There are 31.7 million small businesses in the United States Of America. This number accounts for over 99% of all firms operating in the U.S. and employs 48.75% of the workforce.
The average annual revenue for a small business is $46,979, and more than half have less than 10 employees, unfortunately some 22% of all small businesses will fail in their first year.
But the good news is that even while COVID-19 had a horrible effect on the economy, business startups grew strong by 24% during the pandemic.
Answering the question how many small businesses are in America can be complicated because of the variables but we lay them out below.
Top Small Business Statistics:
- There are over 31.7 million small businesses in the United States, as of March 2021 according to the SBA.
- 99.9% or nearly all small businesses in the United States are made up of under 500 workers.
- Small businesses grew 24% during COVID-19, following a 20% growth in 2019.
- Small businesses create 1.5 million jobs annually, according to a study by the SBA.
- The state of California has the most significant number of small businesses in America at 4.1 Million.
- 40% of small business owners don't take out insurance at all.
- Small businesses employ 59.9 million people, which is 47% of the U.S. workforce on a percentage basis.
- 90% of businesses in the U.S. are small, with less than 20 employees
- Only 10% of all businesses in the U.S. employ more than 100 people.
- 50% of America's GDP is generated by small businesses.
- There are over 305 Million small businesses worldwide.
Number Of Small Business In America & The World
How Many Small Businesses Are There In America & The United States?
There are over 31.7 million small businesses in America as of March 2021 compared to about 30.7 million a year earlier according to the SBA. On top of that, some 543,000 new businesses are started each month.
Key Statistics:
- As of March 2021, there are over 31.7 million small businesses in the United States.
- In 2019 there were an estimated 30.2 million small businesses in the United States, according to the SBA.
- Small businesses make up 99.9% of all U.S. businesses.
- It takes between 4 and 8 days to launch a small business in the U.S.
- In the United States, 543,000 new businesses are started every month.
- 66% of small businesses in America have a website, and 94% (of those who do) are mobile-friendly.
- There are currently 20,139 large businesses in America.
- Over the past 10 years, the number of businesses in the U.S. increased by 78.9%
What Percentage Of American Businesses Are Small Businesses?
It may be hard to believe, but 99.9% of all businesses in America are small companies. This means that for every 100 businesses in the U.S., 99 are small, and only 1 is a large business.
Key Statistics:
- 99.9% of the U.S.'s small and medium-sized companies are classified as small businesses, with 0.1% being considered mid-size to large-sized companies
How Many New Small Businesses Start Each Year In The US?
More than 600,000 new small businesses are opened annually in the U.S., and the number of companies in America continues to multiply, according to the SBA. In 2020 alone, there was a 74% increase in new business applications.
Key Statistics:
- In 2020, 4.35 million new business applications were submitted, which is 74 percent more than in 2019 and the biggest increase of the past decade.
- In the US, in 2019 there were 3.50 million new business applications submitted.
- In 2018, 3.49 million new business applications were submitted
How Many Americans Started A Business During COVID-19?
One of the fastest-growing areas in the U.S. during COVID-19 was small business activity; over the last year, 3.5 million businesses were started and reached 4.4 million total- a 24% increase from 2019 to 2020.
Key Statistics:
- Some 3.5 million businesses were started during the height of the coronavirus pandemic.
- There was a 24% Increase in the number of small business that were started from from 2019 to 2020.
How Many Small Businesses Are There In The World?
There are over 305 Million Small Businesses globally ran by some 472 Million entrepreneurs, and get this, a staggering 100 million companies will open each year globally. In fact, 99% of all businesses in the UK, Australia, & Europe are small or medium businesses.
Key Statistics:
- Over 305 Million Small Businesses exist in the world.
- With Over 472 Million Entrepreneurs Worldwide, entrepreneurship is booming across the globe.
- More than 100 million new businesses will open every year around the world.
- In Europe, 23 million SMEs represent over 99% of all European businesses.
- 99.9% of all UK-based businesses are SMEs (small and medium enterprises).
- Over 97% of Australian businesses are small or medium-sized companies.
Sources:
Pie Insurance | Small Biz Trends | Oberlo | Review42 | Small Biz Genius | SBA | 99 Firms | PIIE | Moya Mason |
Number Of People Employed By Small Businesses In The U.S.
