According to the U.S. Small Business Administration (SBA), a small business has no more than 500 employees. And it has an average annual revenue that ranges from $750,000 – $38.5 million.
These numbers may be surprising to many people, and rightfully so, considering they are for a “small business.”
But keep in mind that these statistics change depending on your industry. Not every small business has nearly 500 employees.
The 2019 SUSB Annual Data Tables by Establishment Industry that 89% of small businesses in the U.S. have fewer than 20 employees working for them.
Moreover, 90% of the business population represents small businesses. So, to prevail in their respective industries, small business owners must be diligent, careful, and creative to stand out from the rest.
Keeping up with the new trends and changes in your industry will help you stay connected with buyers and optimize your business for future challenges.
To save the time spent on research, we have researched and put together the latest small business statistics from credible sources in this post.
Let’s take a look!
General Small Business Statistics
Of all the businesses worldwide, about 95% are small businesses (Global Naps)
Global Naps reports that there are approximately 400 million small businesses globally. These businesses comprise 95% of the total companies.
Small businesses are also responsible for 60 – 70% of employment globally.
Approximately 99.9% of all USA businesses are small businesses (SBA)
Small businesses account for a massive chunk of the U.S. economy.
According to the small business association, the total number of small businesses in the United States is 32.5 million.
This is a huge number and accounts for 99.9% of the total businesses in the U.S.
Almost 46.8% of employees in the USA work for small businesses (SBA)
There are 61.2 million employees in the U.S. who work for small businesses.
These small business employees make up 46.8 percent of the total workforce in America.
83% of small businesses have moved at least some part of their business online (Salesforce)
Moreover, 95% of them moved some operations online last year.
This shift was mainly for the safety and convenience of employees and customers.
Nearly 75% of small businesses increased their online presence via social media, email, and ads last year.
There are over 9.2 million Minority Business Enterprises in the United States (SBA)
Almost 8.2 million of these businesses run their operations without employees.
Thus, more than 1 million minority-owned businesses consist of employees.
Covid-Related Small Business Statistics
During the pandemic, 45% of Small Businesses reported having earned less than 50% of their previous revenue (SmallBizTrends)
Due to the pandemic, small businesses experienced a revenue drop, generating less than half of their previous revenue.
This happened because revenue growth was slower for small businesses than customer growth.
Almost 60% of small businesses permanently shut down because of the pandemic (Yelp)
According to Yelp, 60% of small businesses that stopped their operations during the pandemic never reopened.
Out of the total 163,735 U.S. businesses that were closed in the Pandemic, 97,966 permanently shut down.
Approximately 62% of small business owners believe their businesses wouldn’t have survived if the pandemic had come 10 years ago (SalesForce)
Most business owners believe that many businesses wouldn’t be able to survive this pandemic ten years ago. But thanks to the internet and e-commerce, it is possible now.
Needless to say, technology has helped a lot in terms of buying and selling.
Small Business Failure Statistics
Almost 20% of small businesses fail within the first year, 33% within two years, 50% within five years, and 66% of small businesses meet their end within ten years (Bureau of Labour Statistics)
The Bureau of Labour Statistics reported that 21.6% of small businesses founded in March 2020 had closed by March 2021.
- 31% of small businesses founded in March 2019 were closed by March 2021.
- 49.3% of small businesses founded in March 2016 were closed by March 2021.\
- 66.3% of small businesses founded in March 2011 were closed by March 2021.
In the past year, 843,229 small businesses shut down (SBA)
Many small businesses cease operations every year.
One of the most common reasons behind small business failure is:
- No market need
- Shortage of capital
- Poor management.
Approximately 35% of startups fail because they don’t serve a market need (Cb Insights)
Tackling problems just because they are interesting isn’t good enough. You need to fulfill a particular market need.
Do not try to sell a product because you like it or know some people who would love it.
Find out if the product you are selling is something many people would be interested in buying.
Speak to potential prospects who are not family or friends.
Also, find out how much are they willing to pay for it.
Small Business Employment Statistics
Almost 59% of small business owners anticipate revenue growth and 41% expect to hire more employees over the next 12 months (FedSmallBusiness)
The 2022 small business report by FedSmallBusiness suggests that 41% of small businesses want to expand their business by hiring new employees and 59% expect an increase in revenue by 2023.
Approximately 81% of Small Business Owners say employee turnover is a costly problem (Zenefits)
Small businesses usually invest time and effort to know their employees and treat them right.
This is why small business owners believe that employee turnover can be costly.
With 4,544,426 employees, the biggest employers in the small business world are professional, scientific, and technical services (SBA)
Professional Services: Tax Consultants, Chartered Accountants, Doctors, etc.
Technical Services: Plumbers, Electricians, Mechanics, etc.
Scientific Services: Pharmacologists, Chemists, Environmental Scientists, etc.
Small businesses are responsible for 64% of all new jobs in the United States (SBA)
Small businesses account for 1.9 million new jobs every year. This makes up approximately 64 percent of the total new jobs annually.
Almost 54% of business owners believe poor communication to be the most critical problem (GuidantFinancial)
According to business owners, the most significant employee problems are:
- Poor communication (54%)
- Teamwork (46%)
- Sales and customer management (38%)
- Problem-solving (36%)
Small businesses saw a net increase of 466,607 jobs (SBA)
According to the latest SBA report, small businesses gained over 9.1 million jobs and lost about 8.7 million jobs from March 2019 to March 2020.
Small Business Revenue Statistics
Approximately 35% of business owners report they aren’t generating any profit (GuidantFinancial)
In 2022, 35% of small businesses currently aren’t profitable. They are either breaking even or losing money.
Almost 31% of entrepreneurs started a small business to pursue their passion (GuidantFinancial)
When asked about their motivation behind starting a business, approximately 31% of U.S. small business owners said they wanted to pursue their passion, 21% said they saw an opportunity, and 23% started a business because they were unemployed.
Small Business Marketing Statistics
Approximately 45% of small business owners pay for digital marketing (Statista)
The average digital marketing expenditure of a small business was around 500 U.S. dollars monthly.
However, 93% of business owners plan to increase this amount by next year.
E-mail is the most effective online marketing channel for small businesses (Statista)
Almost 36% of small business owners believe that e-mail marketing is the best way to drive sales. And 19% of them say that social media is the most effective way of driving sales.
Approximately 63% of small businesses have an e-commerce store, and 71% of small business owners say their customers seek online transaction methods (SalesForce)
An e-commerce presence is quickly becoming a must-have for small businesses that sell products.
Also, most customers expect online payment methods from businesses as they have no issue conducting online transactions.
Interesting Small Business Statistics
Inflation is the most significant problem for small businesses (Statista)
The March 2022 report by Statista revealed that around 31% of small business owners believe inflation is the biggest threat to their business.
Over the past year, the Small Business Optimism Index increased from 95 to 97.1 (Statista)
From January 2021 to January 2022, researchers saw an increase in the U.S. small business optimism index. This is primarily due to the recovery from the COVID-19 Pandemic.