Small businesses have an immense impact on the global economy, and employ more than two-thirds of the world’s population. These small business statistics will help you understand how small companies work, what influences them, and how they impact the economy so you can take advantage of innovative opportunities and prepare for potential risks.
Becoming an entrepreneur not only provides individuals with more freedom as they become their own bosses, but also generates new employment opportunities for the rest of us.
While COVID-19 has changed the landscape of small enterprises worldwide, forcing many to close their doors, the entrepreneurial spirit lives strong in those seeking to find solutions to meet the modern consumer’s needs.
Small Business Statistics (Editor’s Choice)
- There were more than a million minority-owned companies in the US in 2019
- Globally, New Zealand is the easiest country to start a business in
- Up to 42% of small businesses fail because of a lack of demand
- Over 30% of small businesses in the US closed due to COVID-19
- Every year, small businesses open a million and a half new jobs
- A third of small businesses accept cryptocurrency
- A small business owner has an average income of about $71,000
- In 2020, there were 31.7 million small businesses in the United States
Global Small Business Statistics
Small businesses and entrepreneurs make the world go ‘round. While prevalence varies from region to region, global consensus is clear: without small business, there just aren’t that many jobs. These insights give an idea of just what it takes to become your own boss, around the world.
1. New Zealand was ranked number 1 for the easiest country to start a business in.
(The Guardian, DoingBusiness)
The Ease of Doing Business report surveyed 190 countries and ranked them according to ease of opening and running a business. This report established some small business facts that are key indicators for whether it’s easy to create a business in a country. Factors such as having a low tax rate, accessible credit loans, and a simple registration process were seen as most important.
New Zealand ranked first for ease of creating a startup based on access to credit, general registration process, and applied taxes. The average small business growth rate is 2-3% annually in NZ, making it the perfect place to take a chance on a new business idea.
2. 50% of all small businesses in the US are managed from home offices.
(Fundera)
There are multiple benefits to running a business from home. From saving money on rent to being closer to family, being your boss from anywhere in the world gives the freedom that many people crave. Small business owners statistics show that there are currently 15 million businesses in the US that run out of the owner’s home.
3. Small and medium-sized businesses make up over 90% of businesses worldwide.
(IFAC)
Small and medium businesses drive global economic growth and contribute to over half of the overall GDP of the world. Contributing to almost 70% of employment opportunities, it’s fair to say that small enterprises are the heart and soul of the global economy.
Statistics on small business startups show that despite the integral role they play on the world stage, 50% of small businesses fail in the first five years.
4. Indonesia has the highest number of small businesses per capita in the world, with 195.27 per 1,000 people.
(NationMaster, APF)
Indonesia has significantly more small and medium enterprises (MSME) per capita than any other country in the world. With almost 99% of the Indonesian economy supported by these enterprises, they are truly the backbone of its economy.
Small business data shows that there were 57 million MSMEs in Indonesia five years ago, and they employed 97% of the workforce.
5. Germany reported having 354,000 small businesses in 2021.
(Statista)
In Germany, small businesses employ up to 50 people and are part of the non-financial sector of the economy. Notably, the largest industry supported by small and medium-sized businesses is the distributed trades sector.
6. 33% of small businesses currently accept cryptocurrencies as a payment method.
(Munichre)
With the new trend of cryptocurrency gaining traction among consumers and enterprises alike, small business stats show that many small companies are taking the risk and allowing the use of crypto for purchase transactions.
Almost half of businesses using this form of payment were started in the last five years, while only 21% had started in the last twenty years. As a new technology, many caution small business owners against using crypto, warning of increased risk of financial fraud, misplaced payments, and the insecurity of a volatile currency.
Small Business Statistics For the USA
The United States might not have the highest number of small business owners in the world, but if there’s one thing that the American Dream was built on, it’s the ability to make something of oneself from nothing. This entrepreneurial spirit is fostered in the US, and these latest stats show how it plays out in real life.
7. According to small business statistics, there are 31.7 million small businesses in the USA.
(CDN)
Like countries all over the globe, small businesses make up for 99.9% of all U.S. companies making them the backbone of American society. Most interestingly, 81.7% or 25.7 million of those firms have no employees at all, lending credibility to the American iconography of the self-made man (or woman).
