Small Business Statistics: COVID-19, Revenue, and Failure Rates

Small Business Statistics: COVID-19, Revenue, and Failure Rates

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Turning your business idea into a flourishing multi-million dollar corporation may seem incredibly challenging—but these 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.

Top Small Business Statistics: Editor’s Choice

  • Because of the pandemic, 31% of small businesses are now non-operational.
  • Only 28% of small businesses do not invest more than $500 in website maintenance.
  • Americans that shop on Facebook account for 18.3%.
  • As of 2020, 5.94 million were UK small businesses.
  • In the US, there are 31.7 million small businesses.
  • A whopping 86.3% of small business owners gain less than $100,000 per year.
  • $1.8 trillion comes from women-owned small businesses alone.
  • Cash flow issues are responsible for the failure of 82% of small businesses.
  • On average, 20% of small businesses fail within the first year.
  • 2,346,200 small businesses owners are Latino women.

Small Business Statistics Amidst COVID-19 in 2020


The current pandemic has profoundly wounded the small business sector. In 2020, most countries underwent a worldwide lockdown, causing many small businesses to close or operate from home.

1. The restaurant industry is currently 57% lower than the pre-pandemic numbers.

According to statistics on the restaurant business, this industry of the most common small businesses is among the first to recover from the pandemic, and for a valid reason. 

This industry is more in demand than any other. Yet, this figure is still far from reaching the one reported in the pre-pandemic period.

2. COVID-19 rendered 31% of small businesses currently non-operational.

When the US became the epicenter of the virus in March 2020, small business statistics during COVID-19 reported that over 60% of firms closed due to health organizations and government orders. 

Unfortunately, a third of them have faced failure and are not operating anymore.

3. Banks approved only 13.6% of small business loans in August 2020.

In 2018, banks approved 26.9% of loans. Although this may not seem much, small business lending statistics show that loan approval reached the highest point in 2018 since the 2008 recession. 

Not surprisingly—considering the economy’s current state—August’s loan approval rate was only slightly lower than in July 2020 (13.8%).

4. 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, small business facts revealed that cases like Bill Gates, Mark Zuckerberg, and Steve Jobs are exceptions rather than a rule in the startup world.

These entrepreneur statistics show why older entrepreneurs have a higher chance to get industry experience before they branch out and fund their own businesses.

It’s important to note that each incident’s cost depends on the company’s size and the scope of the attack. 

However, these worrisome small business data breach statistics are a clear indication that investing in cyber protection is always a better path than taking risks with security.

6. Around 28% of small businesses spend less than $500 on website maintenance.

A shocking one in ten businesses doesn’t invest in marketing. Investing in online advertising when you’re just getting your business off the ground might seem like an unnecessary cost. 

Yet, small business website statistics prove that this strategy may lift your businesses’ presence from a local to a global level. That’s why creating a website and spending on its maintenance are such vital aspects for small businesses.

7. 97% of consumers search for local businesses online.

Although many people prefer to buy local, these statistics show that potential customers look for local businesses on the web before making a purchase. 

That’s why these kinds of small businesses are far from dying out, despite technological advancement and the rising of ecommerce.

How to Market to Small Business Owners


It’s only normal that every small business owner’s goal is to attract new customers. 

The following stats will tell you on which platforms small businesses market the most and how this industry has grown over time.

8. 18.3% of Americans shop via Facebook.

Small business stats indicate that an average Facebook user tends to click on 12 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 the latest small business employment statistics, over one-third of small businesses have to resort to offering higher salaries to their employees to 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.

The latest report is making a case for a highly increased use of digital tools to push your company in the right direction. 

In addition to that, businesses with a digitalized presence are five times more likely to reach an international audience.

Global Small Business Statistics


As small businesses constitute the vast majority of companies, they are considered the backbone of economies worldwide. Let’s take a closer look at some of the numbers regarding small businesses in the US and around the world.

11. As of 2020, there were 5.94 million small businesses in the UK.

Considering these small business statistics, the number of employees for a small business in the UK ranges from 0 to 49. This figure accounts for 99.3% of the total businesses in the country. 

Moreover, small businesses constitute three-fifths of the overall employment and half of the country’s private sector turnover.

12. In Australia, small businesses with 5-19 employees had a survival rate of 77%.

Interestingly, small businesses statistics in Australia show that, in 2020, 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.

13. In 2020, small businesses in Canada made up 98% of all companies.

Keeping in mind these fascinating small business statistics, Canada contributed greatly to the nation’s economy in 2020. 

In fact, these companies were responsible for hiring 9.7 million employees, which equals about 64% of the national workforce. On the other hand, medium-sized companies only employ 3.2 million people.

14. The global average time required to start a business is 19.5 days.

In the US, it takes four days to set up a business.

Although these small business statistics seem to report a reasonable figure, other countries like Hong Kong and Canada start a business in two days. New Zealand and Georgia only take one day.

15. There are 31.7 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 surpassed 31 million, making up 99.9% of the companies in the nation. 

In comparison, there were 30.2 million in 2019. It’s clear that even with the coronavirus outbreak, small businesses didn’t stop thriving.

16. About 47% of all employed people are part of a small business.

Small business statistics in 2021 show that these companies gave jobs to 59.9 million people in the US. 

Understandably, this figure differs from business to business. While many entrepreneurs are sole traders, some others create jobs and retain a higher share of small business employees.

17. 50% of all small businesses in the US are operated from home.

Thanks to the advancement of technology, some of the most profitable small businesses in the US operate remotely. 

Out of these, 60% do not have any paid employees, and for a good reason. Most of these American companies are structured as sole proprietorships.