How Many Americans Do Small Businesses Employ?
59.9 million Americans are employed by small businesses, and 47% are employed by small businesses with less than 100 employees, the largest share of U.S. workers.
Key Statistics:
- 59.9 million Americans are employed by small businesses, 47.5 percent of the entire private workforce in America.
- 20% of small businesses are employer businesses
- Small businesses that have less than 100 employees are the biggest contributor to nationwide employment.
- Private-sector employment increased by 1.8% between 2017 and 2018.
- The number of small business proprietors increased by 2.3 percent in 2016.
- Small businesses created 1.9 million net jobs in 2015, with establishments that employ fewer than 20 people seeing the largest gains at approximately 1.1 million new net jobs added.
What Is The Average Number Of Employees In A Small Business?
The average number of employees in a small business is about 10. This is the average for small companies that have at least one employee. Over 5 million businesses have up to 20 employees, and less than 650,000 companies have 20 to 499 employees.
Key Statistics:
- The average number of employees in a small business is about 10.
- The majority of U.S. businesses are small, with over 5 million companies employing 1 to 19 people.
- There are 629,025 small businesses with 20-499 employees.
What Percentage Of Small Businesses Have No Employees?
81% (or 25.7 million) small businesses in the U.S have no employees and 19% (or 6 million) have paid employees, with 20,139 large businesses represented in total.
Key Statistics:
- 81% of small businesses in the U.S. have no employees!
- 87% of small business owners are sole proprietors.
- Only 1 in 5 small businesses have employees, mostly working alone or hiring their spouse
How Many Employees Is Considered A Small Business?
The Small Business Administration defines a small business as one which has less than $7 million in gross sales and 500 employees. According to the SBA, these firms represent 99% of all businesses in America. The answer varies by industry, but most U.S.-based companies are considered "small" or "micro" businesses due to their size.
Key Statistics:
- The SBA considers a business small if it has less than 1,500 employees, or less than $7 million in gross sales.
- The Office of Advocacy defines a "small business" as any company with less than 500 employees.
- Startup employment averaged 4.4 employees per firm in 2017.
Acceptable Small Business Sizes By Industry
BUSINESS INDUSTRY | ACCEPTABLE SBA SIZE DEFINITION |
|---|---|
Agriculture | Maximum of $750,000 in average receipts. |
Mining | Maximum of 250 to 1,500 employees depending on subsector within mining. |
Utilities | Maximum number of employees ranges from 250 (for renewable electric power generation subsectors) to 1,000 (for electric power and natural gas distribution businesses). |
Construction | Maximum of $36.5 million in average receipts. |
Manufacturing | Maximum number of employees ranges from 500 to 1,500 (with approximately 27% of all manufacturing businesses having a maximum employee cap at 500 employees). |
Wholesale Trade | Maximum number of employees ranges from 100 to 250. |
Retail Trade | For one-third of all retail trade sub-industries, size standards are set at $7.5 million in average annual receipts. Other industries are defined by 100 to 500 employee maximums. |
Transportation and Warehousing | Maximum number of employees ranges from 500 to 1,500. Some sub-industries in transportation and warehousing are defined by a range of $7.5 million to $37.5 million in average annual receipts. |
Information | Maximum number of employees ranges from 500 to 1,500, depending on the sub-industry. The maximum average annual receipts for this industry ranges from $7.5 million to $38.5 million. |
Finance and Insurance | A maximum of 1,500 employees (for direct property and casualty insurance carriers), and a maximum in average annual receipts ranging from $32.5 million to $38.5 million. |
Real Estate, Rental, and Leasing | A maximum of $7.5 million to $32.5 million in average annual receipts. |
Professional, Scientific, and Technical Services | A maximum of $7.5 million to $20.5 million in average annual receipts, or a maximum of 1,000 to 1,500 employees. |
Health Care and Social Assistance | A maximum of $7.5 million to $38.5 million in average annual receipts. |
Approximately What Percentage Of American Workers Got Their First Job With A Small Business?
67% of workers get their first job with a small business, and they receive their initial on-the-job training in basic skills and knowledge. This means that small businesses are the largest initial employer in America.
Only 12% of American workers work for large corporations such as Walmart, Apple, or Target. In comparison, 92% work small business jobs like groceries, restaurants, hair salons, etc.
