Last Updated: February 26, 2021
Table of Contents
Do you know what happened during the last 24 hours?
A bat has eaten around 1,000 insects, more than 17,000 websites have been hacked, and you’ve inhaled more than 2,600 gallons of air.
Do you know how many small businesses are there in the USA in 2020?
Over 30 million!
These are all just facts in the context of the larger scheme.
Our true goal here is to help you understand all the small business statistics. With the knowledge and insights from them, you will be on your way to success. So let’s shed some light on the situation, starting with some…
Fascinating Small Business Statistics & Facts
- 50% of small businesses will survive 5+ years and 33% – 10+ years.
- 26% of people opened a small business in order to be their own boss.
- More than 500,000 new businesses are founded each month.
- Nearly 58 million people are employed by small business.
- 70% of small businesses are operated and owned by a single person.
- 64% of small businesses are started with less than $10,000.
- Small businesses generate 53% of all US sales.
How Many Small Businesses Are There in the US?
Small businesses prove to be the backbone of any economy. More than 600,000 new businesses open each year in the US, according to SBA estimates. In fact, 47.5%, or almost half of the country’s total workforce is employed by small businesses.
1. There are 30.2 million small businesses in the US – they make up 99.9% of all US businesses.
- Small businesses give jobs to 58.9 million people in the US.
- Most small businesses in the United States have fewer than 500 employees, while small businesses with less than 100 employees make up for 98.2% of the total number of small businesses.
- It takes an average of 4 days to launch a small business in the U.S.
- In the U.S., 543,000 new businesses are founded every month.
- 44% of the US economy consists of small businesses.
- 23 million SMEs represent 99% of all European businesses.
- 99.9% of all UK businesses are SMEs.
Small Business Revenue Statistics
2. The average income for a small business owner is around $65,000 per year.
- Entry-level small business owners can expect to earn an average of $58,374.
- Small Business GDP shares declined from 48.0% in 1998 to 43.5% in 2014.
- 60% of SMB owners believe the current economic climate is having a positive impact on business.
If you’ve ever wondered how much does a small business owner makes a year? Statistics of US businesses show that’s between $26,000 – $153,000. Compare this to an average salary of $46,800 in the US and you can already see that small businesses can be way more profitable than regular jobs.
What is the average revenue for a small business?
86.3% of small business owners take a salary of less than $100,000.
3. By 2020 the worldwide VR Market will be in excess of $40 billion.
- The number of unincorporated self-employed people has declined from 10.59 million in 2006 to 9.6 million in 2016.
- 40% of current tradespeople will be retiring in the next decade, creating a huge demand for carpenters, plumbers, construction workers, and more.
- Demand for software developers is expected to increase by 17% each year through 2023.
- Americans spend $81 billion on biking annually, generating 770,000 jobs.
These small business facts reveal certain niches, which will become more and more attractive in the coming years. Today, skilled trades are overlooked by many, perhaps due to the false belief that trades are poorly paid. In fact, skilled tradespeople are well paid. There will be a huge demand for such in the next decade, so it’s definitely worth investing in.
Small business statistics also suggest that meal kit services, software engineering, self-storage units, and senior care services are expected to provide a good opportunity in the recent future.
What percentage of small businesses have a website?
64% or less than two-thirds of SMB have a website. 94% of those websites are mobile-friendly in 2020.
Small Business Survival Rate
4. 50% of small businesses survive 5 years or more, while only 25% make it to 15 years or more.
- 20% of US businesses fail within their first year, according to the US Bureau of Labor Statistics.
- 42% of SMB fail due to no market need for their products or services, statistics for business in 2019 show.
- 29% of small businesses failed because they ran out of money, while 17% failed due to a lack of sound business model and poor product offering.
- In 2015, 73% of SMB owners said they are able to access enough capital for their business.
The small business success rate depends on a number of factors. Be passionate about your business, plan ahead and keep your mind open to new ideas. Plan your budget carefully, be disciplined, and focus on the needs of your customers.
