Business Statistics

Planning a startup? These small business statistics might surprise you.

Industry NewsCategory
10 min read
Raubi Marie Perilli

This article was updated on Jan. 18, 2018.

If you’re getting ready to start your own business, these small business statistics might shed insight into what it’s really like in the world of entrepreneurship. These numbers offer an insider’s look at the small business community — from the overall state of small business in the United States to marketing and tech trends. Together, I hope they’ll help you identify what you need to do to set yourself up to successfully join the ranks of small business owners in the U.S.

Statistics on the state of small businesses

Sometimes it might seem like mega-conglomerates run the majority of the commerce in our country, but that’s not the case. Small businesses make up a bigger piece of our economy than you may realize.

Businesses with less than five employees make up 62% of all businesses in the United States (U.S. Small Business Administration). More than half of the businesses in the U.S. are small businesses, and that number is growing.

The number of small businesses in the United States has increased 49% since 1982 (U.S. Small Business Administration). You won't be alone in the small business world, and more and more entrepreneurs are joining this community as well.

Approximately 540,000 people become new business owners each month (The Kauffman Index). 310 out of every 100,000 adults become new entrepreneurs each month, and the rate of new entrepreneurs in the U.S. is .31%

30% of all new entrepreneurs in the U.S. are immigrants — up from 13.3% in 1996 (The Kauffman Index). As the startup economy continues to gain strength after a downward turn in 2010, there is plenty of opportunity for entrepreneurs from all walks of life.

The number of women-owned businesses has grown 114% over the past 20 years (1997-2017) (American Expresss 2017 State of Women-Owned Business Report). Women-owned businesses are making an impact in the economy generating more than $1.7 trillion in revenues and employing close to 9 million people.

51% of people asked, “What’s the best way to learn more about entrepreneurship?” responded with “Start a company” (Small Business Trends). There’s something to be said for just doing it.

Average revenues of women-owned businesses increased 12% from 2014 to 2015, with average earnings jumping from $67,950 to $72,529 year-over-year (Biz2Credit). The study also found that male-owned businesses generated about 60% more revenue on average than women-owned businesses.

Business Statistics Women

More than a third of the U.S. working population is employed at businesses with fewer than 100 employees (U.S. Small Business Administration). Small businesses are the engine of the U.S. economy, supporting many entrepreneurs and a large portion of the workforce.

Oklahoma City, ranked No. 1 on the Top 15 list of best cities in the U.S. to start a business (CNBC). Results were based on at factors including average length of the workweek, startups per capita, ease of obtaining a loan, number of college-educated people living in the are, living expenses, and office-space affordability.

The majority of small businesses are S-corporations (32%), followed by LLCs (30%) (National Association of Small Business’s 2017 Mid-Year Economic Report). C-corporations were once the go-to tax structure for businesses, but now small businesses have other, and often better, options. As you set up your small business, talk to an accountant about which business entity is your best bet.

2/3 of small businesses owners anticipate revenue growth in the next 12 months — the highest it has been in nine years (National Association of Small Business’s 2017 Mid-Year Economic Report). Small business owners are optimistic about the future and are expecting to grow their business in the next year.

40% of small business owners expect to grow revenue by improving their existing customer experience and retention (Wasp). Other anticipated tactics for growing revenue include launching new products and services (36%) and investing in new customer acquisition activities (32%).

Small businesses list their primary goal as driving sales (30.9%), retaining and re-engaging customers (23.1%), and building brand awareness (13.6%) (2017 Small Business Marketing Trends Report). Most small businesses are focused on growing and building lasting customer loyalty, but many are making mistakes with their marketing that could be halting their growth.

Small business marketing statistics

Most businesses are focused on growing, and effective online marketing can help fuel that growth — as these small business statistics illustrate.

Business Statistics Website

83% of small business owners who already own a website feel they have a competitive advantage over those without one (GoDaddy). A website is a vital part of a small business's marketing plan. Here are seven reasons why you need one.

Six out 10 very small businesses are not online (GoDaddy). Too many small businesses are missing out on online marketing opportunities by failing to create websites. However, as GoDaddy CEO Blake Irving points out:

“The good news for micro-businesses around the world is that their fears about getting online are quickly eroding. According to RedShift, over half of the businesses that took part in their study said they intend to get their business online within the next two years. They also expect that having their own online presence will significantly speed growth by making their businesses visible to local, national and international audiences.”

75% of small business owners believe that internet marketing is “effective” or “very effective” at attracting new customers (Business 2 Community). Many small business owners see success from creating a strong online presence — including a website, business-class email and social media profiles.

