The Ultimate List of Small Business Statistics for 2023
If you are thinking about starting your own small business, knowing what others have gone through while understanding where they have failed is essential.
The U.S. Census Bureau and the U.S. Bureau of Labor Statistics estimate that around 144,000 surveys happen in various businesses each month, allowing them to get different information about the current small business situation.
Understanding what is needed to run your business can give you an edge over the competition.
This might include the use of:
With that said, while the right small business ideas can generate success for anyone wanting to get into entrepreneurship, failure is all too common.
With a global pandemic having crushed so many hopes and dreams, it’s now time for you to take charge and focus on the success of your business.
To help you get going, here is a list of the best small business statistics that I will present to you in this post.
These statistics will help guide you in your business planning and decision-making.
Let’s dive deep into this topic.
Small Business Statistics To Consider
The following are the key statistics to keep in mind when it comes to small businesses.
1. Successful Business Growth Rate Confidence.
It’s estimated that only around 10% of people are confident that their small business will grow as expected.
With many non employer firms not making it through the first five years, this number is expected to rise in the coming years.
This makes planning all the more critical, as you can increase your chances of success by having the right plan in front of you.
Image Credit: GuidantFinancial.com
2. 50% of Small Businesses to Close.
60% of small firms are expected to close in the current American economy.
This is mainly due to the worldwide pandemic that has struck many small businesses since 2019
With that said, the right small business loan will allow a company that is not yet making profits to have a chance to survive.
This also comes with the need to have the right plan in front of you so it’s important to be informed before making any decision.
3. The Leading Causes For Failure.
According to the U.S. small business administration, there are two main reasons why so many small businesses are closing their doors.
The first is attributed to low sales.
With the main aim of a business being to sell a product or service, a company is forced to close its doors when it can’t do so because of a lack of interest.
The second factor is cash flow (or rather a lack of it).
Many new businesses cannot generate enough cash flow to keep the business alive and have to go through the process of closing down.
4. Not Finding The Proper Help.
As much as 27% of small businesses that NSBA interviewed said that they ran into a problem because they did not have the right help (and funds) to get started.
Whether these funds go to suppliers, workers, or anything else, small business owners must ensure that they have the resources they need.
5. A Lack Of Workforce Is Not Helping.
While there are many net new jobs available in America, there doesn’t seem to be the right people with the skills to fill those positions.
56% of small businesses admitted failing to find the right workers.
The lack of a skilled workforce can be very detrimental to the operations of any business.
6. Small Businesses Make $65K In Income.
This figure might seem low, but remember that small businesses are also trying to survive in the U.S. economy – an economy where many others have failed.
Statistics by Payscale indicated that the average amount of income for a small business is around $64,700.
Depending on the industry or profession, this amount can vary.
7. Business Survival Rate In Years.
Did you know that two-thirds of businesses make it past the two-year mark, half of the companies past five, yet only one-third of all businesses survive beyond ten years?
According to SBA.gov, these are the grim figures small businesses have faced over the last few years.
8. Small Businesses Areas Of Operation.
Can you guess what this area is?
According to a recent report by Guidant Financial, the services industry has the highest number of small business owners.
Given that this industry faces stiff competition for employees, it’s highly likely that small businesses will still face a tough battle to stay alive.
9. Future Optimism.
It’s curious that while many small businesses fail within the first five years, many are still optimistic about their future.
Salesforce reported that 72% of small business owners believe that their business will still be operating in the following years and was looking optimistically at the future.
10. Home-Starting Businesses.
Half of all small businesses get going from the comfort of one’s own homes.
This might make the last statistic about small businesses owners being optimistic about their future make more sense since if people can operate their business from home, why not think more positively about its chances of success?
As an owner, you don’t need to worry about office space, hiring employees, getting a commercial real estate loan, or any other kind of overhead costs when your business is starting.
11. The Start Of Micro Businesses.
(Business News Daily)
Being a subset of a small business, a microbusiness is defined as one with its assets and sales at less than a quarter of a million dollars per year and having less than five employees.
This small business type also tends to have lower startup costs than other small businesses.
When it comes to micro-businesses, many business brokers have started to notice that the real estate industry tends to have many of them, and they are growing more prominent as time goes by.
12. Working Overtime For Startup Owners.
While this may come as no surprise to some, for others, this may be a stark contrast to what they thought would be the truth.
Working long hours can be an arduous task for small business owners since they have so many other responsibilities on their plate.
The right time management skills are crucial since they will determine how much time you can spend doing things that don’t involve your business.
In addition, the use of task management software can help small business owners be more efficient with their time.
13. Small Business University Graduations.
Having a bachelor’s degree (or higher) is widespread among most small business owners.
With the mentality of never wanting to settle for less, it’s not a surprise that many small business owners want to make the most out of their education, and this seems to have been a critical factor in motivating them to start from scratch.
Online course platforms are a modern way to get a better education, and they can be highly flexible for busy students.
14. 30% Of Pandemic Entrepreneurs Want to Stay Online.
Having an online presence is becoming more and more critical as time goes by.
With 30% of survey respondents wanting to continue running their business online, it’s easy to see why staying active in social media marketing and having a solid online presence is crucial.
Almost three out of every four entrepreneurial business owners didn’t have enough money to start their small business.
While this statistic from Kabbage is a bit dated (2019), it does offer an interesting perspective.
65% of business owners said they didn’t have enough funds to start their business compared to the other 35%.
Generally speaking, most businesses are funded by loan providers and savings.
