New Business Applications
The U.S. Census Bureau publishes data on new business applications – that is, “business applications for tax IDs as indicated by applications for an Employer Identification Number (EIN) through filings of IRS Form SS-4” – dating back to July 2004. These numbers are not actual business formations, but instead, a measure of individuals filing for tax ID numbers. From this data, projections regarding actual future business formations are made.
With the onset of the pandemic in 2020, one of the most encouraging and surprising results was the dramatic leap up in terms of business applications. This is encouraging for future growth in entrepreneurship, which is vital to economic recovery and growth.
Total Business Applications Reached Record Levels: As noted in the following two charts, total business applications and high-propensity business applications (that is, businesses most likely to have payrolls) both registered record levels in 2021, with total business applications registering 5.4 million and high-propensity applications coming in at 1.8 million.
How many small businesses are there in the U.S.?
There are many small businesses worldwide, but one of the best places for small businesses is the United States of America. The U.S. has many programs in place to support small businesses. Small businesses are doing wonders for American small towns and local economies.
1. There are 30.2 million small businesses in the U.S. and over 99% of all businesses are small businesses.
Small businesses are a huge part of the United States economy. According to a recent study, there are 30.2 million different small businesses across the entire U.S. Small businesses comprise 99.9% of all United States businesses.
2. Small businesses account for 64% of all new jobs in the U.S.
3. Out of all of the businesses in the world, about 95% are small businesses.
Small businesses are vital because they create an astonishing number of jobs. They account for over 95% of all firms worldwide and about 60%-70% of the global employment rates, leading economies worldwide.
4. 24,813,048 small businesses in the United States are non-employer.
Just because a business is small doesn’t mean it has to employ anyone. A lot of people start small businesses to legitimize their careers and practices. The United States government calls these businesses non-employer businesses. Furthermore, there are about 24,813,048 non-employer businesses in the U.S. today.
5. 69% of U.S. startups are started at the entrepreneur’s home.
We’ve all heard the touching tale of how most of the world’s big businesses started. Harley Davidson, Amazon, and even A.M.G. all started in garages, and that seems to be a trend across many small businesses. About 69% of all small businesses in the U.S. start their operations from home.
6. Small business measuring tactics
Depending on your business type, number of employees, and revenue, whether or not your business can be labeled as small can vary. For industries such as manufacturing and mining, anything under 500 employees is considered small. For wholesale trade, it’s 100 employees.
Other businesses such as retail and service need to have an annual average revenue of less than 6 million dollars. For construction, the number rises to $28.5 million, special trade contractors are $12 million, and agriculture is $750 thousand to be considered a small business.
7. Small businesses created 1.9 million net jobs in 2015.
Small businesses create a lot of jobs, and as time goes by, that amount is growing. In 2015, small businesses created about 1.9 million net jobs, and firms that employed less than 20 people experienced the most significant growth, adding about 1.1 million net jobs.
8. The employment share of the self-employed and micro-enterprises is highest in South Asia, Africa, and the Middle East.
A comparison of the different regions indicates that the share of self-employment in total employment is highest in South Asia (67%), followed by sub-Saharan Africa (50%) and the Middle East and North Africa (44%).
9. Total early-stage Entrepreneurial Activity (TEA) leaders by region of the world
The biggest Total early-stage Entrepreneurial Activity (TEA) in Asia and the Pacific is from Armenia at 21%. The highest TEA in Europe and North America is Canada with 17%. For Latin America, it’s Ecuador with 37%, and for the Middle East and Africa, it’s Madagascar with 18%.
10. Most micro-businesses employ nine to ten people.
When you think of micro-businesses, you’ll need to take the small business label and downscale it even further. However, there are many micro-businesses, most of which employ nine to ten people.
Small business owner’s stats
Small business owners are a diverse bunch. It seems that in this day and age, a lot of people want to get out of the wage-cage and start their own small business, and it’s easy to see why. While a significant portion of small businesses fails, those that persist are usually moderately successful, allowing them to focus on opening more small businesses or taking their business to the next level.
11. 45 is the most successful age to be a small business owner.
Small business owners are very diverse when it comes to their age, but the most successful age to start a small business is 45. That’s because people in that age demographic aren’t first-time entrepreneurs, and they have a lot of life experience to fall back on.
12. Young entrepreneurs are 188% more likely to side-hustle with a small business.
The craze involving passive income is becoming more prominent every year, which has driven many young entrepreneurs to seek side hustles. Millennials and Gen Z people are about 188% more likely to start a small business as a side hustle than other age demographics.
13. There are 8 million minority-owned businesses.
To say that small businesses are becoming diverse would be an understatement. There has been a lot of focus placed on ensuring that minorities have access to support and means to start a small business, resulting in about 8 million minority-owned businesses in the U.S.
14. About 54% of all small business owners have at least a bachelor’s degree.
Education is one of the most important factors when starting a small business, but you might be surprised to find out that about 53.78% of small business owners have a bachelor’s degree or higher.
15. About 4.3% of all small businesses in Canada are focused on innovation.
Small businesses are often trying to fill out a niche and grab a slice of a buzzing market. Some small businesses tend to carve out the market themselves before they have any real competition. The industry leader is Canada, with about 4.3% of small businesses doing something completely new.
16. 38% of small business owners say self-discipline is key.
One of the essential skills to learn as an entrepreneur is self-discipline. 38% of young entrepreneurs list self-discipline as the most important characteristic for running a successful small-scale business.
17. 29% of small business owners said money-making was the main driver behind starting a small business.
People open small businesses for many different reasons, and the most popular one is to make more money. About 29% of small business owners have listed this as the most important driving factor behind their decision to open a small business.
18. 19.4 million non-employer businesses in the U.S. are sole proprietorships.
Remember when we talked about non-employer businesses? Well, about 19.4 million of them in the U.S. are one-man-show sole proprietorships, 1.6 million are partnerships, and the smallest amount of them, 1.4 million, are corporations.
Small Business FAQs
How many employees is considered a small business?
Generally speaking, small businesses are considered those that have less than 500 employees. The average small business employs 10 people. In the US, 98.2% of small businesses employ less than 100 people.
What are the most common small businesses?
The most common type of small business in the US is in the service and goods-producing sector. Convenience stores, bakeries, hairdressers, restaurants, and small grocery stores are the most common small businesses. Professionals like accountants, programmers, lawyers, and doctors also tend to operate as small businesses.
What percentage of small businesses are profitable?
What percentage of small businesses are successful?
The success rate of small businesses hasn’t changed much over the past two decades. The small business failure rate for the first two years is 30% and 50% don’t go beyond their fifth year. Small business statistics show that 66% of small businesses successfully go through the first ten years, whereas only 25% of them succeed for 15 or more years.
How many small businesses are there in the US?
What percentage of US businesses are small businesses?
How many small businesses start each year?
What are the small businesses with the highest success rate?
Small business statistics indicate that according to the average profit margin, the most profitable venture is accounting, tax preparation, bookkeeping, and financial planning (18.4%). Real estate leasing (17.9%), legal services (17.4%), outpatient clinics (15.9%), and property managers and appraisers (14.9%) are also among the top five small businesses with the highest success rate.
Sources:
https://sbecouncil.org/about-us/facts-and-data/
https://firstsiteguide.com/small-business-stats/
https://99firms.com/blog/small-business-statistics/