprietorship.
Small Business Revenue Statistics
17. In 2018, 9% of small businesses made over $1 million.
The most profitable small businesses made over $1 million in 2018, while those that did not fare so well only made $10,000. That sum is not even enough to break even unless a single person runs the business.
18. 86.3% of small business owners earn an annual income of $100,000.
It’s not a giant leap of logic to understand that small business owners make a great deal less than big-company CEOs. Small business owners statistics indicate that they make less than 100 grand annually. But something that may come as a surprise to many is that a whopping 30.7% don’t take any salary at all!
19. A small business CEO makes $64,647 on average per year.
If we talk about the average income for a small business CEO, it is just over $64,647 per year, with most people falling in the range of $30,000 to $156,000. PayScale also states that the business’s geographical location also dramatically impacts the CEO’s salary, so those who live in high-income areas can expect to earn a bit more than average.
20. 1.7% of women-owned small businesses generate a revenue of $1.2 trillion, according to small business sales statistics.
Women have shown a lot of interest in starting their own businesses in recent years. In 2018, 207,900 women-owned companies generated more than a mind-blowing $1 trillion in revenue. This is an incredible jump of 46% if we look at the average small business revenue data for the past 11 years.
Small Business Demographic Statistics
21. Black business owners have suffered an 18.4% decline in business activity due to the pandemic.
While 2020 has been a hard-hitting for any American business owner, it’s the black population who suffered the most. Small business owner demographic statistics indicate that the decline among black American business owners has been almost three times the decline among all the other owners.
22. In 2018, there were 12.3 million women-owned businesses in the US.
The number of female-owned businesses has increased 31-fold from about 45 years ago. In 1942, women owned only 402,000 firms that accounted for just 4.2% of the demographic. Today, they own 40% of all US firms, per women-owned small business statistics.
23. Between 2014 and 2019, the number of women-owned businesses grew by 21% to a total of almost 13 million.
In comparison, women-owned companies have been growing at an almost double pace as all the other businesses (9%).
24. Hispanic small business statistics imply that there are 2,346,200 small businesses owned by Latino women.
About 18% of all women-owned businesses belong to Latino women. The number has seen a 7% jump annual growth from 2014 to 2019. However, in the last year, the growth has reached 10%. According to small business success statistics, it’s the revenue that’s problematic—Latino women earn $50,900 compared to an average of $142,900 among all the other groups.
25. Younger women (25–44) have higher participation rates (27%) in businesses globally.
More women (27%) start their businesses out of necessity than men (21.8%). The number of women-owned companies has grown by 21% per small business statistics. This is especially impressive when we consider that all the other businesses have grown only 9% in comparison.
26. Veterans started 2.52 million small businesses.
What’s more, veterans own about 9.1% of all US businesses. Out of these, 42,485 companies employed over 5 million people in 2018. Over 2 million of them are self-employed. Texas, California, and Florida are the states which boast the highest number of veteran-owned businesses.
27. Canadians spend just over $30,000 a year on advertising, according to small business marketing budget statistics.
When it comes to businesses with annual sales of less than $2 million, the companies tend to spend around $19,652 on the website and $14,301 on online marketing campaigns. This totals an amount of $33,953 for advertising purposes.
Small Business Failure Statistics
28. 1 in 12 small businesses closes down every year.
The percentage of small businesses that fail hovers between 7% and 9%. Although the success rate is a bit low, remember that you can avoid some significant pitfalls with business knowledge, proper funding, and adaptability.
29. 42% of small business startups fail because they put out a product/service that is not high in demand.
It is highly recommended to do proper market research before getting started in the business world. While some business ideas might seem genius at first, the truth is that there is no monetary value in them unless people have a substantial need or interest in what you’re offering.
30. 29% of small businesses close because of their inability to sustain regular cash flow.
While small business bankruptcies statistics uncover that the most significant reason for small business failure is the absence of need for what is being offered to consumers, many owners also struggle with allocating the money influx in a way that fits a sustainable business model.
A small business’ debt problems may actually be income problems, hence why a regular cash flow must be a priority for all owners.
31. 23% of small businesses fail because they do not have qualified teams to run the business.
Small business failure statistics show that many startups fail because they do not have the right management to stay on top of finances, organize the daily workflow, or bring in new customers. They also have a shortage of hard working and dedicated employees.
32. 19% of businesses close down because of tough competition.
Understanding how competition works is essential for running a successful business. Companies that perform a practical competitor analysis have a bigger chance of staying above water by continuously improving their services, small business facts reveal.
33. 65% of startups in the construction industry close down by their fifth year.
According to the most recent startup failure rate, about 75% of small businesses survive their first year, 65% survive the second year, and only 35% make it through their fifth year.
The situation in the transportation industry is quite similar. More than 75% of transportation startups make it through the first year, while only 40% survive their fifth year.
34. Small business failure statistics for Australia indicated that small businesses with 5-19 employees had a survival rate of 77%.
Interestingly, the failure rate declined with the growth of the number of employees. Microbusinesses with 1–4 employees had a 32% failure rate. Medium businesses (20–199 employees), on the other hand, have failed in 18% of cases.
Even though the competition is very tough, small businesses that develop innovative ideas, have flexible management, and adequate funding can manage to stay on top of the game.
These small business statistics and facts can help you understand some of the startups’ issues and how you can overcome potential problems. Make sure you follow these stats and do some research of your own, so your business has a chance to thrive.
Frequently Asked Questions (FAQ)
In the United States, any business that has fewer than 500 employees is considered a small business. The number of employees varies globally, but the central concept is the same. A small business is an organization that has fewer employees than an average company.
The definition of a small business also depends on how much revenue it earns across various industries. For instance, a construction business that makes no more than $36.5 million annually is considered a small business. Meanwhile, companies with average annual receipts of less than $750,000 are considered small in the agriculture business.
Contrary to popular beliefs that most startups fail within their first year, the actual small business failure rate is 30% within the first two years. Moreover, about 50% of small businesses survive their fifth year, and 66% make it through the first ten years. Just 25% make it past year 15 or more.
However, these figures vary from industry to industry, so if you think of dipping your toes as an entrepreneur in an industry, you need to do thorough research first.
The percentage of startups that fail may be reduced by proper funding, planning, management, and adaptability.
The average small business owner’s salary in the US is $69,748. The pay range is fairly broad—$30,000 to $145,000. The bonuses also differ significantly, ranging anywhere from $970 to $21,000.
Small businesses make up 99.9% of all the businesses in the United States, which significantly impacts the economy. They also have a high impact on the country’s GDP and create many jobs, particularly to underserved communities. Many small businesses also bring highly innovative concepts, products, and services to the market.
Small services also offer critical B2B services to large enterprises like design, accounting, content marketing, and legal services. Others produce niche products that they then sell to large corporations.
Around 20% of small businesses fail within their first year. The biggest reason for failure is simply the lack of demand for a product or service the business is offering. Around 42% of companies fail because they didn’t do proper market research. The second most common reason for closing a business is insufficient funds.
Small and medium-sized businesses make for over 90% of all business population in the developed economies—as well as 60–70% of employment and 55% of GDP, small business statistics show.