Insights from Business Owner Statistics

Like many promising entrepreneurs, you’ve often yearned for a steadfast compass, reliable and ready to guide your decisions in even the stormiest conditions.

This is precisely why we’ve decided to plunge headfirst into the vast ocean of data surrounding business owners and their operations.

This article seeks to serve as your lighthouse amidst uncertainty, illuminating key statistics about small businesses – from employment rates to ownership diversity. These objective insights have been carefully curated to inform and inspire your entrepreneurial journey.

Ready to take on these waves? Let’s delve into these insightful figures together!

Small Business Employment Statistics

Small businesses make up 99.9% of all businesses in the United States, highlighting their significant economic contribution. Approximately 48% of all U.S. employees work for small businesses, reflecting their importance as employment providers. Small businesses have created around 12.9 million jobs in the past 25 years, accounting for 63% of new jobs since 1995. Industries like manufacturing and technology offer promising opportunities for job growth within small businesses.

Small businesses comprise a huge part of the U.S. economy, with approximately 99.9% classified as small businesses.

Percentage of small businesses in the US

Small businesses constitute a significant chunk of the United States’s bustling business landscape. Small businesses make up an overwhelming 99.9% of the business population in the country. We’ve compiled the data into the following table to put this into perspective.

Business	Number of employees	Percentage
Small Businesses	less than 500	99.9 %
Medium Businesses	500-999	0.07%
Large Businesses	1000 and more	0.02%

This demonstrates the fundamental role small businesses play in the U.S. economy. Moreover, these small businesses are the backbone of new job creation, accounting for 64% of fresh employment opportunities in the country. As an owner, marketer, or manager, understanding these statistics can help you better understand the business environment and strategise accordingly.

Percentage of employees employed by small businesses

The data shows that small businesses employ a significant portion of the U.S. workforce. According to recent statistics, approximately 48% of all U.S. employees work for small businesses, demonstrating these entities’ vital role in the nation’s economy.

Employment Category	Percentage
Employees working for small businesses	48%
Employees working for large businesses	52%

This decline from the 52% recorded in the early 2000s suggests a shift in the employment landscape, possibly influenced by consolidation, automation, and economic policy. 

Small businesses with no employees

Small businesses with no employees make up many businesses in the United States. This is an important demographic when discussing business trends and market dynamics.

Business Category	Percentage
Total small business in the US	100%
For small businesses with no employees	82%
Hispanic-owned small businesses with no employees	15.5%

As you can see from the table, small businesses with no employees make up a massive 82% of all small businesses in the States. This means these businesses are run solely by their owners. It’s interesting to note that Hispanic-owned firms account for 15.5% of these nonemployer businesses. This is a considerable percentage and shows the entrepreneurial spirit within this community.

These no-employee companies are a force to be reckoned with in small businesses. They bring a lot of variety and innovation to the market. It’s crucial to remember these statistics when planning marketing strategies, as these businesses present unique opportunities and challenges.

Small businesses with 1-19 employees

Most small businesses have between 1 and 19 workers. They make up a big part of the U.S. business world. Two to five staff run most (38%) of these firms. Some (18%) have six to eight people on the team. For others (16%), it’s just the owner who does all the work. Even smaller firms with less than 100 staff represent nearly all (98%) of small businesses in total.

Small Business Job Creation

Small businesses are crucial for job creation, with millions of jobs created yearly. 

Number of jobs created by small businesses

Over the past few decades, small businesses have consistently been a critical driver of job creation. Small businesses have added over 12.9 million jobs in the last 25 years. To put this into perspective, this accounts for 62% of net new job creation from 1995. In fact, in 2019 alone, small businesses created 1.6 million new jobs, contributing significantly to employment growth and economic development.

The role of small businesses in job creation cannot be overstated. Between 1995 and 2021, they have been credited with 63% of the new jobs created, totalling 17.3 million new roles. This shows the significance of entrepreneurship and the small business sector to the job market. According to the Small Business Administration (SBA), small companies create 1.5 million jobs yearly. Hence, the power of small businesses in shaping the economic landscape is reflected in these impressive job creation rates.