8. Small businesses create 1.5 million jobs each year.
(CDN)
Despite not even 20% of small businesses having any employees, they still contribute to 65.1% of all new employment opportunities across the United States. Research on small business employment statistics shows that businesses with 20 to 99 employees offer the best employment opportunities.
9. Almost 70% of small business owners start their business from nothing rather than purchasing an already existing company.
(SBA)
The beginning of most businesses starts with an idea and the willingness of the entrepreneur to put in the work and financing to see it through. Notably, 67% of current small businesses in the US were founded by the owner, rather than being purchased.
Small business statistics from the SBA show that the younger and smaller a business, the more likely it is to be founded by the owner. While this may be the case, 64.5% of small business founders reported that they plan to sell their business at some point.
10. The average income of a small business owner is approximately $71,000.
(FreshBooks)
There is a significant range when it comes to the salary of the average small business owner in the US. While the nationwide average is around $71,000, it varies from state to state, and the SBA estimates that the true average is somewhere around $49,000 annually.
The average small business is unlikely to generate profit within the first three years of opening, and as such, many entrepreneurs don’t take any salary at all until the company is off the ground. On the contrary, some businesses fail to generate profitable revenue because owners pay themselves too much.
11. 55% of small business founders say they opened their own business so they could be their own boss.
(Oberlo)
According to the latest Bureau of Labor Statistics, the small business failure rate is as high as ever. Yet, many still pursue the increased responsibility and risk of starting their own company in order to gain freedom over their time and money.
Of the respondents in one study, 37% claimed that they opened their business in order to pursue a passion, and a smaller percentage claimed they did so because they had the right opportunity to do so.
12. Despite common myths, 85% of restaurants survive their first year of business.
(LendingTree, Fundera)
While many believe that opening a restaurant is riskier than any other business, small business survival rates indicate otherwise. Notably, only 15% of restaurants go under in their first year, compared to 20% of businesses in other sectors.
It seems to be a vicious cycle of myth propagating outcome, however, as many potential new restaurant entrepreneurs fail due to lack of access to loans because it’s deemed too risky by banks. After five years, the industry is at the same survival rate of 50%, but still, the first few years of restaurant ownership appear to be the most promising.
13. Small business trends show that 42% of startups fail because their product or service is irrelevant to the market.
(Fundera)
Every business starts with an idea to fulfill a need or gap in the existing market, and these innovations are what drives successful companies. Unfortunately, just a little less than half of new businesses fail to address this key factor—relevancy.
Another reason for small business failure is due to lack of cash flow, resulting in a 29% failure rate for financial reasons.
14. In 2019, there were over one million minority-owned companies in the US.
(Census)
That equates to 18.7%. Let’s break that down by ethnicities. Namely, there were more than 7,300 Native Hawaiian and Other Pacific Islander-owned companies, and over 26,000 Alaska Native and American Indian-owned companies.
As for the number of African American and Asian-owned companies, it was approximately 134,560 and 581,200, respectively. However, Hispanics had the highest number of minority-owned companies, and it was more than 346,800.
Small Business Statistics and COVID-19
The onset of COVID-19 and related social distancing and stay-at-home measures had an immense impact on the state of small businesses in the United States and globally. While many larger corporations and companies were able to close their doors and still stay afloat, many small firms simply were unable to handle the loss in revenue.
The following statistics show just how many small businesses in America were affected by the pandemic and how they foresee recovery in today’s “new normal.”
15. COVID-19 caused 31% of small businesses to close in the USA.
(Forbes)
COVID-19 has taken and continues to take a catastrophic toll on small businesses in the United States. Sectors most directly affected were healthcare and service sectors, as well as food and beverage establishments. According to the US small business statistics, 31% of small businesses and 52% of personal businesses were forced to shut down.
Even though many small businesses have recently reopened, they continue working with minimal staff, and cautious optimism for the future.
16. 70% of small business revenues have declined during the pandemic in Europe.
(McKinsey)
The impact of the pandemic on small businesses wasn’t exclusive to the United States. The European small business revenue declined significantly, statistics show, during the first legs of the coronavirus, and most still are trying to recover.
Notably, one in five small business owners feel concerned that they might have to rely on loans to save their businesses or that they will have to let some of their employees go. As a central line of the European economy, the ripple effects of small business closures are devastating on the lives of people all over.
