25 Revealing Small Business Statistics & Facts for 2022
Small businesses are an essential component of any economy in the world. They provide services that fill the gap of many big companies that stick with mainstream products. Also, many families run small businesses to support their lifestyles. It’s a viable alternative to climbing the corporate ladder.
This page will explore exciting and informative small business statistics that give you insight into various aspects of the topic. Also, don’t skip the section at the end to learn about the commonly asked questions of small businesses.
Top Small Business Statistics and Facts of 2022
90% of companies in the world are made up of small businesses.
1.6 million jobs are generated by small businesses in the United States.
The average income of small business owners is $64,709
Becoming your boss is one of the main reasons why small businesses are started.
Cash flow problems are one of the main reasons why small businesses go bankrupt.
50% of small businesses are started at home.
The average business borrows $10,000 when getting started.
72% of small business owners are optimists about future success.
Food and restaurant businesses are the fastest growing among all industries.
53.7% of small business owners have a bachelor’s degree or better.
Basic Small Business Stats
Global small business statistics indicate that 90% of all companies worldwide are small businesses.
This telling statistic shows how many small businesses in the world are categorized as small, which is the vast majority of them.
Most businesses shut down within the first few years of operation and don’t make it to medium or large size. Also, the revenue of a small business is not very high during the first years. It takes a long time for a small business to grow and move up in scale, which is part of the explanation behind this statistic.
99% of businesses in the United States are small businesses, according to US small business statistics.
The United States has a culture where people are encouraged to live the dream by being ambitious and opening a business or side hustle. Therefore, many people try their luck by registering a new business to become rich, and for that reason, the number of small businesses in the US is one of the highest in the world. Therefore, most small businesses are started by regular folk looking to make a living.
(JP Morgan Chase)
Small businesses were responsible for 1.6 million jobs in 2020.
Why are small businesses important? They allow local communities to thrive, usually keeping the money in the community itself while creating jobs at the same time. Small businesses cannot hire many people individually because of their nature, but overall, many people work for small companies because so many exist. Moreover, the number of small businesses is predicted to increase in the coming years, which means such companies will hire even more people.
However, the same job progression is typically not available at smaller companies. That’s because there are fewer positions and such businesses have less money to spend on expensive managers or CEOs.
(CDN Office of Advocacy)
Home-based business statistics show 50% of small businesses are started at home.
This statistic is unsurprising because the internet has made it easy for anyone to start a business at home. You only need an internet connection and a computer to run a business that could generate millions in revenue per year. With the competition growing, the percentage of small businesses that don’t have a website is shocking.
Furthermore, the improvement in delivery services worldwide means business owners can use their garages as storage units. This allows people to sell physical goods without needing a business location, making this one of the most surprising small business facts.
29% of people start a business to become their own boss.
The most common reason people start their own business is to become their own boss. Other reasons include taking advantage of an opportunity and being dissatisfied with their workplace.
Social media has created a culture where it’s desirable to start your own businesses. This encourages more people to consider leaving their job and starting a business.
For small businesses, the service industry is the most popular target.
This includes companies that cater weddings, restaurants, and fast food stores. So it makes sense that these would make up a large share of small businesses. They are primarily location-based and grow big enough to accommodate local needs.
Small Business Statistics: Owners and Workers
81% of business owners work overtime.
Many small businesses are on the verge of going bankrupt, and the only way the owners can make ends meet is to work overtime. Even small companies that are flourishing require a lot of overtime to grow. Eventually, owners can reduce the amount of work necessary to maintain the business. This happens when more employees are hired to fill time-consuming roles. Additionally, small business statistics indicate that 89% of owners work weekends to ensure the business runs smoothly.
According to small business vs large corporations statistics, the portion of small business owners who struggle to find the right employees is 56%.
This is a relevant small business demographics fact. Talented employees are hard to find because small businesses might not provide the right working conditions. Larger companies may offer better opportunities for ambitious employees.
Also, many people have been quitting their jobs during the pandemic and looking for better job conditions. For instance, many job-seekers will avoid the job offer if remote work is not offered.
58% of small businesses are started by new operators from scratch.
One of the most interesting facts about small businesses is that most of them are started by first-time business owners. On the other hand, the high portion of first-timers also contributes to an increase in the failure rate. It’s encouraging to know that the average business owner will need to fail multiple times before launching a successful business.
(Thrive My Way)
Small business demographics show 53.7% of small business owners have a bachelor’s degree or higher.
This is one of the most interesting demographics concerning small business owners. The education provided by a degree can help new business owners meet the fundamental challenges of running a company. This might be figuring out cash flow or completing their taxes.
The portion of business owners that are in the 39 to 54-year-old range is 44%.
Many business owners don’t start running their own company until they have funds to invest or have become disappointed in working for a company. Therefore, they are more likely to start a new company in their late 30s or early 40s, if we look at the demographics of small business owners.
This general statistic can be broken down by industry and annual revenue to get even more insight into the age of small business owners.
Facts about Small Business and Finance
Small businesses close down because of cash flow or sales problems.
Statistics on small business failure indicate that 1 in 12 small businesses close down every year, and the most significant reasons are cash flow or sales. However, this can happen for multiple reasons, such as not researching market expectations, providing a good product, lack of marketing, or healthy accounting practices.