18. 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 Revenue Statistics


Many factors determine how small businesses pay for themselves each year. 

Size, gender, industry, location, experience, and type of business are all strong indicators that shape small business owners’ total revenue.

19. 86.3% of small business owners earn less than $100,000 per year.

As expected, small business owners make a great deal less than big-company CEOs. Small business owners statistics indicate that they do not reach 100 grand annually. 

But something that may surprise you is that about 30% of small business CEOs do not gain a cent from their hard work.

20. On average, a small business CEO with less than five years of experience makes $49,000 per year.

The average income of small business owners is determined by many factors, including years of experience in the field. 

While small business CEOs with 5–10 years of experience can reach $70,000 per year, veterans are close to hitting $100,000 per year.

21. Women-owned small businesses generate $1.8 trillion.

Not only does this figure represent the average small business revenue, but it also comprises shipments, receipts, and sales.

Women have shown a lot of interest in starting their own businesses in recent years, giving valuable contributions to the national economy. In 2018, they hired more than 10.1 million talents with a whopping payroll of $388.1 billion per year.

What Is the Success Rate of Small Businesses?


While starting a new business can be an exciting experience, many aspects like employment and marketing strategy are responsible for your success or downfall. 

Let’s take a look at these intriguing numbers.

22. 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.

23. 42% of small business startups fail because they put out a product or service that is not high in demand.

These small business failure statistics suggest doing 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.

24. A whopping 82% of small businesses fail because of cash flow issues.

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 come from income problems, so a regular cash flow must be a priority for all owners.

25. The small business failure rate is, on average, 20% within the first year.

In addition to that, about 30% of small businesses are expected to fail within the first two years. 

This is because these companies do not have the proper 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.

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.

27. 65% of startups in the construction industry close down by their fifth year.

Only 35% of small businesses with the highest success rate make it through the fifth year. However, about 75% of small businesses survive their first year, and 65% surpass the second 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.

Small Business Demographics


After getting a good grasp of small businesses, their income, and their failure rate, you’re ready to know more about some exciting demographics about gender, ethnicity, and age. 

Moreover, we will cover the impact of the pandemic on small businesses owned by minorities.

28. Black business owners have suffered an 18.4% decline in business activity due to the pandemic.

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. 

Understandably, 2020 has been hard-hitting for any American business owner, yet it’s the black population who suffered the most.

29. American women employed 19.9% of workers in their small businesses.

When it comes to a women-owned small business, the most recent statistics might come off as discouraging.

Although the annual earnings of people working in women-owned firms lag behind the national average, the figure is steadily growing.

30. Latino women own 2,346,200 small businesses.

About 18% of all women-owned businesses belong to Latino women. The number has seen a 7% jump in annual growth from 2014 to 2019. 

Yet, according to Hispanic small business statistics, the revenue was problematic, and here’s why. Latino women earn $50,900 compared to an average of $142,900 among all the other ethnic groups.

31. 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%, small business trends reveal. 

This is especially impressive when we consider that all the other businesses have grown only 9% in comparison.

Small Business Statistics: The Takeaway

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

How much does a small business owner make?


According to Payscale, US small business owners gain an average of $70,300. However, running your own business does not guarantee a considerable income right away. On the contrary, many founders do not take a salary during the first years.

When the business manages to survive and earns an income, the pay range is fairly broad—$30,000 to $145,000. The bonuses also differ significantly, ranging anywhere from $970 to $21,000.

How much does a small business owner make?


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.

Why do small businesses fail?


When jumping on the entrepreneurship bandwagon, owners must keep in mind that launching a small business is inherently risky. The most successful business owners can mitigate company risks while bringing a product or service to a profitable market for both businesses and customers. The key to survival is the ability to meet the customer’s demands.

The percentage of startups that fail may be caused by proper funding, planning, management, and adaptability.

What percentage of businesses are small businesses?


Small businesses make up 99.9% of all the businesses in the US, which significantly impacts the economy. They also have a high impact on the country’s GDP and create many jobs, particularly in 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.

What is the average lifespan of a small business?


The vast majority of small companies find it challenging to survive within the first five years of their business activities. Especially with the coronavirus outbreak, running a business has become even more difficult.

All that considered, if you manage to survive the first five years successfully, your company might encounter fewer difficulties and last for a long time. However, a good part of businesses is still young. In fact, 51% of small businesses are 10 years old or less, and 32% of them do not surpass five years.

What percentage of employment is a small business?


Understandably, small businesses are the anchor of the US economy. Despite their size, small businesses employ 47.1% of the total number of workers in the country.

Considering that there are 31.7 million small businesses, 25.7 million of them do not hire anyone choosing to run a sole proprietorship. Only the remaining 6 million small businesses employ paid workers.

How many businesses fail in the first year?


Technological development, payment methods, and high-speed internet are the main reasons why ecommerce has become so easy. Furthermore, the massive usage of smartphones has enabled people to shop comfortably from their homes. 

As ecommerce statistics show, this industry generated $3.5 trillion in sales in 2019 and is expected to reach $4.9 trillion by the end of 2021. As of 2020, the ecommerce market size was valued at $10.36 trillion.

Sources

American Express, BDC, Biz2Credit, CB Insights, Census, Census, Deloitte, Entrepreneur, FreshBooks, FSB, Fundera, Fundera, Fundera, IBM, Indeed, Lending Tree, Luisa Zhou, Minutes, Oberlo, Open Seed, SBA, Score, Simply Insurance, Small Biz Trends, Statistics Canada, Status Brew, Top Digital Agency, Wharton, World Bank, Yelp