Loans can be obtained online, and there are many business finance options available regardless of the type of industry you’re involved in.
With the introduction of many different types of loans (including peer-to-peer lending or even an SBA loan), there is a much better variety in business finance options available nowadays.
15. Almost No Regret Among Small Business Owners.
According to Fundera, 92% of small business owners have no regrets about their initial decision.
While not everyone will have the same level of satisfaction regarding their career choices, knowing that almost all small business owners live without regret in terms of this choice is a great sign.
Factors to Consider Before Starting a Small Business
Having your own business is an exciting prospect that many people embrace.
However, before registering an LLC and getting started with your own business, you might want to look at some of the important factors below.
Evaluate Your Strengths and Weaknesses
Looking at how small business owners work makes you realize that they often have to wear many hats in their business – sometimes struggling in their lives as a result.
You don’t want to start a business if you’re terrible at specific tasks such as accounting, using payroll software, or doing bookkeeping since these are things that the company will need.
Instead, it’s probably a good idea to get someone else to do them so that you can free up some time for other tasks.
Having a Solid Plan
Creating a business plan and updating it as your small business scales is essential if you want things to go according to plan.
This is partially why the average small business owner must spend a significant amount of his working hours on business planning.
Ideally, you want to get your plan right the first time because it will save you a lot of time and effort, but if not, keep updating it as you go along.
This is the main factor that separates potential business owners from others.
After all, if you don’t have the money (or can’t get it otherwise) to start a company, there’s no point at all.
Paying for your expenses out of pocket with earnings from your new business might not be feasible for most entrepreneurs in their early stages.
The good news is that you can get access to money in many different ways.
This includes loans, angel investors, business grants, and starting a crowdfunding campaign.
The Importance of Studying Cash Flow Statements
Cash flow statements show you how much money is coming into your business and where it’s going.
This allows business owners to see which areas need more financial resources and what can be improved.
Many entrepreneurs consider cash flow statements an essential part of running a small business.
Number of Employees
Many small business owners employ their friends or family members as their first employees.
If you decide to go down this route, know that working closely with close friends/relatives is no easy task.
This is why you need to make sure that everyone knows what they’re doing and accepts the terms and conditions under which they’ll be working for you.
Otherwise, the relationship might become toxic and lead to resentment later on.
In addition, having fewer than ten employees might make things easy on some fronts but tough on others.
For example, it will be relatively easy for you to manage everyone and ensure their work stays on track. In addition, you won’t need to keep specific types of injury and illness records.
However, the biggest challenge might be finding someone who can provide specific expertise or skills your company needs.
Getting a loan for their small business is something that many entrepreneurs consider.
After all, there are plenty of great reasons to do so.
Whether you need money for inventory, equipment, or working capital, getting a loan might be the simplest way to get your hands on much-needed resources.
However, keep in mind that not all loans are a good idea.
Many entrepreneurs consider poor loan practices one of the top causes of business failure.
A poor loan practice can be defined as a lender’s failure to make a small business loan available when it is needed or making the terms on a small business loan so burdensome that the borrower cannot repay them.
Marketing Your Business
One of the most important things you can do as a business owner is making your business known to the public.
This includes advertising, creating a website, networking with other businesses, and more.
In all honesty, one of the reasons why so many entrepreneurs put off marketing their small business for as long as they can is that it can be very time-consuming (and expensive) if you don’t know what you’re doing.
Unfortunately, this means that your business will have a hard time finding new customers, which means you’ll have to push even more to get customers into your business.
Social media marketing and digital marketing are probably the most effective ways to market your small business to a target audience.
Your marketing strategy should be part of your overall business plan from day one.
The Amount of Time You Can Dedicate to Your Business
Being your own boss means that you get to set your hours and determine your schedule.
However, don’t forget being self-employed takes up a lot of time.
This is usually more than most people think it will, especially during your first year as you are setting everything up.
In addition, many entrepreneurs often work more than eight hours per day and take very few days off during the year.
With that said, many entrepreneurs work for themselves because they enjoy the freedom and flexibility of having their own business.
This means that you’ll have to consider whether as a small business owner, you want to keep working as much (or even more) compared to when you were employed by someone else.
An online business is an excellent idea for anyone who wants to sell products or services without having a physical storefront.
This type of business is also much cheaper and easier to start in many cases.
Suppose you already have a successful brick-and-mortar business.
In that case, likely, you’re already considering expanding your presence online, which could be an entire second business or an online store for your current business.
However, keep in mind that having an online presence will be very different than having a physical storefront.
This means you’ll need to hire people who can dedicate their time to writing blog posts, managing social media accounts, and other tasks that won’t directly lead to revenue growth.
Alternatively, you’ll have to learn how to do things yourself, which is definitely a good skill to have in this day and age.
These vital small business statistics are sure to impact those planning on becoming self-employed.
Small businesses consisting of sole proprietorships are not easy businesses to start, and the above statistics might indicate small business trends to keep in mind.
Small business failure is not something anyone wants to experience, no matter the demographics involved.
The failure rate depends on the industry and the niche you decide to go in.
Both the public and the private sector offer many opportunities for baby boomers, millennials, and various other age groups to start something they can call their own.
Understanding the implications behind the above statistics will ensure that you have the best chance of thriving in your business.
Have you ever started your own business? What was your experience like? Let me know in the comments below.
Further reading on AdamEnfroy.com: Want to learn how to start your own business from home?
Here’s an article about how to start your ecommerce business today.