Approximately What Percentage Of American Workers Got Their First Job With A Small Business?
67% of workers get their first job with a small business, and they receive their initial on-the-job training in basic skills and knowledge. This means that small businesses are the largest initial employer in America.
Only 12% of American workers work for large corporations such as Walmart, Apple, or Target. In comparison, 92% work small business jobs like groceries, restaurants, hair salons, etc.
Percentage Of Jobs Created By Small Businesses In America
How Many Jobs Do Small Businesses Create In The United States?
Small companies create 1.5 million jobs annually and represent the backbone of the U.S. private sector, employing 59.9 million people and 47.3% of the entire workforce on a percentage basis while accounting for 99.9% of all business in America according to the Small Business Administration.
Key Statistics:
- According to the Small Business Administration, small business creates 1.5 million jobs annually.
- It is estimated that small businesses account for 64.9% of net new jobs in the United States.
- 90% of America's companies say they want to grow their workforce.
- Though not all small businesses are new, new businesses in the U.S. account for nearly 20% of gross job creation!
- From 2000 to 2018, small businesses created 9.6 million new jobs while large businesses only contributed 5.2 million jobs during the same time period.
Sources:
Small Business Employment Statistics By State, Industry, & Size
How Many Small Businesses Are There In Each State?
The average number of small businesses in each state is 644,000; this is based on how many small companies there are by region (on average). There are a lot more Small Businesses than there are larger businesses in the U.S.
Which States Have The Most Small Businesses?
California has the most small businesses with over 4.2 Million. Texas has the second-most number of small businesses in America, with around 2.6 Million. Florida is third and New York fourth among states for the number of small businesses that are home to over 2.4 Million companies each. Illinois rounds out this top five list by having about 1.2 Million small businesses.
Which States Have The Least Amount Of Small Businesses?
Wyoming comes in dead last for the number of small businesses with just over 66,000. Next are North Dakota and Alaska, with just over 76,000 small companies. DC and Vermont round out the bottom 4 and 5, both with no more than 80,000 small businesses in their states.
In Which States Do Small Businesses Employ The Most People?
Small businesses employ the most people in Montana, with small companies employing almost 65% of people in their state, followed by Wyoming with just over 63%. The state of Vermont is third on the list for small businesses that employ people, with 62% of people working for a small company.
In Which States Do Small Businesses Employ The Least Amount Of People?
Small businesses employ the least amount of people in Florida and Nevada, with small businesses employing only 41% of people in their state, followed by Tennessee with just over 42%. The state of Georgia is fourth on the list for small businesses that employ people, with 43% of people working for a small company.
Which Industries Have The Most Small Businesses?
The Other Services industry is responsible for more small businesses than any other single category and is composed of over 4.3 million firms, followed by the sectors of Professional & Technical Services, 14%. Construction covers over 13% and Retail Trade with just over three million firms or 12% of small businesses.
Which Industries Have The Least Amount Of Small Businesses?
Although all industries have many small businesses, the Utilities industry has the lowest, with just over 25,000 firms. Followed by the Mining industry with 106,000 firms. Then there is Agriculture, Forestry, and Fishing and Hunting with only 257,000 firms.