Industries with the most job openings

Many small businesses are opening lots of jobs. Here is a list that shows which businesses do this the most:

1. Small businesses in manufacturing are at the top. They open up many new jobs.
2.  In the last 25 years, small businesses have made 12.9 million new jobs.
3.  From 1995 to 2021, small businesses gave us 63% of all new jobs.
4.  Each year, small companies make 1.5 million jobs.
5.  Over half (54%) of all small business owners aim to spend more money.

Industries with the highest projected job growth

Let me share some exciting news about the bright future of small business job creation. Two primary industries look promising in terms of expansion and new work chances.

1. The tech industry is growing fast. Small firms play a big part in this boom. They make up 96% of businesses in the top-making tech fields.
2.  Healthcare is another field set to grow a lot. The need for health workers increases each day, meaning more jobs for everyone.

Industries with the biggest loss of jobs

During the pandemic, some industries experienced significant job losses. Here are the industries that faced the biggest loss of jobs:

1. The Leisure and Hospitality industry has lost 633,000 jobs since February of 2020. 
2. Job losses were also observed in the retail, manufacturing, and professional services sectors.

Unemployment rates in different regions

Unemployment rates vary across regions, and business owners must know these trends. As of June 2023, the District of Columbia has the highest unemployment rate at 5.1%. This indicates a higher level of Joblessness compared to other areas. However, overall, there has been a slight decrease in unemployment rates nationwide, dropping to 3.6% from its previous level. These regional differences can affect businesses and their labour markets. Business owners must understand the local economic conditions when making hiring or expansion decisions.

Small Business Salaries & Wages

Small business owners earn an average salary significantly lower than the national average, but there has been an increase in hourly earnings for small business employees. Want to learn more about the salaries and wages in small businesses? Keep reading!

The average salary of a small business owner

As a small business owner, you may be curious about the average salary of people in similar positions. According to recent data, the average salary of a small business owner in 2023 is $68,853 per year. However, it’s important to note that this figure can vary based on industry, location, and company size. Some small business owners earn as little as $18,902 per year, while others make as much as $496,659. The median salary for small business owners is around $90,633 annually. Remember that these figures are based on U.S. data and may differ in other countries or regions.

Increase in hourly earnings.

The increase in hourly earnings is an essential factor for small business owners. According to the Bureau of Labour Statistics, wage growth has been slow, with February seeing a cooling trend. This can impact the living standards of low- and moderate-income Americans, as their income doesn’t keep up with inflation. When adjusted for inflation, today’s average hourly rate has the same purchasing power as in 1978. Additionally, there’s been a significant gap between productivity and worker compensation since 1979. Understanding the relationship between small business salaries, wages, and minimum wage is crucial in managing employee compensation effectively.

Small Business Ownership Statistics

Millennial entrepreneurs are making their mark in the business world, with a significant percentage of small businesses being owned by this generation. But not just millennials take charge – there is also a diverse mix of genders among small business owners.

Percentage of small businesses owned by millennials

Interestingly, millennials own 12.9% of small businesses, which is a significant portion considering their age group. It shows the growing presence of young entrepreneurs in the business sector. Millennials are leading the way in entrepreneurship compared to Generation Z, who only make up 1% of small business ownership. Additionally, it’s worth noting that the silent generation (born between 1928 and 1946) also owns 12.9% of small businesses, showcasing generational diversity among business owners.

Gender distribution of small business owners

The gender distribution of small business owners in the U.S. is reasonably balanced. Males are 51% of business owners, while females comprise 49%. This means that almost an equal number of male-owned and female-owned businesses exist. Women own about 41.1% of businesses in the U.S. that do not have paid employees, with total receipts reaching $313.6 billion in 2019. The number of women-owned businesses in America is increasing, with most being run by white women. Non-minority, non-Hispanic, and non-veteran women dominate the majority of women-owned firms. Small business owner demographics are diverse, including women, African Americans, and Hispanics. 

Online & E-Commerce Business Statistics

Percentage of businesses without a website, percentage of business conducted online, and the importance of a business’s website. 

