- Job Creation
- Economic growth
- Innovation in Industry
Statistics for Small Businesses You Need to Know in 2023In the US, there are 33,2 million small businesses that make up 99.9% of all companies. The US small business sector is responsible for more than 1,5 million new jobs every year, accounting for 64%. In the first five years, over half of all small businesses fail. Small tech startups are more than 95% likely to fail in the first five years. Poor labor quality is one of the greatest challenges that small businesses face in creating a business plan. About 58% of entrepreneurs start their business from scratch. 18% of new small business owners purchase their existing business Of the small business owners who own franchises, 19% chose to invest in a brand-new location. Only 6% chose to continue with their current location. The fastest-growing small business sectors are food and restaurant services (11%), followed by general retail (7%) and home services (6%) About 3.7 million micro businesses have less than ten employees out of the 33,2 million small businesses.
Statistics on Small Businesses by IndustryEach small business sector operates differently. Different economic challenges require different strategies to achieve success. No one size fits everyone. You can better understand the small-business landscape by examining the following statistics, broken down according to industry.
Alimentation sector (Food & Restaurants)In the US, only 12% of all small businesses are in the restaurant and food industry. It is one of the largest industries. Why is this industry more popular than other industries? Consumer spending has steadily increased in this sector since 2014 by an average of 2.6%. It’s not the easiest business to run, but if you have the determination, you can build a successful company. Accommodation and food service is expected to reach $14.8 billion in 2025. It’s not all sunshine and rainbows for the alimentation industry. COVID-19 was a major factor in the decline in total sales from 2019 to 2020. It has recovered stronger than ever, as people are now able to eat out again.
Retail SectorRetail has also seen a decline in growth as a result of the COVID-19 epidemic. Sales are down 6% from before 2019. Although it was not as badly hit as other industries, the 6% drop is still significant. Retail is an important sector of the US economy despite the economic downturn. The retail sector’s value is currently estimated at $ 4.56 billion and will reach $ 5.52 billion by 2026. This is a substantial increase of 21% over the next few years, which indicates that retail in the United States still has plenty of room for growth and development.
Business Services SectorBusiness services suffered the most from the COVID-19 epidemic, with a 16% decline in sales in 2020. The growth rate for 2021 was also very modest, at just 0.15%. This is a huge loss when you factor in inflation. Currently, the professional and business service sector accounts for 13% of the US GDP. It’s a very important industry for the United States.
Health, Beauty & Fitness Services SectorHealth, beauty, and fitness are some of the most resilient industries for small businesses in the United States. Today, 9% of US Small Businesses operate in this industry. COVID-19 has also had a significant impact on the industry, but not nearly as much as initially believed. The values for each small business sector are forecasted to be by 2026.
- Health Services: $4.32 Trillion
- Beauty Services: $14.8 Billion
Residential & Commercial Services SectorIn the United States, 7% of all small businesses are involved in residential and commercial services. It’s important, even though it’s not the largest sector of the small business world. In 2019, there were registered 67,226 residential and commercial service franchises. In 2020, despite the disruptions caused by COVID-19 (the COVID-19 Act), the small business residential and Commercial Services industry was one of few that maintained strong growth, with a rise in franchises registered to 68.008. Between 2015 and 2019, the average annualized growth rate of establishments was +1.09%. This number increased to 1.14% between 2019 and 2020. This is the epicenter of the pandemic. Residential and commercial services are a great place to start your small business if you’re looking for a resilient industry.
Demographics of Small Business OwnersSmall business owners come from a wide range of backgrounds and demographics. In the United States, you will be more likely to succeed as a business owner if:
- A white male
- You come from a two-parent home
- Growing up in a household with a high income
Race StatisticsA 2018 US Census report shows that only 5% of Black people are self-employed. This is due to the lack of outside investment. Black Americans in the United States had to rely on their savings or credit cards to obtain the funding they needed to start a new business. 17,6% of African Americans are forced by their personal credit card debt to finance their new businesses. The interest payments on credit card debts can be huge, especially with the high failure rates of new businesses in the country. Minorities are less likely than the general population to be able to secure the necessary financial resources to start a successful small business.
Age StatisticsYou can start a company in the US if you’re over 18. Statistics on small businesses show that age is a factor in the likelihood of success. The average age of founders is 40. Entrepreneurs of small and medium businesses (SMBs) are most successful between 30 and 50 years old. After age 50, the likelihood of a new business succeeding drops. Experts believe that most people under 30 years old need more experience in order to run a successful business. The energy required to start a successful business might be too much for people over 50. There will always be outliers in these statistics.
Education StatisticsMany people believe that education is the key to success, especially in college and university. The following statistics on small business education show otherwise. Only 44% have a bachelor’s degree or more. This means that most small business owners (56%) do not have a college degree. 31% of small-business owners have started college courses or associate degrees but never completed them. 20% of small-business owners only have a GED certificate or a diploma from high school. 5% of high school students never completed their education. It is important to note that 95% of small business owners have completed high school. You don’t have to go to college to run a small business.
Income StatisticsThe average salary for Americans is now $54,132. The average revenue of small businesses with no employees is $46,978. The average American small business owner earns $71,813 per year. In the US, 86.3% (or a staggering 86.3%) of small business owners earn less than $100,000 a year. This means that only 14% of small business owners in the US make more than six figures per year. Small business statistics indicate that while the average owner of a small business might earn more than an average employee, you won’t necessarily make a lot of money. To achieve this, you’ll need to hire staff.
