35+ Small Business Statistics to Know in 2020
The HYPE around small businesses is growing.
It’s part of the American dream after all:
- Starting your own business
- Being your own boss
- Breaking the chains of bureaucracy
- Succeeding against all odds
We here at SpendMeNot, gathered some of the most important small business statistics:
Fascinating Small Business Facts (Editor’s Choice):
- 50% of small businesses can fail in the first five years.
- 30.2 million small businesses are open in the US.
- $107,000 was the average amount of loans given by SBA in 2018.
- The number of small businesses in the US owned by women is 12.3 million.
- 20% of small-medium businesses fail in their first year, but this is lower for restaurants -17%.
- 69% of small companies start at home.
- 73% of all small business owners are men.
- 43% of all women-owned businesses are owned by women of color.
- 45% of small businesses are owned by minorities.
- 55% of unicorn startups are founded by immigrants.
Transforming a vision into a productive and lucrative business can be an empowering and challenging journey. If you plan on becoming a small business owner or already are one, you should take the time to learn more about recent small business trends.
Being aware of the newest small business statistics can be a huge advantage!
Here’s where we come to help!
Impact of Small Business
1. 30.2 million small businesses exist in the US.
First, let’s answer how many small businesses in the USA?
But what percentage of businesses are small businesses?
As of 2018, 99.6% of all US businesses are small businesses. This is a huge chunk!
They employ around 47.5% of the private workforce in the USA, which is a lot of people dependent on small businesses for their everyday revenue. In 2017, small businesses accounted for almost 2 million new jobs.
This makes them an essential part of the economy.
Small Business Revenue
2. The average salary for small business owners is less than $100,000.
How much does a small business owner make a year?
86.3% of all owners earn less than $100,000. Statistics of US businesses show that while small business owners may work harder than CEOs, they don’t make much in comparison.
The average salary of a traditional CEO is around $163,000 annually. A study even revealed that 30% of small business owners might not even take money.
Business Categories Popular With Small Businesses
3. In 2018, healthcare, technology, e-commerce, maintenance, and marijuana were the most popular industries for startups.
One of the most important steps for startups is to identify industries that are set to experience great growth rates. You will be able to take advantage of these small business statistics to further your business too.
The most lucrative industries for startups are those that are still likely to be around a decade from now. Technology, energy, and health make it to the top of the list while real estate, hospitability, and retail are all up there.
4. A 34% increase was seen in the health, fitness, and beauty industries in 2018.
(Source: Guidant Financial)
2018 saw a huge boom of wellness-conscious consumers, which is why a substantial growth was seen in the fitness, beauty, and health industries. Other popular industries included restaurants and food businesses that saw an increase of 14% too.
Success and Failure of Small Businesses
5. 50% of small businesses last for more than five years.
So, what percentage of small businesses fail in the first year?
Surprisingly, only 20% are likely to shut down.
In the first two years, only 30% of startups are likely to fail.
The small business survival rate is 50% for five years or more.
The small business success rate for more than ten years is 66% and 25% for 15 years or more.
It is important to plan and manage the business accordingly to make sure that it survives.
6. Every year, 1 in 12 businesses close.
The small business failure rate is only 1 in 12, which is a great margin. It means that 11 businesses out of 12 survive annually. However, this also implies that only 4 out of 100 businesses can survive past the decade mark.
The most common problem for failure is cash flow problems, which is a reason shared by 82% of small companies. This shows that if you’re planning to start a business, you should make sure to analyze your cash flow statements so that you aren’t among the failing companies.
Small Business Trends and Small Business Growth Statistics
7. 543,000 new businesses are started each month.
How many new businesses start each year?
New business statistics show that 6.5 million businesses are opened yearly. While a small business may not manage to survive in the long run, you should note that the competition remains stiff.
8. 75.3% of private-sector workforce work for micro-businesses.
(Source: Blue Corona)
Small businesses with less than 10 employees are the most common type. Small business start-ups account for 75.3% of American private-sector employers. 10.5% of all jobs in the private sector are provided by micro-businesses.
9. Social assistance and healthcare industries are expected to grow by 21%.
Small businesses under social assistance and healthcare industries will find a stable market. 85% of businesses in these industries will be able to make it past the first year.
10. 84% of small business owners are optimistic about the future of their companies.
There are thousands of small businesses opening every single day. Despite this, small business owners are extremely confident about their future in the market. Companies are expecting growth in the future and aren’t afraid to put in the time, effort, and hard work into the business to ensure that it will succeed.
