How many small businesses are in the U.S.? Answers to these questions and more.
While most of the business news you hear in the media is centered around large, publicly traded corporations, the reality is that small, independently-run businesses play an outsized role in the U.S. economy. Small businesses account for nearly half of private employment in the U.S., generate nearly half of all U.S. economic activity, and each and every year, more and more small businesses are started.
Below, we’ve gathered the data and crunched the numbers on some of the most interesting aspects of American small businesses.
How many small businesses are there in the U.S.?
There are 31.7 million small businesses in the U.S., making up 99.9% of all United States businesses.
Note: This statistic is based on data from the U.S. Small Business Administration’s Office of Advocacy, which defines small businesses as independent businesses with fewer than 500 employees.
How many people do small businesses employ in the U.S.?
Small businesses employ 60.6 million people in the U.S., which makes up 47.1% of the country’s private sector employees and 40.3% of the private-sector payroll.
How many jobs do small businesses create?
Small businesses in the U.S. created 1.6 million net jobs in 2019. Firms with fewer than 20 employees contributed the majority of net job additions, with 1.1 million net jobs added in 2019.
From 2000 to 2019, small businesses created 10.5 million net new jobs, while large businesses created 5.6 million net new jobs. Small businesses have accounted for 65.1% of net new job creation since 2000.
How many small businesses open and close each year?
The number of business establishment openings rose from 973,000 in 2017 to 1,003,000 in 2018. The number of business closings also increased, from 858,000 in 2017 to 888,000 in 2018.
Here is a breakdown of business survival rates from 1994-2018:
- Two-year business survival rate: 67.6%
- Five-year business survival rate: 48.8%
- Ten-year business survival rate: 33.6%
- Fifteen-year business survival rate: 25.7%
What percentage of small businesses do minorities own?
In 2017, 29.6% of small businesses (9.2 million) were owned by minorities, while 68.3% of small businesses (21.2 million) were owned by non-minorities. The remaining businesses were of mixed ownership.
Here is a breakdown:
- African American: 3.08 million
- American Indian or Alaskan Native: 0.11 million
- Asian: 2.52 million
- White: 24.76 million
- Hispanic: 3.96 million
What percentage of small businesses are owned by women?
In 2017, women owned 37.6% of small businesses (11.7 million), while men owned 56% of small businesses (17.4 million). The remaining businesses were of mixed ownership.
Men tended to own more employer firms than women, with women owning 19.7% of employer firms (1.1 million) and men owning 60.6% (3.5 million).
Women owned 41.7% of nonemployer firms (10.6 million), while men owned 55% (13.9 million).
How old are small business owners?
Younger owners are underrepresented while older owners are overrepresented. Owners under the age of 35 comprised 20% of all owners, those between 35 and 54 years of age made up 43% of owners, and those 55 and older represented 37%.
What percentage of small business owners are foreign-born Americans?
Foreign-born Americans were 21 percent of owners (6.31 million) in 2017.
How do small business owners start their businesses?
Generally, 7 out of 10 business owners founded their own business. This statistic has held true over the period of time between 2007 and 2017.
Here is a breakdown of how owners started their businesses:
- Founded: 67%
- Purchased: 22%
- Gifted: 7%
- Inherited: 4%
How are small businesses legally structured?
The majority of nonemployer firms were sole proprietorships, while employer firms were typically organized as corporations. Here is a breakdown of how small businesses were legally organized in 2017:
|Type of business||Nonemployer||Small employer||Large employer|
|C-corporation and other||1.5%||24.8%||81.2%|
How are small businesses financed?
Small businesses are primarily financed through personal and family savings. Here is a breakdown of how small employer firms are financed:
- Personal and family savings: 64.4%
- Business loan from a bank or financial institution: 16.5%
- Personal credit cards: 9.1%
- Personal family assets other than savings of the owner: 8.7%
All of these incredible statistics on U.S. small businesses truly demonstrate the impact that small business owners and their employees have on the economy. While the specific data may change from year to year, the underlying truth remains that small businesses have always and will continue to be the backbone of America.
If you have other statistics or figures you’d like to see on small businesses, feel free to reach out and ask. We’ll do our best to track down the information or crunch the numbers.
- U.S. Small Business Administration Office of Advocacy