The small business failure rate is mostly attributed to a lack of knowledge, insufficient or non-existent internet presence, and marketing. Weak leadership, low flexibility, and financial management problems are other top factors for the low survival rate of small businesses.
5. 67% of US adults have more confidence in small businesses, compared to 21% who trust corporations more.
- 46% of small businesses report they failed because they weren’t sure of what they were getting into.
- On a scale of 1 to 10, 53% of business owners ranked their happiness at nine or above.
- Small businesses generate 53% of US sales.
Americans are more likely to trust small businesses, while confidence in big businesses is in shorter supply. The happiness levels of employees are also higher in small businesses since they generally feel more like a family. Small business employees are more likely to handle different roles and work more, instead of taking advantage of good workflow management software.
How much debt does the average small business have?
SBA lending statistics show that in 2019, the average SBA loan was $417,314. The average SMB debt is around $195,000, as stats from 2016 reveal.
According to small business stats and facts, entrepreneurs earn an annual salary of $68,000. 30% work between 50-59 hours a week, although 73% said their hours were more flexible now than when they worked for someone else.
Small businesses drive innovation. They produce 16 times more patents per employee than large companies.
6. Around 7,000 businesses go bankrupt each year in Canada.
(Source: The Balance SMB)
- The small business survival rate in Canada is just one year, a mere 4% of SMB.
- 16% of SMB owners say they are having problems finding and retaining qualified talent.
- Only 10% state that the current economic climate is hurting their business.
Small business owners’ statistics suggest that the main reason behind small business failure is poor planning. SMB owners often neglect the needs of their customers and plan chaotically, leaving market research aside.
Modern-day SMB stats also reveal that 23% of owners are concerned about finding ways to grow their revenue. Other financial challenges for small businesses include healthcare costs (15%) and corporate taxes (10%).
What is the success rate of small businesses?
80% of small businesses survive their first year, while only 34% are existent after 10 years.
Small Business Growth Rate
7. Health, Beauty, and Fitness Businesses have increased by 34% in 2018.
(Source: Guidant Financial)
- Food businesses became the second most popular small business industry in 2018 with a 14% increase.
- US CBD industry reached $500 million in 2018 and is expected to reach $1.91 billion by 2022.
- Global e-bike revenues are expected to grow to $24.3 billion by 2025, from $15.7 billion in 2016.
Under the influence of social media, people have become more knowledgeable and conscious. SMB stats tell us that gyms, beauty salons, and spas are currently a very popular endeavor.
General retail is also on the rise with a 7% increase in the last year. Business services remain a top choice with an 11% increase and home-based businesses qualify in the top 5, going 6% up.
Most Common Small Businesses
Here are 10 great ideas for small business startups in 2020:
1. Personal Trainer
6. Online dating consultant
7. Freelance graphic designer
8. Travel planner
9. Massage therapist
10. Tour guide
8. 95% of purchases will be made through eCommerce by 2040.
- In 2018 46% of small businesses didn’t have a web presence.
- 35% of SMB owners think that their business is too small for a website.
- South Korea is seducing investors with the fastest average internet speed in the world – 28.6 Mbit/s.
- 30% of people would return to a website they’ve purchased from before.
Having a website for your business is essential in the 21st century. It’s your digital storefront, where potential customers are free to browse and purchase with the ease of a mouse click.
In only a couple of decades time physical shopping will be almost gone, but even now in 2019, the percentage of online shopping is growing. So why leave your customers to go shop through your rivals, simply because you do not have a website?
Global Small Business Statistics
9. 45% of all small business leaders use a CRM system.
(Source: Sales Force)
- 50% of US businesses are operated from home.
- 47% of SMB owners regularly use Facebook.
- 33% of SMB owners aren’t sure whether their marketing tactics are working.
Small business trends will continue to be dictated by social media and digital marketing. The business of the future is operated from home and relies on Facebook to promote its products or services.