Marketing for Small Business Statistics
11. 70-80% of consumers research small businesses before making a purchase or visiting them.
(Source: Blue Corona)
It is important for any business to have a website, even if they are small.
Websites can have a huge set of benefits – they lend credibility, visibility, and ensure a better customer experience. A huge chunk of consumers prefers to go online and check the business out before they make a purchase. Small businesses need to make sure that they have a website in place so that customers can check it at will.
12. 64% of small businesses have websites.
Small business statistics, 2020, show that one-third of small businesses don’t have a website yet. The main reasons include irrelevance to industry, cost, and social media. Social media has made it easy to market your services and goods at a low cost.
13. 61% of small business startups invest in social media marketing.
Digital marketing channels are more popular with small businesses due to their limited budgets. They plan to continue investing in the future too.
Owning a website is also popular – 62% do have one. But social media is a close second at 61%. Email marketing is another popular strategy, at 39%.
Small businesses need to realize that taking a holistic approach to marketing is important. Investing in different mediums can be more helpful for small businesses since it can help you get your brand image out there.
14. Almost 50% of small businesses are known to spend $10,000 on digital marketing yearly.
Startups and small businesses have limited resources to spend on their marketing resources. Statistics for business show that spending more than $10,000 on digital marketing yearly is common since they need to use their marketing resources efficiently.
The biggest resource they have for marketing is an in-house team. 43% of startups use in-house employees for digital marketing. Almost 40% have marketing software. You should explore which strategy suits you and your business more.
15. A majority of startups don’t invest in content marketing.
A survey found out that content marketing was the most underrated form of digital marketing. 80% of small businesses don’t have any content marketing strategy in place.
This shows that one in four small businesses actually don’t use the most cost-effective way to build customer loyalty and engagement. You will be able to climb up the rankings on the search engines by making SEO-friendly content.
16. 92% of all small business owners think that websites are the most effective digital marketing strategy.
(Source: Iron Paper)
89% of owners believe that SEO techniques help their business. Small business growth statistics show that combining SEO and websites is the most important elements of successful digital marketing.
Building a website with the right keywords can increase traffic by relevant users. It can also provide a dynamic experience for the users and produce high-quality content to keep them engaged.
The growth rate of small businesses shows that you will be able to increase leads this way, making sure that your profit increases too.
17. VR and AR are the least common small business marketing strategies.
VR and AR actually help bring consumers closer to the products since they are simulation technologies and give customers an accurate impression of the goods.
However, despite the benefits that VR and AR bring to the table, only 10% of small businesses use this strategy.
Small Business Owner Statistics
18. 50% of all American businesses are home-based businesses.
Just a few decades ago, working from home seemed like something incredibly far-fetched.
However, technology has long since advanced since then.
Operating a business from home is a manageable, great option for many business owners. SBA statistics have found that 50% of all businesses are home-based businesses. This includes 60% of firms that don’t have paid employees yet.
The most common business type for home-based operations is a sole proprietorship.
19. Most startup owners don’t have college degrees.
The majority of small business owners never went to college or are dropouts.
Only 26% of owners actually have a bachelor’s degree. 20% of small business owners graduated from high school but didn’t go to college. 5% didn’t even finish high school.
This shows that you don’t need to have a degree to start your own business.
20. 26% of small business owners were motivated to open a business because they wanted to be their own boss.
(Source: Guidant Financial)
This was the most common reason among small business owners. 23% of respondents to a survey suggested that they went into business for their own pleasure. They wanted to pursue their passions and create something from scratch.
21. 19% of owners work 60 hours weekly.
While being your own boss may seem like a lucrative option, it isn’t easy.
Small business owners have to work harder than any other employee. 81% of them said that they worked even during nighttime. 89% worked on the weekends. 70% worked at least 40 hours a week, while 19% worked over 60 hours.
22. 12.3 million businesses are owned by women in the US.
It is important to look at women vs. men. We can see that women are getting into the business game now more than any other time in history.
The number of women-owned small businesses has increased 31 times since 1972. In 1972, just 402,000 firms (4.6% of all companies) were owned by women. In 2018, 12.3 million companies (40% of all firms) were owned by women. These small businesses have employed 8% of all private-sector labor forces. They contribute to 4.3% of the total revenue by the sector.
This may be due to the unfair pay gap in private companies for female employees, increased technology, and many other factors.
