Small business owners know how important it is to understand the marketplace. Getting a sense of what’s really going on through statistics and data can help drive informed decision making and adaptation. We’ve compiled 19 useful small business statistics to know, including the best age to start a small business, what percentage of small businesses close within a year, and more.
1. 50% of small business owners are between 50 and 88 years old
The satisfaction that comes from running a business you’ve built is one of the reasons that people in their 50’s, 60’s and beyond continue to do so. As you become more experienced, you are able to apply everything you’ve learned, and your business may run smoother, more efficiently and more successfully.
2. 20% of small businesses fail within the first year
The first few years of a business are crucial. The more preparation and market research you do, before you get started, the better your chances for success! Apply the lessons you’ve learned in the past to your current venture. Since running out of cash is a common issue for new businesses, make a sound budget and secure adequate financing before you get started.
3. Most businesses fail because there’s no market for the product or service
This is why market research is so crucial! Spend some time talking to potential customers and gathering information to ensure there’s demand for the product or service you want to sell. This will also help identify whether the market is already overcrowded with similar businesses.
4. 25% of business financing is from personal sources like friends, family or savings accounts.
The majority of small businesses get their financing from products like business loans, credit cards, and lines of credit. Personal cash or funds from family and friends are also common. Whatever you choose, make sure you have enough on hand to survive the crucial early years.
5. 50% of all small businesses are home-based
There are nearly 15 million home-based businesses in the United States. Not to mention that the majority of startups began at home. That’s because working from home greatly reduces the overhead costs associated with an office space. This style of working has become increasingly popular throughout the pandemic, and it’s likely to stay that way for years to come.
6. 70% of customers will pay more for excellent customer service
Providing great service helps your customers see the value in choosing your business over your competitors’. It also ensures they have a positive experience, increasing the likelihood of a referral. Keep your customers happy and they’ll keep coming back again and again!
7. 91% of Americans shop at small businesses
When choosing where to shop, customers really value the personal interaction and great service they receive from small business owners. The most popular local businesses among shoppers include restaurants, bakeries, and pubs, clothing and shoe stores, bookstores, and gift shops.
8. 99% of all businesses in America are small businesses
This may seem like a high number, but the definition of a “small business” can include those with up to 500 employees. However, the majority of small businesses are much smaller, often just one person.
9. 50% of small businesses survive 5 years
The great news is that after the first five years, the failure rate flattens out.[1] If a business is going to fail, most of the time it happens within the first two years. Being prepared to face this crucial time will help ensure your business makes it to that five-year mark.
10. 64% of businesses have a website
In 2021, it may seem surprising that the number isn’t 100%! Many businesses don’t feel they need one. Certain industries rely more on word of mouth or social media. Still, having a professional-looking website is a great idea. Many customers expect to be able to find your business online and there are many tools for building a modern website or e-commerce platform at a relatively low cost.
11. 90% of customers research a business before buying a product
Leverage the research phase to drive home the message that your business is worth supporting. Positive reviews can have a direct impact on your revenue. Ensure you’re providing the best possible service and solving any problems quickly so your customers know you care. It will show in your reviews.
12. 44% of America’s economic activity is tied to small businesses
It is really true that small business is the engine driving our economy![2] Small businesses are responsible for creating 66% of new jobs and drive a ton of innovation, keeping the United States competitive on the global scale.
13. 89% of small businesses have less than 20 employees
This really shows how most small businesses are truly small![3] The percentage climbs when you include small businesses with no employees. Very small businesses with less than 20 employees are efficient and agile, saving money on overhead and real estate.
14. 44 million Americans are self employed
The number of self-employed people has climbed over the past several years. One reason is that technology has made it easier to run a business. Software suites can handle things like bookkeeping and payroll, and many banks cater to the self-employed small business owner.
15. 40% of American businesses are owned by women
This represents nearly 20% of employer businesses and the number continues to grow every year. The most popular women-owned businesses are in health care, hospitality, and waste management.
16. It takes 30 days or less to start a simple business
It doesn’t take very long to start a business if you are simply working out of your home with no employees. Creating a larger business with offices, warehouses, employees etc., can take up to 365 days to get started! Some of the tasks you’ll need to do are to create a business name, set up a bank account, choose a business structure, and more.
17. 8% of millennials run small businesses
Even more are making plans to start a business soon. This fast growing segment of the market is having a big impact on how business is done. They are often focused on striking a good balance between work and family life. Additionally, they are very comfortable with technology, so their business reflects that with e-commerce, apps, and social media.
18. 70% percent of Americans prefer shopping at small businesses
Americans tend to have a huge level of confidence in the quality of service that small businesses provide. 57% of people in a recent survey by Intuit[4] had a desire to keep their money local. Even though the pandemic hit small retail locations very hard, customers are loyal to the stores that remain. Millennials and Gen X’ers really value small businesses. They view the experience as authentic, which is a value they place a lot of importance on.
19. Micro businesses make up 75% of private sector employers
Micro businesses have between 1 and 9 employees and are the most common type of employer. Keeping a business small saves on overhead, and allows for a high level of teamwork and cooperation between employees.
Conclusion
Understanding what’s going on in the market helps identify opportunities for your small business. The data proves there’s an appetite for the small business community to continue growing, and the owners already out there have innovated and adapted in fascinating ways.
Article Sources
- Small Business Administration: Do economic or industry factors affect business survival?
- Small Business Administration: Small Business GDP, 1998–2014
- SBE Council: Facts & Data on Small Business and Entrepreneurship
- Intuit: Buying Local Statistics for 2021: Survey Finds 70% of Americans Shop Small
