The Small Business Administration (SBA) defines a small business as a firm which has fewer than 500 employees. This means that many highly valued startups in the U.S fit within this definition of small businesses.
1. How Many Small Businesses Are There in the U.S?
There are 30.7 million small businesses in the U.S. which account for 99.9 percent of all U.S. businesses (SBA, 2019).
Businesses with fewer than 100 employees account for 98.2 percent, and those with fewer than 20 employees account for 89 percent of all businesses in the country.
2. How Many Jobs Are Created by Small Businesses?
According to the Small Business Administration, small companies create 1.5 million jobs annually and account for 64 percent of new jobs created in the U.S. Over 90 percent of the business population represents small- and medium-sized businesses.
3. What Is the Most Common Reason for Opening Your Own Business?
There are many reasons why people might be motivated to open their own business. Among the most common motivations, 55 percent of respondents said that they were opening their own business because they wanted to be their own boss (Guidantfinancial, 2019). The next most popular reason for starting your own business includes wanting to pursue your own passion, with 39 percent of respondents choosing this as their primary motivation. Other common reasons include dissatisfaction with corporations, finding an opportunity to start your own business, and a lack of preparation for retirement.
4. Small Businesses Hit Hard by the COVID-19 Crisis
Uncertainty is one major factor that can really impact small businesses, and this has been particularly evident during the coronavirus pandemic.
According to the latest small business statistics, nearly one-third (31 percent) of small businesses in the U.S. are currently not operational (Facebook, 2020).
Over 70 percent of US small businesses shut down in March, when the U.S. became the new epicenter of the virus. More than 60 percent of these small businesses that closed were due to government or health authority orders, as large parts of the country went into lockdown in a bid to curb the spread of the virus.
Some small business owners have taken measures to adapt to the new reality the coronavirus has created. Many of them have increased their online activities to try and reach out to their client base and keep their business alive by selling their products and services online. In fact, more than half (51 percent) say that they have increased the interactions they have with their clients over the internet. Additionally, 36 percent of personal businesses who use online tools are now also doing all their sales online.
Looking forward, 28 percent of these small businesses owners say cash flow will be their biggest challenge in the near future, followed by a lack of consumer demand.
5. New Generations Are More Likely to Create a Side Business
Millennials and Gen Zers are 188 percent more likely to have the aim of creating a side business, compared to Baby Boomers or traditionalists (SalesForce, 2019). In comparison to Baby Boomers, Millennials and Gen Zers are also 48 percent more likely to say that they started a business because they had an idea that they were passionate to bring to the marketplace.
6. Top Digital Marketing Channel Among Small Business Owners
Social media is a preferred favorite for small business owners. In fact, 64 percent of surveyed small businesses use social media in their marketing strategy (The Manifest, 2019).
The same study shows us that nearly all small businesses advertise. And in most cases this advertisement is through digital mediums (in comparison to traditional channels). After social media marketing, the next most popular method of advertising is online marketing (49 percent), followed by print marketing (36 percent) and TV (22 percent). 73 percent of marketers believe that their efforts through social media marketing have been “somewhat effective” or “very effective” for their business.