Number Of Small Businesses & Small Business Employees By State
STATE | NUMBER OF SMALL BUSINESSES | NUMBER OF SMALL BUSINESS EMPLOYEES |
|---|---|---|
Arizona | 571,495 | 1,039,228 |
Tennessee | 603,310 | 1,096,245 |
Colorado | 630,113 | 1,117,202 |
Maryland | 594,124 | 1,143,191 |
Missouri | 532,277 | 1,168,725 |
Indiana | 512,348 | 1,222,372 |
Minnesota | 520,110 | 1,254,958 |
Wisconsin | 452,594 | 1,258,929 |
Washington | 608,956 | 1,379,558 |
Massachusetts | 669,224 | 1,490,416 |
Virginia | 745,886 | 1,535,136 |
Georgia | 1,051,071 | 1,637,892 |
North Carolina | 913,398 | 1,672,050 |
New Jersey | 884,049 | 1,810,107 |
Michigan | 873,722 | 1,868,885 |
Ohio | 949,479 | 2,192,920 |
Illinois | 1,233,572 | 2,485,857 |
Pennsylvania | 1,058,033 | 2,497,524 |
Florida | 2,494,279 | 3,397,931 |
New York | 2,168,799 | 4,106,086 |
Texas | 2,679,964 | 4,706,864 |
California | 4,203,260 | 7,129,204 |
Wyoming | 66,653 | 131,499 |
Alaska | 73,354 | 141,147 |
Vermont | 77,614 | 161,080 |
Delaware | 82,121 | 187,556 |
North Dakota | 73,142 | 198,964 |
South Dakota | 86,550 | 210,534 |
Rhode Island | 101,516 | 229,974 |
Montana | 120,246 | 245,411 |
District of Columbia | 76,083 | 247,461 |
Hawaii | 132,640 | 275,115 |
West Virginia | 113,410 | 275,145 |
Maine | 147,270 | 289,156 |
New Hampshire | 134,760 | 295,895 |
Idaho | 162,905 | 315,753 |
New Mexico | 154,804 | 334,945 |
Nebraska | 176,358 | 412,291 |
Mississippi | 257,404 | 440,399 |
Nevada | 270,079 | 487,407 |
Arkansas | 249,907 | 490,497 |
Utah | 287,803 | 572,888 |
Kansas | 254,297 | 604,215 |
Iowa | 270,484 | 651,635 |
Kentucky | 351,260 | 702,054 |
Oklahoma | 350,718 | 712,582 |
Connecticut | 346,950 | 750,457 |
Alabama | 396,432 | 789,425 |
South Carolina | 418,031 | 794,711 |
Oregon | 377,860 | 852,983 |
Louisiana | 447,440 | 902,758 |
Table Data Source: U.S. Census Bureau. Figures released by the Small Business Administration Office of Advocacy, “Small Business Profiles”. Table does not include territories such as Puerto Rico or Guam. Percent of workforce in small businesses is based on the number of people employed in the private (nongovernmental) workforce. Percentages are rounded.
Sources:
SBA | Fundera | University Of Minnesota | The Simple Dollar | Small Biz Trends |
2021 Small Business Owner (SMB Owners) Statistics By Demographics In America
How Many Small Business Owners Are There In The U.S.?
There is an estimated 31.7 million small business owners in the United States accounting for 99.9% of all businesses. This number does not account for companies with multiple owners or the amount of time it would take to become a self-employed entrepreneur.
How Many Home Based Businesses Are There in The US?
Some 50% of American small businesses are home-based, roughly 15 million. More specifically, 60.1% of all small firms without paid employees are home-based, including 23.3% of small employer firms and 0.3% of large employer firms.
How Many Minority-Owned Businesses Are in the United States?
In the United States alone, there are now over 4 million minority-owned businesses that create an annual sales volume surpassing $700 billion. Here are the percentages of small business owners by race from Kauffman Index:
RACE | SMALL BUSINESS OWNERSHIP PERCENTAGE |
|---|---|
White | 71.67% |
Black | 6.22% |
Latino | 13.99% |
Asian | 6.16% |
Other: | 1.96% |
Key Statistics:
- There are more than 4 million minority-owned businesses in the U.S that do close to $700 billion in annual sales.
- There are over 3 million immigrant-owned businesses in the US right now.
- There are over 1.9 million Latina-owned businesses in the United States.
- Women of color own half of all women-owned businesses.
- Minorities own 45% of small businesses and constitute 12 million jobs in the United States.
- Veteran-owned firms make up 9.1% of America's businesses.
- People who immigrated to the U.S. make up 25% of small businesses nationwide.
- Immigrants have founded 55% of the Unicorn startups in America.
- More than 2 out of every 3 African American small business owners are the only employee in their own firm.
- African-American small businesses were the most impacted by COVID-19 experiencing a 41% drop in activity.
What Is The Average Age Of Small Business Owners?
The average business owner in the U.S. is 50.3 years old, and they earn 21% more than the average American. The higher earnings are primarily because many small business owners work 60 hours or more each week, including weekends, while people with other jobs may not. The breakdown is below:
SMALL BUSINESS OWNER AGE | SMALL BUSINESS OWNERSHIP PERCENTAGE |
|---|---|
Under 35 years | 15.9% |
Age 35 to 49 | 33.2% |
Age 50 to 88 | 50.9% |
Key Statistics:
- The average business owner in the U.S. is 50.3 years old.