46% of businesses believe inbound marketing provides a higher ROI than outbound marketing (Hubspot’s State of Inbound Marketing Report). More brands find that inbound marketing tactics such as a website, content and social media provide a better return on investment than outbound marketing. Only 12% said outbound marketing gives a higher ROI than inbound marketing.

More than 65 million small businesses have Pages on Facebook, and more than 4 million small businesses advertise on Facebook (Facebook). More than one billion people visit Facebook business pages each month, so small businesses can use this platform to connect with a large audience.

64% of brands follow other businesses on social media (Business Insider). It’s not just general consumers who use social media. Businesses also go to social media to find solutions for their needs. Plus, social media is a good place to find business-to-consumer and business-to-business customers.

Small business statistics on technology

The stats show that businesses which embrace technology have a greater chance at success — although the numbers also highlight the high percentage of small business owners who’ve yet to incorporate various tech solutions into their operations and marketing.

More than half of all website traffic now comes from mobile (StatCounter). It’s never been more important to come up with a strong mobile strategy for your business.

42% of small businesses have built a mobile app (Clutch). The primary reasons for why most small businesses built an app was to increase sales and improve customer service. From one-touch contact to GPS-enabled coupons and map integration, here are a handful of must-have features for business mobile apps.

89% of mobile media time is spent using apps instead of mobile website browsers (Smart Insights). Whether users are managing their account, reading branded content, placing orders, or processing payments, many use dedicated apps to engage with a business. Brands need to make it ultra-easy for customers to do business with you via a dedicated mobile app. Adopting mobile solutions is a must for satisfying today’s tech-savvy consumers.

Business Statistics Mobile

35% of very small businesses feel their operation is simply too small to warrant a website (GoDaddy). No matter how small you are, a website shows you mean business. It’s a great way to jumpstart your startup and show potential customers that you’re serious about your enterprise.

49% of small businesses owners say they do their own marketing (2017 Small Business Marketing Trends Report). Whether they do it on their own or hire someone, small businesses can’t neglect or ignore their digital presence.

51% of small businesses say that the “Time Required” is the biggest barrier to adopting new technology (Business Insider). When small businesses fall into this trap, they risk falling behind. Start slow, adopting one or two technologies that will save you time, cut costs, and help your business grow. If necessary, consider hiring a contractor to manage the technology.

97% of consumers read online reviews for local businesses in 2017, and 12% look for a local business online every day (BrightLocal). It’s become common practice for consumers to research business and sleuth online reviews before making purchases. Businesses must have a substantial list of online reviews for customers to find online. Learn how to encourage your customers to leave reviews about your business.

50% of small businesses have seen listings for their business that are not accurate (Constant Contact). All online profiles need to be monitored, updated and accurate. When potential customers find inaccurate information about a business, they will likely fail to connect with that business. Consider using a time-saving solution like GoDaddy’s Get Found to manage your online business listings from one convenient dashboard.

Statistics on small business success

Though succeeding in small business can be challenging, as the statistics below show, determined entrepreneurs who take a strategic approach to doing business — including building a dynamic digital presence, planning for growth, and managing money — have a strong chance at going the distance.

About 50% of small businesses succeed after the five-year mark (Bureau of Labor Statistics). As GoDaddy CMO Phil Bienert explains, persistence is key:

As we’ve mapped out the journey of the life of a small business, we’ve learned that people start out with a feeling of optimism – and then other factors set in. Managing finances, finding customers, and balancing work life and personal life are all difficult moments of truth for every small business. And there will be points where a small business owner wants to give up. That’s the point where grit comes into play. Everyone’s motivation is different, and it’s really important in those tough days to be reminded that there are others out there who have been through this as well, and others who know you’re doing important work and who believe in your vision.

82% of businesses that fail do so because of cash flow problems (Fundera). Problems with managing money is the No. 1 reason why businesses fail. So, being aware of this issue and setting up a clear and detailed financial plan before launching can help a business succeed. Here are some tips for cash flow forecasting.

Business Statistics Cash Flo

About two-thirds of businesses with employees survive at least 2 years, and about half survive at least 5 years (Bureau of Labor Statistics). Every day you are in business increases your chance of survival, and these rates are the same over time and across industries.

75% of small businesses studied over a seven-year period succeeded (Quickbooks Online). Let’s end on a high note with some findings from an Intuit study that looked at 196 businesses over a period of seven years. The vast majority were still chugging along at the end of the study. While 25% of businesses closed, not all of them failed. Some closed because of economic conditions, but others dissolved their business entity for other reasons — such as creating a new entity or completing their project or goal.

As you get ready to launch your business, knowing these small business statistics and understanding the trends of the business community will give you a better perspective. You’ll be more likely to know what you are getting into, plan ahead, and successfully join the growing community of U.S. entrepreneurs. Go, You!