Small Business Employment Statistics
Most U.S. Businesses Are Small Businesses
Small businesses dominate the U.S. economy, with 33.3 million qualifying as small businesses. This makes up 99.9% of all U.S. businesses. They play a crucial role in employment and economic stability.
Nearly Half of U.S. Employees Work for Small Businesses
Small businesses employ 61.6 million people, which is 45.9% of the U.S. workforce. This shows their importance in job creation and sustaining the economy.
Many Small Businesses Have No Employees
Over 80% of small businesses are solo ventures managed by their owners without any additional staff. This highlights the independence and self-reliance of many small business owners.
Some Small Businesses Have 1 to 19 Employees
About 16% of small businesses have between 1 and 19 employees, which is around 5.4 million businesses. Only 647,921 small businesses have 20 to 499 employees.
Small Business Job Creation
Significant Job Creation Over 25 Years
Small businesses have created nearly 13 million net new jobs in the past 25 years, accounting for about two-thirds of all new jobs added to the economy during this period.
Leisure and Hospitality Industry Leads in Job Growth
The leisure and hospitality industry has been adding an average of 52,000 jobs per month over the past year, showing strong recovery from the pandemic.
Professional and Business Services Industry Has Most Job Openings
This industry now leads in job openings, reflecting a high demand for skilled workers in management, administration, and consulting.
Home Health and Personal Care Industry Will Grow Fastest
This sector is projected to grow by 22%, adding over 804,000 jobs in the next decade due to an aging population and increasing demand for in-home care.
Small Business Salaries & Wages
Average Salary of Small Business Owners
The average small business owner earns $69,119, which is just 16% above the national average mean wage of $59,428. Salaries vary greatly, with some earning as low as $32,000 and others up to $147,000.
Increase in Hourly Earnings
Hourly earnings have increased by 4.6% over the past year, outpacing the annual inflation rate of 3.2%, suggesting a real increase in purchasing power for employees.
Small Business Ownership Statistics
Millennials Own 13% of Small Businesses
Despite their entrepreneurial spirit, Millennials own just 13% of small businesses. Most are owned by Boomers and Gen X, but Millennials may catch up as they age.
More Male-Owned Businesses
While males still own the majority, 43.4% of small businesses are now owned by females, showing progress towards gender equality in entrepreneurship.
Online & E-Commerce Business Statistics
One-Third of Businesses Don’t Have a Website
Despite the ease of building websites, only 71% of businesses have one. About 20% use social media instead, though a website is generally more advisable for visibility.
Significant Online Business
Over a quarter of all business is conducted online, with 2.64 billion e-commerce shoppers as of 2023.
Importance of Business Websites
76% of online shoppers check a business’s website before visiting its physical location, emphasizing the need for an online presence.
Small Business Costs
Labor Is the Biggest Cost
Labor costs make up 70% of business spending, leading many businesses to look for ways to reduce these costs through layoffs, outsourcing, or automation.
Inventory Is the Second Biggest Cost
Inventory accounts for 25% to 35% of a business’s budget. Strategies like dropshipping and smaller minimum quantity orders help manage these costs.
Marketing Budgets
Marketing makes up 9% of a business’s revenue on average, with social media being a popular and cost-effective advertising channel.
Small Business Survival Statistics
More Businesses Opening Than Closing
From March 2021 to March 2022, 1.4 million new small businesses opened, outnumbering closures by 447,519.
Early Business Failure Rates
20% of businesses fail in the first year, 30% by the second year, and 50% by the fifth year, highlighting the critical early years of business.
Top Reasons for Business Failure
38% of businesses fail due to running out of capital, while 42% fail due to lack of market demand. Effective financial management and understanding market needs are crucial for success.
Conclusion
Understanding these statistics helps small businesses plan for the future. By leveraging this data, businesses can make informed decisions to navigate challenges and seize opportunities in the evolving economic landscape.
Source: Forbes. (2024, January 31). Small Business Statistics of 2024.
https://www.forbes.com/advisor/business/small-business-statistics/