Funding can help businesses stay afloat for longer to prove their profitability. However, that requires a track history, which is something many small businesses can’t provide right away.
The cheapest companies to start are micro businesses.
Micro businesses can be defined as having less than ten employees and starting costs of around $3,000. In some industries, these starting costs would be impossible to work with. However, the running cost of home-based businesses can be $2,000 to $5,000, which fits in the micro business category.
Business owners that do not have ample funds, or understand how to secure funding from external sources, will only have the option of starting a micro business.
(Business News Daily)
$64,709 is the average income for small business owners.
On average, how much does a small business make? For a small business, the average revenue is not high at all. Most small business owners are not making millions, the wages are close to the average, but it is higher than the average annual income for regular jobs. Most business owners pay themselves a relatively small yearly salary in the hopes of growing their business.
The yearly average revenue of a small business is nothing to get excited about, but the lifestyle might be worth it for some. Also, this is not a fixed income and has the potential to increase significantly as the business develops.
Unmet funding for small businesses comes to about $5.2 trillion annually.
Investors look at many factors when deciding where to allocate their investments. This includes growth potential, product quality, and the business owner’s work ethic. Most small businesses need extra funds, whether that is to stay afloat or grow. Unsurprisingly, the majority of small businesses would grow bigger given a choice.
$10,000 is the average amount of money borrowed to start a business.
According to small business loan statistics, $10,000 is a feasible amount for banks and investors to take a gamble on a business and provides the required resources to get many companies off the ground. However, the figure changes depending on the industry.
For example, small business startup statistics show the average IT startup can raise around $80,000. That’s because they have the highest potential to grow big. Therefore, investors are drawn to tech companies and willing to invest more money.
65% of entrepreneurs felt they didn’t have enough money in 2019.
This means that there are many potential small business owners that would like to get started but do not have the required funding. It reflects the current culture where many people would rather start a business than work for somebody else.
However, many people do not have the funding required to get their projects off the ground. Also, some potential business owners might feel like they need more money than is actually needed.
Small Business Survival Statistics
Only around 11% of small business owners are confident about their company’s growth.
This means that a small portion of small business owners have confidence in their company growing. That might be because of market conditions or no plan to make the business grow. Also, many small business owners do not understand how to read the data determining whether their business will succeed or stagnate.
The share of small businesses surviving over five years is only 50%.
Stats on small businesses show that around half of businesses fail during the first five years of operation. That’s because they declare bankruptcy due to running out of money, slashing small business success rates in half.
It might be because the products have become obsolete, better competitors have come to the market, the market has shrunk, or there is no longer any demand for what the company was created to sell.
During the pandemic, the share of small businesses that closed was 60%.
We can clearly see the effect of covid on small business as statistics show more than 50% closed during the pandemic. Since April 2020, a disproportionate number of small businesses have had to shut down because of new regulations. Some companies are simply forced to shut their doors or have to deal with unfamiliar market conditions.
For instance, many customers started buying goods online, which large retailers were in a position to facilitate, whereas many smaller businesses that rely on local footfall could naturally not compete.
During the start of the Covid pandemic, only 63% of businesses were able to retain profitability.
The small business failure rate increased during this period, and the lucky businesses that were able to continue operations during the pandemic struggled to make the same number of sales as before. That might be because restrictions were in place, meaning fewer people could be served at a restaurant, or each store could only allow a small number of people to enter.
92% of small business owners have no regrets about starting a company.
Statistics on small businesses indicate that most small business owners have no regrets about starting a company, which is an interesting statistic because many have difficulties. This might be because the difficulty of starting a business is anticipated.
Also, many owners might have the viewpoint that starting a business is failing rather than never giving it a try in the first place.
Small Business Trends and Statistics
The portion of small business owners feeling optimistic about the future is 72%.
Statistics about small business indicate more than 50% of business owners are optimistic when starting a small business.
Feeling optimistic about your small business is a good attitude—otherwise you won’t have the required strength to make it through difficult times. Most business owners are proud of what they have created and are working to grow. Therefore, they will naturally feel like they are optimistic about future growth potential.
Small business growth statistics indicate that the fastest growing industries are restaurant and food businesses.
Small business owners that are looking for a new business idea should consider restaurants and food. That’s because there is a huge demand for such services in most locations around the world. Some locations have too much choice of specific food types.
However, there are always gaps in the market that allow new small business owners to generate a lot of interest in a highly contested location.
30% of small business owners that started during the pandemic share they would never open a physical store.
Small business ecommerce statistics show that many people that got started during the pandemic did so through tough conditions They arguably steered away from physical-based businesses because of the negative impact of the pandemic. Also, most people view online-based businesses as easier and cheaper to operate because there is no need to maintain a physical location.
To conclude, there is a large number of small businesses that are being started by individuals that strive to get out of the rat race. However, the statistics reveal that the average business owner works overtime and does not earn significantly more than the average income in the United States.
The statistic reveals that most businesses fail within the first five years and seek to get around $10,000 in funding. The lower barrier to starting a business because of the internet means that many business owners begin from the comfort of their own homes.
What should a small business owner know before starting?
How much funding should a small business owner seek?
Where can small business owners seek funding?
What is the best industry to start a new small business?
What is required to start a new business?
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