- Millennials will make up 75% of the global workforce by 2025.
- Millennials currently make up 35% of America's labor force.
- Millennials already run over 16% of small businesses in America and this number is set to grow.
- Small businesses with founders aged 55+ tend to survive and have fewer employees, in contrast to the opposite for younger populations.
What Percentage Of Small Businesses Are Owned By Women?
32% of small businesses are owned by women while the majority of small business owners are male at 68%. This statistic has changed to an even more pronounced percentage in recent years. In 2019, Baby Boomers comprised 41% of small business entrepreneurs. However, by 2020, this number had decreased by 9% to 32%.
Key Statistics:
- Globally, women own 6.2% of all businesses established. This percentage is even higher for younger women.
- Women-owned businesses generate $1.8 trillion annually
- According to the Small Business Administration, women are running 48.3% of all home-based businesses.
- Between 1997 and 2017, female entrepreneurship grew by 114%.
- Every day, there are 1,817 new women-owned businesses.
- 88% of women-owned businesses generate less than $100,000 in revenue.
- Women entrepreneurs are most likely to start a business in retail and wholesale (26%), government, health education, and social services (21%,), professional administrative service (18%).
What Share Of The GDP Do Small Businesses Represent?
According to the Small Business Administration, small businesses are a significant contributor to the GDP of America, contributing $5.9 trillion in 2014 and 44% of economic activity in America.
What Is The Average Salary of a Business Owner?
According to PayScale, as of May 2021, the average salary of an American-based small business owner is $67,677. However, the salary of a small business owner in the United States can range from $30,000 to $130,000 per year.
How Many Veterans Own A Small Business?
There are 2.52 million veteran majority-owned businesses in the United States as of Nov 2019. 99.9% of all these businesses are classified as small businesses, according to the latest U.S. Census Bureau survey.
Sources:
NAV | Fundera | Small Biz Genius | Fortunly | 99Firms | SCORE | The Balance | SBA | Guidant Financial | Small Business | SEMrush | Pie Insurance | Payscale |
Small Business Insurance Statistics
How Many Small Businesses Have No Insurance?
To save money, many small businesses and startups refuse to get professional insurance. Recently, Next Insurance conducted a survey comprising 30,000 respondents. The results indicated that 44% of the companies had never sought any type of business insurance coverage - even when it was available!
Key Statistics:
- 40% of small business owners don't have any insurance at all.
- 48% of small business owners pay between $300 - $600 a year averaging around $504 a year
- 75% of small U.S. businesses are underinsured
- One out of every three small businesses faced top hazards last year.
- Nearly 35% of business owners experienced an incident that could have been covered by insurance in 2016.
- The most popular reason for small business owners filing grievances was due to disputes with customers (22%).
- Women business owners were 18.6% more likely than men to report that they had not experienced an insurance incident in 2016.
What Are The Most Expensive Types Of Small Business Insurance Claims?
According to The Hartford, the 10 most expensive types of business insurance claims are:
- Reputational harm: $50,000
- Vehicle accident: $45,000
- Fire damage: $35,000
- Product liability: $35,000
- Customer injury or property damage: $30,000
- Wind and hail damage: $26,000
- Customer slip and fall: $20,000
- Water and freezing damage: $17,000
- Struck by object: $10,000
- Burglary and theft: $8,000
Sources:
Insureon | The Hartford |
Concluding Thoughts
Taking Action
Thank you for reading this blog post about how many small businesses there are in America, the number of small businesses in America is on the rise, and more than half are expected to survive.
As a result, these enterprises will create jobs that fuel economic growth and while COVID-19 caused a ton of small businesses to fail, it also caused latent entrepreneurs to start more businesses than ever.
However, the most shocking statistic was that 40% of small businesses don't have insurance and that we saw a 24% increase in small businesses during the pandemic.
Sources:
Pie Insurance | Small Biz Trends | Oberlo | Review42 | Small Biz Genius | SBA | 99 Firms | PIIE | Moya Mason | JP Morgan Chase | Wikipedia | Quizlet | SBE Council | SBA | Fundera | University Of Minnesota | NAV | Fortunly | 99Firms | SCORE | TheBalance | Guidant Financial | Smallbusiness | SEMrush | Insureon | The Simple Dollar | The Hartford |