Fascinating Small Business Stats in the US in 2019

Small and medium-sized businesses (SMEs) form the backbone of the US economy. In this expose we take a look at some fascinating insights into small businesses and the resources that make them work.

The United States is home to an estimated 30.2 million SMBs (Small and Medium Sized Businesses). The world’s biggest economy ranks as the third-best country for managing a start-up and running a business. Thanks largely to the phenomenal success of Silicon Valley enterprises, the US has retained its status as one of the most SMB-friendly destinations in the world. To this end, some 55% of the American workforce is employed by small businesses, and 3.7 million micro businesses across the country are staffed by fewer than 10 employees.

It comes as no surprise that eager entrepreneurs, fresh with ideas want to get up and running in the US every year. A caveat is in order: 50% of all start-ups will be wiped out within 4 years; such is the nature of the beast. Yet, despite this, an equal number of small businesses make it past these critical hurdles and become profitable operations for their stakeholders. For SMBs established in 2014, 8/10 of them survived into 2015, 7/10 of them survived into 2016, 6.2/10 of them survived into 2017, and 5.6/10 of them survived into 2018.

Different Types of SMBs in the US

Of the SMBs that are established, 69% are started at home. The vast majority of SMBs – 35% are LLCs, while S-Corps make up 33%, corporations comprise 19%, sole proprietorships make up 12%, and standard partnerships make up just 2%. This data provided by the NASB (National Association of Small Business) in its 2017 Economic Report makes for compelling reading.

Even more interesting is the fact that 25% of small business owners identify as female and 73% identify as male, with the majority of small business owners falling into the 40-49-year-old age group (25%), the 50-59-year-old age group (35%), and the 60-69-year-old age group (18%). Only a small minority of SMB owners slot into the 18-29-year-old age group (4%) and the 30-39-year-old age group (14%).

Equally interesting are the reasons why entrepreneurs start SMBs to begin with. Most of them (26%) are simply ready to be their own boss and take up the cudgels of their own financial success, while 23% of those surveyed simply want to pursue their own passions, and 19% were ready to seize the opportunities presented in the market. Corporate America is seen by 12% of small business owners as the reason why a lot of entrepreneurs are disenchanted with the workforce and want to create their own new reality.

In terms of ethnic make-up, 71% of SMB owners identify as Caucasian, 11% as Asian or Pacific Islander, 7% as African-American, 6% as Hispanic, and 5% as others. Ultimately, 90% of start-ups will fail at some point in their lifetime, despite their performance over 4 years. Of all the small businesses that are established in the United States, social assistance industries and healthcare industries have the highest longevity.

In 2017, statistics indicate that 42% of SMBs generated a payroll of less than $100,000, with just 13% of companies paying out $1 million – $5 million to their employees in 2017, with just 6% of SMBs making payroll expenses between $5 million – $150 million. According to NSBA, 46% of SMBs have between 1 – 5 employees (FT or PT). Small businesses typically provide OTJ (on-the-job) training for their employees, with some 82% of them attesting to that. Additionally, 61% of small businesses pay for off-site training, and 61% of businesses provide on-site training for specific types of jobs. As a result of these types of investments, most SMBs retain their workforce for at least 4 years +. SMBs typically don’t hire union workers, with just 95% of employees being non-union workers.

Small business management solutions are increasingly being used by SMBs across the US to facilitate more efficient overall operations. Small business IT spending is rapidly rising, and the industry boasts a compound annual growth rate (2011 – 2017) of 4.8%, with 2017 figures indicating that $686 billion is spent in North America on business IT. Myriad companies feature prominently, like BambooHR that provides HR software for all aspects of the employee life cycle. This insightful data can be used for better employee management operations. A variety of HR solutions is provided by this HR software, notably the maintenance of employee records, reporting and analysis, workflows, ATS, performance management, PTO (paid time off), mobile hiring and onboarding functions.

Of course, there are powerful small business management solutions like vCita that allow for bookings, billing & invoicing, customer retention management, marketing, and payment-related activity to drive success for SMEs across the US. These types of fully-integrated management solutions are responsible for the continued success of SMBs across the US, with a strong focus on mobile communications, engagement, and management.

Fascinating Stats about Small Businesses in the US:
* Small Businesses make up 99.9% of all business activity in the US.
* 77% of SMB owners have been rejected for loans by big banks, and most SMBs self-finance through credit cards and company earnings.
* 22% of SMB owners use their own savings for expanding their businesses.
* Some 42% of SMBs readily employ freelancers, with 55 million freelance workers now active in the US. This makes up 35% of the country’s workforce.
* Some 8 million SMBs are owned by minorities in the US, with 3.3 million of them owned by Hispanic people.
* The 287,835 SMBs which export goods overseas accounted for 97.6% of all exports from the country in 2015.
* The biggest challenges faced by small businesses include economic uncertainty and healthcare provision.
* The SBA Office of Advocacy reported that the US is home to 3.7 million micro businesses with less than 10 employees.
* Most small businesses are located in the southern part of the US (27%), with 22% in the mid-Atlantic region, and the Pacific regions, Mountain regions, Great Lakes comprising 12% – 15% of small businesses.
* The least profitable industries for SMBs in the US include oil & gas extraction (-6.9% net profit margin), software publishers (-5.1% profit margin), and beverage manufacturing (-3.7% net profit margin).

12 thoughts on “Fascinating Small Business Stats in the US in 2019”

  1. Would be fun if Uncle Warren said he was applying for a SBA loan. Yes, top 500 public corporations make more turnover than the 30 million SMEs. Article needed some good editing.

  2. 77% of small business are own by Caucasian. I wonder who are included in that group. Are South Asian, Jews, Middle-Eastern, Hispanics, North Africans, and Mediterranean included? Just wondering. Instead of mentioning race maybe ethnicity and immigration status would have been more useful. In my neck of the wood most of the small businesses I see are owned by immigrants or children of immigrants.

  3. Brian has not been as good as he normally is in showing his sources, but it seems to be from the National Association of Small Business

  4. Well, BKH isn’t a micro business any more then. Still counts as a small business and so contributes to that 99.9% of all business…

    I bet the line is supposed to say “99.9% of all businesseswhich is very different.

  5. Basically same story in every country, SMEs are the backbone of every economic system, though the large companies make far more money in aggregate and have far more influence.

  6. Latest letter I found (2016) said 24. Buffett must have gone on a huge hiring spree! The audacity, it’s a business, not some charity!

  7. 99% of all enterprises, not business “activity”, e.g., turnover. SMEs represent roughly $7 trillion in sales, whereas the S&P500 represent about $10trillion in sales.

  8. This was actually pretty informative, and I still have no idea what exactly they were selling me, though I assume they were trying to pump the mentioned vendors.

    Oh, I see, they’re trying to increase their own visibility. This seems like a reasonable cross-post.

    I would have liked more detail around future trends, not just current and recent stats. Do we expect higher/lower growth in small businesses? Are there any underlying socioeconomic trends to consider in the next 2-10 years?

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