Statistics on Women-owned BusinessesWomen-owned business is on the rise. A new study shows that women will start 49% of all new businesses in the United States by 2021. This is a huge increase from the 28% of women who started businesses in 2019. At least 50% of US companies are owned, controlled, and run by women. These statistics show the importance of women business owners across all sectors in the US. This also indicates that a majority of women across the US own small businesses. Small businesses owned and run by women are responsible for the employment of close to 9,000,000 people and 1.7 trillion dollars in revenue. This is about 7.3% of the US economy. By 2022, small businesses with a majority of women-owned will employ around 8% of the private sector’s workforce. These women-owned businesses generate 4,2% of the total revenue generated by all companies. In the past 20 years, women’s business ownership has increased by 114%. The main reason for this is that women are now able to access more opportunities in all sectors of small businesses. 39% of US employers are women-owned businesses! 46% of women are black entrepreneurs. It is the highest percentage of black women entrepreneurs in the United States. Black women are now empowered to pursue entrepreneurship as a viable career. The trend towards female-owned businesses is a positive one, but it also comes with challenges. Most women prefer to fund their businesses with cash on hand. Most female entrepreneurs use their funds to start their business.
Statistics on Minority-Owned BusinessesA study from November 2022 reported that 1.15 million minorities now own employer businesses in the United States. The number of minority-owned businesses has increased by 15% since 2019, when there were 1,000,000 minority-owned enterprises. This might not appear to be a huge jump in 3 years, but it is actually considered a very positive thing because the minority-owned business grew both during and after COVID-19. Below is a breakdown of all employers owned by minorities. Minority-owned businessesTotal Annual RevenueEmployeesEstimated Annual Payroll Veteran $926.7 billion 3.6 Million $176.6 billion Hispanic $472,3 billion 2,9 million $105.6 billion Asian $841 billion – – Black/African-American $141 billion 1,3 million $42.2 billion Native Alaskans & American Indians $39,7 billion 244,000 $9.6 billion Native Hawaiians & Pacific Island 8 billion dollars 60,100 $2.3 Billion The most revenue was generated by veteran-owned businesses, at $926.7 billion. The company also employs the most people, with 3.6 million employees and an annual payroll of $176.6 billion. The number of Hispanic-owned businesses has increased by approximately 8.2%, from 346.836 to 375.256. These businesses also make up approximately 6.5% of the total business sector and generate an estimated $472 billion in revenue annually. Hispanic-owned businesses are very important for the sector. There are an estimated 2.9 million employees in the United States. Minority-owned businesses employ over 9,000,000 people in the US each year. Social assistance and health is the largest sector owned by minorities, accounting for 37% of total minority-owned businesses. Minority-owned companies receive only half the amount of investment that white-owned firms receive. Although this may seem unfair, the fact is that there are more white-owned companies in the US. This means more money is invested into these businesses.
Jobs Creation StatisticsSmall businesses have a major role to play in creating jobs. Small businesses in the United States excel at this. Small businesses create about 1.5 million jobs in the US each year. Small businesses are responsible for 64% of the total job creation in the US. Without small businesses, there would be a serious problem in the US employment market. How many employees do small businesses typically have? Around 41% of small businesses have between two to five employees. 37% of small business owners choose to outsource their work primarily to increase the efficiency of their business. The majority of businesses are small businesses with fewer than 100 employees. The media tends to focus more on large billion-dollar corporations, but small businesses are the ones that create jobs in the United States.
COVID-19 Impact on Small Business StatisticsCOVID-19 has hit small businesses hard. COVID-19 will force 27% of small businesses to lay off their employees or be furloughed by 2020. Only 29% of small businesses retained all of their employees. The COVID-19 pandemic had a negative impact on 83.5% of food service and accommodation businesses. How long has COVID-19 affected small businesses? 56% of small-business owners believe that it takes six to one year to recover the economy and business climate from the pandemic. The government’s COVID-19 policy had a huge impact on small businesses.
Facts about Small Business SuccessAre you thinking of starting your business venture? Here are some statistics about small businesses that you should know! Two founders will increase your chances of success. Ideal is:
- One founder is a business developer
- Another focus on the technical needs of the business
Small Business Failure StatisticsYou should be aware of the risks involved before you start a new venture. What you should know about business failure: Poor financial management is the main cause of failure for 82% of businesses. This is the number one killer of all companies. What is the second most important reason? Second, there’s no market for their product or service. You can increase your chances of being successful by ensuring you have the money necessary to start your business and that there is a market available for your product/service. Research and create a realistic plan for your finances. That’s it! Every month, in the United States, approximately 543,000 new companies are launched. Around 20% of these businesses will fail in the first year. Statistics on Entrepreneurship indicate that failure rates increased from about 23% to up to 50% within five years. This is a big deal because 50% of small businesses fail in the first five years. You are more likely to succeed if you can make it past the five-year mark.
Wrapping it UpThe US economy is dependent on the small business sector, according to statistics! The industry provides millions of jobs annually and generates trillions of dollars in revenue. Being a small-business owner has its benefits.