Percentage of businesses without a website

Did you know that around 41% of businesses do not have a website? This is quite surprising, considering the importance of online presence in today’s digital world. A website allows your business to have a web presence, reach more customers, and increase sales. It also helps establish credibility and build trust with potential customers. With so many online resources available for website development, it’s worth considering investing in creating a business website to enhance your digital footprint and expand your customer base. Take advantage of the opportunities an internet presence can bring to your small business!

Percentage of business conducted online

The percentage of business conducted online is growing. It’s forecasted to reach 28.8% of all business activity in the U.S. by 2024. Currently, 28% of business activity is already happening online. Businesses must take advantage of this trend and consider selling their products or services online. With 36% of small-personal businesses making sales online and a staggering 79 billion people buying something online last year, there are plenty of opportunities for success in the digital marketplace. So, it may be time to start an online presence and jump into the vast potential of internet sales.

Importance of a business’s website

A website is crucial for the success of any business, especially in today’s digital marketplace. It allows businesses to start an online presence and capitalise on the increasing trend in online shopping.

Statistics show that 64% of small businesses already have a website, projected to increase to 71% by 2023. Your website enables you to reach more audience, showcase your products or services, and provide convenient online shopping options for customers.

So whether you’re running a small local business or operating in the e-commerce space, having a well-designed and user-friendly website is essential for supercharging your online business and staying competitive in today’s market.

Small Business Survival Statistics

The number of small businesses opened versus closed can provide insights into the entrepreneurial landscape. The failure rate within the first year is crucial to consider when starting a small business.

Understanding the reasons for small business failure and identifying industries with high failure rates can help entrepreneurs make informed decisions. Explore these survival statistics to gain valuable knowledge for your business’s success.

Several small businesses opened vs closed.

Over the past year, over 180,000 small businesses have opened their doors in the U.S. This is great news for entrepreneurs and business owners looking to start their ventures. However, it’s important to note that nearly one-third (31 %) of small businesses currently need to be operational. On top of that, about 25% of small business owners are obliged to close their doors each year. These numbers significantly impact overall business survival statistics and can dramatically affect the success or failure of business owners.

Failure rate within the first year

The failure rate for small businesses within the first year is high. In 2015, about 23% of businesses failed after one year. The District of Columbia had the highest business failure rate in this period. Around 21.7% of startup businesses fail within their first year, and the failure rate for business startups is projected to be about 22% in 2023, based on the U.S. Bureau of Labor Statistics Report. Business owners and marketers need to understand these statistics and take steps to increase their chances of success in that crucial first year.

Reasons for small business failure

As a business owner, it’s essential to understand why small businesses fail. Here are some common factors that contribute to small business failure:

1. Poor financial management: Many small business owners need help managing their finances effectively. This can lead to cash flow problems, inability to pay bills and employees, and ultimately, the closure of the business.
2.  Lack of market need: One of the leading causes of small business failure is a need for more demand for the product or service offered. Businesses must conduct market research and ensure there is a need for what they are selling.
3.  Ineffective marketing strategies: Without effective marketing initiatives, it can be challenging for small businesses to attract and keep customers. Poor advertising, branding, and customer targeting can lead to low sales and eventual failure.
4.  Insufficient planning: Many small business owners need to plan for the challenges they may face adequately. This includes requiring a solid business plan, failing to establish clear goals and objectives, and neglecting contingency plans for unexpected events.
5.  Lack of differentiation: In today’s competitive market, businesses need to stand out from their competitors. Small businesses that need to differentiate themselves often need help to attract customers and stay ahead in the industry.

Conclusion

The statistics on business owners reveal a thriving entrepreneurial landscape in the U.S. With millions of new businesses being established and a growing number of women, minorities, and immigrants entering the business world, small business owners have diverse opportunities.

These statistics also highlight the significant role that small businesses play in job creation and overall economic growth. However, small business owners must stay aware of challenges, such as high failure rates within the first year and adapting to changing market trends. By understanding these implications, small businesses can better navigate their journey towards success.