23. 1,821 women-owned businesses were opened per day in 2017 and 2018.
(Source: American Express)
The average growth of small businesses owned by women is outstanding. The progress of creation took an especially fast turn in recent years. Reports show that the small business owner demographics are dramatically different from how they were before.
Between 2002 and 2007, only 714 businesses were opened by women on average. As the recession and recovery period occurred between 2007 and 2012, the average number increased to 1,143.
After the recession, only 952 businesses were opened by women.
24. The Total Revenue By Women-Owned Businesses Is $1.2 Trillion
The contribution by businesses run by women has steadily grown over the years. In 2018, 1.7% of businesses owned by women (207,900) made more than $1 million. This has increased by 46% in the last 11 years. The total contribution of women-led firms has increased by 69% to $1.2 trillion.
25. 45% of small businesses are owned by minorities.
(Source: Guidant Financial)
Almost 15 million small businesses are owned by minorities. This is a dramatic increase! In 2015, only 15% of business owners were part of any minority ethnic group. Small business owner statistics show that African American business owners have jumped by a significant 400% between 2017 and 2018.
26. 9.3% of US firms are owned by veterans.
The latest reports show that 2.52 million businesses are under the ownership of veterans.
2.08 million of these are self-employed businesses.
42,485 companies are responsible for 5 million employees.
The most veteran-owned businesses are in California, Florida, and Texas.
27. 25% of small business owners are immigrants.
Immigrant entrepreneurs own a quarter of all American small businesses. New Jersey, New York, and California have the biggest contribution of immigrants, pursuing the American Dream.
28. 55% of unicorn startups were founded by immigrants in the US.
Out of 91 startups that have been valued over $1 billion, 50 had at least one immigrant owner.
A lot of these firms have increased their workforce over the last two years, creating more jobs than ever.
The biggest name among these unicorn startups is Uber. There are 9,000 employees across America and more than 3 million active drivers.
Other companies include Mu Sigma, WeWork, and SpaceX, with 3,500, 6,000, and 7,000 employees, respectively.
Financing Small Businesses
29. It takes only around 6 days to start a business.
It doesn’t take that long to start a business; in fact, you just need six days to have your business up and running in the US. In other countries, it can take significantly longer to start a business. It can take 38 days for China, 30 days for India, and 13 days for Ireland and UK citizens to start a business.
30. $10,000 is the average amount of capital needed for startups.
The Wells Fargo Small Business Index study confirmed that you just need $10,000 for startup capital on average.
Another survey by Kauffman Firm found that $80,000 is the average small business startup capital that owners need per year.
However, you should note that one-third of non-employer companies and 12% of employer companies actually start without capital. The need for capital depends on the idea of the business.
Small Business Cost
31. $1,000-$5,000 can be enough to start home-based franchises.
One-third of small businesses are created with around $5,000 in startup capital. However, most of these franchises are based at home.
The small business bureau found that you don’t need large investments to open micro-businesses either. You only need low upfront investments for businesses like sole proprietorships. They can be started with as little as $1,000-$3,000 worth of capital.
32. 56% of small business startups find talent hunting their biggest challenge.
Finding the right employees for small business owners can be a struggle.
35% of small business owners find it harder to find the right employees now as opposed to five years ago. Another 24% agreed that it was harder than it was ten years ago.
33. Almost 40% of SMBs give higher salaries to get employees.
Small businesses don’t have a lot of resources when it comes to finances. Nevertheless, SMB stats show that 37% of them offer higher salaries to appeal to more candidates. SMB stats show that lucrative salaries, alongside other benefits, such as vacation opportunities and policies, are seen as an advantage over working for bigger companies.
Best Bank for Small Business
34. In 2018, $107,000 was the average loan amount given by SBA.
(Source: Value Penguin)
SBA lending statistics show that the average loan given by SBA was $417,314, and average microloans were $13,000. Large national banks gave out average SBA loans of $59,000, while small banks gave $165,000.
35. 26.9% of loans for small businesses were approved by big banks.
Small businesses are finding it easier to look for capital in 2018. Small business loan stats show that almost 27% of small business loans were approved. This is the highest trend of loan approval in the post-recession period.
At the End of the Day
All small business statistics up to hear show one thing – it’s a trend that is not to be underestimated.
As technology grows, it is getting easier for more and more people to start their own business. 2020 is certainly going to be interesting in terms of the development of small businesses.