More and more people are taking a chance on working independently than ever before. They do it for a wide variety of reasons, and most don’t regret the decision. Whether you’re determined to go out on your own or are just interested in whether the odds are in your favor if you decide to take the plunge, there are plenty of statics to help you make an informed decision.
1. Small Business Statistics
- There are 30 million businesses in the U.S., which represents 99.9% of all businesses: Step by Step Business
- 73% of small business owners are men and 25% are women. 60% of those individuals are between the ages of 40 and 59: Guidant Financial 2019 Small Business Trends
- 99.7% of the 5.6 million employer firms in the U.S. had less than 500 workers in 2016 and 89% had less than 20 workers. When you add the U.S. nonemployer businesses to the number of businesses with fewer than 20 workers, the percentage jumps to 98. (2016 is the last year for which statistics are available): U.S. Census Annual Survey of Entrepreneurs
- The most successful small businesses by net profit margin (NPM) are accounting, bookkeeping and payroll, and tax preparation with an NPM of 18.4. Landlords are a close second with a 17.9 NPM. There has been a 34% increase in the number of fitness, health, and beauty businesses. These include spas, gyms, and salons: Abrigo
- 66% of small businesses are still operating after 2 years. 50% make it to the 5 year mark. About 33% of small businesses survive for at least 10 years: Bureau of Labor Statistics
- 33% of small business owners cite lack of capital as their biggest challenge. It is followed by 11% who cite marketing and advertising. Owners have seen a 15% rise in the challenge of employee recruiting and retention: Guidant Financial 2019 Small Business Trends
- 43% of hackers aim their cyber attacks at small businesses. Only 15% of small businesses are able to mitigate cyber attack risk effectively. 60% of small businesses that fall victim to cyber attacks are out of business within 6 months
- Companies average a 4300% return on their email marketing investment
- The quality of labor, taxes, and government regulations make up 55% of the biggest problems owners are facing as of April 2019: Statista
- According to the National Small Business Association 35% of small businesses are LLC, 33% are S-corps, 19% are corporations, and 12% are sole proprietorships. Only 2% are partnerships: National Small Business Association
- The South wins as the region with the most small businesses coming in at 27% with the Mid-Atlantic region right behind it at 22%. The Eastern and Farm Belt regions report the fewest small businesses with only 5% each: National Small Business Association
- The majority of small business owners are bullish on the national economy. 54% say it’s better than 6 months ago. 63% say it’s better than a year ago, and 78% believe it’s better than 5 years ago: National Small Business Administration
- The small business generating the lowest profit margins are grocery stores, bakeries and tortilla manufacturing with only 2.2% and 2.3& NPM respectively: Forbes
- As of 2017 privately held companies were averaging sales profits of around 7% over the previous year: Forbes
2. Entrepreneurship Statistics
- The more education individuals have the less likely they are to start a small business. A third of entrepreneurs have high school degrees only or cite obtaining their GEDs as their highest degree of education: Guidant Financial 2019 Small Business Trends
- 49% of millenials would rather own their own businesses than work for others: America’s SBDC
- 73% of entrepreneurs are white: Guidant Financial 2019 Small Business Trends
- 81% of independent workers are happy they made the decision to work independently, and 60% believe they are healthier: MBO Partners, Inc.
- 86.3% of small business owners take home less than $100,000 annually. The average income is $59,000. Slightly more than a ⅓ of owners don’t take any salary: Fundera, Inc.
- Analysts are predicting that by 2027 half the workforce will be freelancing: Forbes
- 2.5 million armed forces veterans own small businesses
- 12.3 million women own businesses in the U.S. That’s 4 out of 10 and up from 45 years ago when less than 500,000 women owned businesses: WBENC
- Women were majority owners of 9.9 million companies in 2012. They account for $1.4 trillion in sales and employed more than 8.4 million workers: Small Business Administration
- The number of African American small businesses has increased by a whopping 400% in the last year. Hispanics come next at 14%. Asian business owners are at 8% and Native Americans come in at 4%: Guidant Financial 2019 Small Business Trends
- The United States has the best environment for cultivating entrepreneurs when compared with 136 other countries across the globe: GEDI
- One of the most dramatic workforce shifts in American history could come to fruition by 2020. It is estimated that as many as 27 million workers will have left the traditional workplace in favor of becoming self-employed: FreshBooks
- 81.3% of entrepreneurs start from scratch. 11.3% purchase an ongoing business. 4.4% get them as gifts or transfer of ownership, and 2.8% inherit the businesses they own: U.S. Census
- Half of entrepreneurs start their businesses in garages or basements: SBE Council
- Entrepreneurs are 125% more successful when they have had previous experience in the field in which they start their businesses: MIT Management
3. Startup Statistics
- According to Kabbage 33% of small businesses start with less than $5000. Nearly 60% start with less than $25,000. 65% of owners were not confidant they had the funds necessary to successfully open their own businesses: Small Business Trends
- The majority of startups are self-funded: SBA How to Fund Your Business
- Only 34% of small businesses are traditionally funded through a bank. The primary reasons for this are the time and difficulty is takes to get a loan. Credit from lenders is the largest source of funding for small U.S. businesses: SBA How to Fund Your Business
- Nearly 50% of small businesses plan to implement digital apps: Clutch
- In 2015 96.4% of U.S. manufacturers exporting goods overseas were small or medium size businesses. 93.5% of U.S. manufacturing importers were small or medium size businesses: SBE Council
- 60.1% of small businesses without employees are home based. Franchises make up 2.9% of small businesses. 19.3% of small businesses are family owned: Small Business Administration
- The survival rate for startups has improved over the years. 79.9% of companies started in 2014 were still in business a year later. That’s the highest percentage since 2005: Bureau of Labor Statistics
- 63% of small business owners carry a certain amount of debt. They use credit cards extensively for short term capital, but credit cards aren’t used as frequently for startups or expansion. Small Business Administration
- The top reasons for business failure are no need at 42% and lack of funding at 29%: CBI
- 27% of businesses can’t get the funding they need according to the NSBA. This means they can’t grow their businesses, fund sales, and sometimes are forced to layoff employees: NSBA
- Homeowners are 10% more apt to start their own businesses than those who rent. Real estate is an asset many of them use as collateral to get loans: SBA
- The lowest effective tax rate is paid by sole proprietorships at 15.1% in 2013: SBA Office of Advocacy
- 40 year olds are more than 2 times more likely to be successful at starting businesses than 25 year olds: Kellogg School of Management
- The nation’s recovery from the recession is based largely on small business. 60% of the jobs created between 2009 and 2013 came from small businesses: SBA Office of Advocacy
The bottom line is that starting your own business doesn’t take vast sums of money, and you have a better than even chance it will last over time. Even though you may not get rich as a small business owner, the statistics indicate you’ll be happier and healthier than if you had remained working for someone else in a job that didn’t challenge you or that you didn’t feel passionate about.
Last Updated on June 8, 2022 by Joe