Small businesses are the undeniable backbone of the American economy. They create jobs, drive innovation, and provide character to communities across the country. But if you‘re wondering exactly how many small businesses exist in the US today, the numbers may surprise you!
Let‘s take a comprehensive, in-depth look at the latest statistics on the small business landscape in America.
A Booming Sector: 33.2 Million and Counting
The US Small Business Administration (SBA) reports there are 33.2 million small businesses in the United States as of 2023. This marks an impressive 11% increase from just six years ago in 2017, when there were 29.6 million small businesses.
This robust growth reflects the continued vibrancy and importance of small businesses for the nation‘s economic health. Despite market fluctuations and uncertainties, Americans remain enthusiastic about starting and growing small businesses.
To put this in perspective, the number of small businesses now amounts to 99.9% of all businesses in the US. The remaining 0.1% are made up of large corporations.
So when we talk about business in America, we are overwhelmingly talking about small business. This diverse range of entrepreneurs and locally-owned establishments are what drive competitiveness, job creation, and innovation across industries nationwide.
Small Businesses by the Numbers
Let‘s break down some key statistics to understand the components of the small business ecosystem across America:
- 61.7 million people are employed by small businesses – accounting for 46.4% of the total US workforce.
- Small businesses have generated 12.9 million net new jobs over the last 25 years. They are truly engines when it comes to job creation.
- The top small business states are California (4.2 million), Texas (3.1 million), Florida (3 million), and New York (2.3 million).
- Vermont, Maine, Montana, North Dakota and South Dakota have the highest small business share, with approximately 99% of businesses qualifying as small.
Now let‘s look at the breakdown based on number of employees:
- 27.1 million small businesses are non-employer firms, meaning they have no employees aside from the owner.
- 5.4 million have between 1-19 employees.
- Only 650,000 have 20-499 employees.
So the vast majority of small businesses are microbusinesses with just a handful of employees. But it‘s the cumulative impact of all these businesses that make them so vital for local job creation and economic health.
Who‘s Starting Small Businesses?
When it comes to demographics, most small business owners fall into the 41-56 age range. Specifically:
- 46% of owners are between 41-56 years old
- 41% are between 57-75 years old
- 13% are between 25-40 years old
- Just 1% are between 18-24 years old
The older average age indicates many entrepreneurs start businesses later in life, after accumulating industry experience and capital.
An interesting demographic trend is that while women make up 50% of the US population, they own only 41% of small businesses. So there is still room to improve gender equity in business ownership.
Economic Pillars in Every Community
The importance of small businesses for local job creation and community vitality can‘t be overstated. Here are some ways they make a difference:
- Small businesses contribute 44% of US economic activity, according to the SBA.
- They produce 16 times more patents per employee than large firms, driving innovation.
- On average, small businesses donate 250% more than larger businesses relative to their size, supporting local causes.
But it‘s not always easy – approximately 20% of small businesses fail in their first year according to Bureau of Labor Statistics data, and only 50% make it past five years.
Ongoing support in terms of access to capital, resources, and mentorship is needed to help give small businesses the best shot at stability and growth.
The Path Ahead
While individual businesses will come and go, the entrepreneurial spirit of small business owners across America persists. As the backbone of local economies providing jobs, character, and innovation to their communities, the over 33 million small businesses in the US show that the American dream of owning your own business is still very much alive.
Nurturing small business growth will be key for the nation‘s economic health in the years ahead. With the right support, these businesses can continue driving competitiveness, hiring, and progress from Main Street to Silicon Valley.