10. New Zealand is the best country when it comes to both starting a new business and protection of minority investors.
(Source: The Guardian)
- The incorporation fee in the UK is £81.
- You’d need only 2 days to register a new business in Georgia.
- The Isle of Man has a 0% corporation tax rate.
Starting a new business is different around the world. In New Zealand, there are no payroll, social security, or capital gains taxes. Property registration can be done in just two days and there’s an annual growth rate of 2-3%.
Generally, a good place to start your business should have a low tax rate, easy registration rules, and skilled workers available. New business statistics imply that New Zealand is the top place to start your business this year.
Top 10 countries to start a business in 2020
1. New Zealand
4. South Korea
5. Hong Kong
6. United States
7. United Kingdom
Small Business Loan Stats
11. $10,000 is the average amount of startup capital required by an SMB owner.
- 90% of American businesses are family-owned.
- 25% of small businesses in 2019 are owned by females.
- Women-owned businesses employ more than 9.2 million people across the US.
- 33% of SMB owners graduated from High School, while only 4% finished a Doctorate.
- Boomers (50-59 years) make up 35% of SMB owners.
According to small business statistics, today’s SMB owners are mostly 50-59 years old (35%) and have a High School degree (33%). The percentage of female small business owners has increased by 1.48% since 1996. As of 2015, the women vs. men ratio in small businesses is 33.02% to 66.98%.
Believe it or not, 70+ year-olds are the same percentage as 18-29 year-olds (4%). Small business owner demographics also indicate that a high number of small businesses in the US are owned by army veterans.
12. 32% of businesses use cash as a funding method, crowdfunding popularity drops to 1%.
(Source: Guidant Financial)
- With 13%, ROBS is the second most preferred financing choice for SMB.
- Crowdfunding has dropped by 10% in the last year, even if we take the best crowdfunding platform into consideration.
- Mortgage refinancing shares increased by 33% in 2018.
Cash remains the most popular method for small business financing. Only 5% of owners take an SBA Loan, but ROBS (Rollover for Business Start-ups) is gaining ground. It’s a method of using retirement funds to start a business without tax penalties. You can start your business debt-free and full of cash – what’s not to like.
13. Small businesses in the US need anywhere between $2000 and $50,000 to get started.
(Source: Excel Cap Management)
- On average, small businesses are looking for between $60,000 and $80,000 from traditional small business loan lenders.
- 75% of small businesses in the United States are self-financed.
- The average cost to rent an office space in the US is $34 per square foot.
- Payroll is usually between 25-50% of the total budget.
The average cost to launch a startup is around $30,000, according to the Kauffman Foundation. The monthly cost of maintaining a small business in the US, on average, is a little more than $4,000. This is all dependant on location, however, because home-based businesses can start with as little as $1,000-$5,000.
What percentage of small businesses fail?
Only 30% of new businesses fail during their first two years, the SBA states.
Small business statistics in 2020 highlight the importance of keeping your budget under control, and prioritizing whatever is essential for your business. Using free software is another good way to cut some costs.
Small Business Advertising Statistics
14. 32.7% of small businesses spend over $100 weekly on social media advertising.
(Source: Chamber of Commerce)
- 42% of SMB in the US have a mobile app.
- 61% of small businesses invest in social media marketing.
- 50% of small businesses spend $10,000 or less on digital marketing every year.
- 80% of SMB don’t use content marketing.
- 92% of business owners believe that the most effective digital marketing is having a website.
People are really missing out on the most effective channel for building brand loyalty – content marketing, as SMB stats inform. Marketing is essential to your profitability and growth. Still, many small businesses don’t allocate enough money to marketing.
As a general rule, small businesses with revenues less than $5 million should allocate 7-8% of their revenues to marketing. This also depends on their growth rate and the average size of a small business in their industry.
7.29% of avid investors have an affinity towards Bitcoin. Nearly 48% of the BTC community consists of 18-25-year-olds.