17. Small business failure statistics show that nearly 800 small businesses close each day in the US due to COVID-19.
(Washington Post)
Even though some businesses received aid from the Small Business Administration, for many, it simply wasn’t enough. More importantly, the extent to which the coronavirus has destroyed small businesses is underestimated, as there is no official reporting process for closing a business.
Many businesses tried to adapt to the imposed restrictions in order to stay afloat, either temporarily closing, staying open part-time or changing their method of service. Without the regular average small business revenue, however, many owners feel that they will not be able to survive another year.
18. Nearly 30% of businesses in East Asia and the Asia-Pacific received financial aid from the state during the pandemic.
(The Drum)
All small and medium-sized business owners in the Asia Pacific reported a fall in sales and demand due to the pandemic, but many are optimistic about recovery. The failure rate of small businesses in these regions was notably less than those in South Asia and other regions worldwide.
Still, 70% of businesses did not receive state financial aid during the pandemic, with lack of information being the most referenced reason for not applying for a grant or loan.
19. 4.2 million businesses have received emergency loans from the SBA for pandemic relief.
(Washington Post)
Small business lending statistics report that only a fraction of the 30 million small businesses received emergency support in order to stay open. While small enterprises have been the bloodline of the US economy for over three decades, the pandemic is a major factor that may change that for the foreseeable future.
Many reported that these emergency relief loans are not designed for micro-firms, and as a result, almost 100,000 companies have shut down for good.
20. 1 in 10 small and medium-sized businesses in Europe expect to file for bankruptcy after the impact of the pandemic.
(McKinsey)
According to small business owner demographics, almost 20% of small European companies expect to close in the next 12 months despite receiving financial aid from governments. In some industries, almost 15% said they would declare bankruptcy in the next half year.
The most affected sectors are accommodation, food services, agriculture, education, logistics, retail and wholesale, and construction.
Conclusion
For many, it’s a dream to start a business and be your own boss, but it comes with many risks and considerations. Especially in current times, becoming an entrepreneur is only for the brave of heart.
With the right innovation and research into the latest small business trends, there’s no reason why a business can’t flourish, even amongst the new ways of living due to the pandemic.
Small businesses are the lifeline for most economies worldwide, and while the individual impact may be small, collectively, entrepreneurs are responsible for almost half of the workforce.
While industries in the public service sphere are scrambling to adapt to a changing world, new upcoming industries are just breaking out to address the new needs of populations everywhere.
People Also Ask
According to the Small Business Administration’s (SBA) Office of Advocacy, small businesses play an important role in the U.S. economy. Considering that by 2020 there were over 30 million small businesses in the US, small companies make up 44% of the US economic activity and make up for 99.9% of all businesses in the US.
The Small Business Administration’s Office of Advocacy (SBA) reported that in 2020 there were 31.7 million small businesses in the United States of America, and nearly 800,000 new businesses were launched in 2020.
About 80% of new small businesses survive through the first year. After that, the number slowly declines year by year. Nearly 51% of the businesses survive longer than five years, and only one in three are lucky enough to hit the 10-year mark. The most common reason why businesses fail is they don’t address a relevant need in the market.
Small business owners make between $29,000 and $156,227 per year. The average income is approximately $71,900. If we take bonuses, profit sharing, and commissions into account, the income range is between $30,000 and $179,300.
Small businesses are a vital contribution to the US economy. Even though most small business owners don’t even hire employees, they generate millions of new jobs every year. Back in 2019, small businesses generated 1.6 million new jobs in the US. Companies with less than 20 workers alone generated 1.1 million new jobs.
Currently, there are 60.6 million employees in the US who work in small businesses. That is approximately 47.1% of the entire US workforce.
The average lifespan of a small business is approximately eight years. According to the SBA, 550,000 small businesses close every year. Notably, 20% of businesses fail in their first year, while by five years, the failure rate goes up to 49%.
Since the onset of COVID-19, these numbers have changed drastically, as many small businesses have been forced to close due to the extreme conditions.
In the United States of America, there are currently 31.7 million operating small businesses.
According to small business statistics, California, Texas, Florida, New York, and Illinois have the highest number of small businesses and the highest number of minority-owned businesses.
With 60.6 million small business employees in the US, small businesses are an integral part of the US and global economy.