Bitcoin transactions typically charge between 0 and 1%, yet the cryptocurrency still appears to be underrated by small businesses. In a recent survey, conducted by Quartz, 8 small business owners were asked whether they would consider using bitcoin in their business. 50% of them rejected the idea, while the other 50% were more intrigued.
Hundreds of corporations and small businesses already accept Bitcoin as a legitimate currency. Microsoft, BigFishGames, Shopify, CheapAir – you have the choice to get ahead of the competition because pretty soon Bitcoin will be accepted almost everywhere.
Small Business Owners Statistics
15. As of 2017, 33% of SMB owners in the US accept payments via credit, debit cards, and at a POS terminal.
- 29% of SMBs accept online payment providers like PayPal and Visa Checkout.
- 12% accept digital wallet payments like Apple Pay and Android Pay.
- Global use of mobile payments is set to rise to 28% by 2022, making it the second most common payment method after debit cards.
- 97% of small businesses still rely on paper checks.
Customer demands have the power to change the way businesses work. 31% of businesses that adopted new payment technologies did so because of their customers.
The tendency is for online payments and cryptocurrencies to grow in power during the course of the next decade. Having said that, you should know your client demographic and adapt to their particular preferences.
16. 83% of small business owners believe having an organized office is a vital part of their business.
(Source: Small Business)
- 74% of owners say they could not operate their business without any organizational tools.
- 49.8% of businesses take advantage of accounting software.
- Only 17.4% utilize payroll software.
- 94% of small businesses use at least one social media platform for their business.
Adopting specialized tools and software to handle your business needs can potentially save you a lot of money. Small business accounting software, in particular, appears to be on a growing popularity streak.
Automation is an effective way to organize time-consuming tasks like email marketing, social media management, and project management.
17. According to 38% of SMB owners, self-discipline is the top characteristic for running a successful business.
- Top efficiency skills that 33% of owners rely on communication skills and passion.
- An SMB loses an average of $62.4M due to poor communication.
- 90% of the highest-performing companies use a formal, guided sales process.
Hiring people with good communication skills who are passionate about what you do will put you on the higher end of the small business revenue statistics. Small business trends dictate high levels of self-discipline to be a key factor for the growth rate of small businesses.
Updating your budget on a monthly basis is another trick for good efficiency since any business needs constant monitoring.
Small Business Trends in 2020
Lets’s look at some challenges small business owners face in 2020 and are their expectations.
18. Most problematic for small business owners in the US (17%) in June 2020 is poor sales due to the Covid-19 pandemic.
- Another 19% stated taxes and quality of labor as major issues.
- 13% of surveyed small business owners in June 2020 expect sales to increase in the coming three months and another 46% surveyed have expectations for good or very good cash flow during the next 12 months.
- During the second quester of 2020, about 33% of US small-business owners expect their revenue to see a little or a lot of increase until the same time in 2021.
Make sure the changes you make have a positive impact and be ready to respond to any unexpected challenges. Adapt, overcome and survive, as Bear Grylls would put it.
(SBA Office of Advocacy)
99.7% of employer firms are made up of small businesses.
The success or failure of a small business depends on many factors. The lack of capital, an ineffective management team, and a faulty business model are among the top reasons why most small businesses fail in the first 5 years.
There are an estimated 30.7 million small businesses that are operating within the United States.
(U.S. Small Business Administration, Office of Advocacy)
Small businesses are considered to be the lifeblood of the American economy, contributing towards two-thirds of the net new jobs in the country. According to reports, 44% of economic activity in the U.S. comes from small businesses.
(Small Business Trends)
According to small business statistics, around 40% of small businesses that are operating within the United States are profitable. The same study also indicates that around 30% of small businesses manage to break even, while the other 30% of small businesses end up losing money consistently.
- Guidant Financial
- The Balance SMB
- The Guardian
- Chamber of Commerce
- Small Business
- Excel Cap Management
- SBA Office of Advocacy
- U.S. Small Business Administration, Office of Advocacy
- Small Business Trends