Beneath the vast canopy of the American economy thrives an astonishingly diverse forest of 33.3 million small businesses, proving that from veterans and millennials to immigrants and Gen Z, the entrepreneurial spirit is woven into the very fabric of our nation.
Key Takeaways
- In 2022, approximately 33.3 million small businesses in the US were owned by entrepreneurs, representing 99.9% of all US businesses.
- Women owned 12.3 million businesses in the US as of 2022, accounting for 42% of all businesses with employees.
- In 2021, 19% of US business owners were Hispanic or Latino, marking a 34% increase from 2017.
- In 2022, US small businesses generated $17.0 trillion in annual receipts.
- Small businesses accounted for 44% of US economic activity by GDP in 2022.
- The average annual revenue for a US small business was $1.2 million in 2022.
- 88% of US small businesses have fewer than 20 employees as of 2022.
- US small businesses created 12.9 million net new jobs in 2022.
- 82% of US small business owners handle multiple roles including HR in 2023.
- 67% of US small business owners cite inflation as their top challenge in 2023.
- Labor shortages affected 89% of US small businesses in 2023.
- 56% of US small businesses struggled with supply chain issues in 2022.
- US small business applications hit 5.5 million in 2022, a record high.
- AI tool usage grew to 25% among US small businesses in 2023.
- 58% of US small businesses plan expansion in 2024 per surveys.
Small businesses are a diverse and vital part of the US economy despite facing significant challenges.
Challenges Faced
- 67% of US small business owners cite inflation as their top challenge in 2023.
- Labor shortages affected 89% of US small businesses in 2023.
- 56% of US small businesses struggled with supply chain issues in 2022.
- Cybersecurity threats rose 300% for US small businesses since 2020.
- 82% of failed US small businesses blame cash flow problems per 2023 data.
- Regulatory compliance burdens 78% of US small business owners in 2023.
- 71% of US small businesses faced rising energy costs in 2023.
- Hiring and retaining talent challenges 85% of US small firms in 2023.
- 43% of US small businesses reported increased taxes as a barrier in 2022.
- Marketing difficulties plague 49% of new US small businesses in first year.
- 65% of US small owners worry about economic recession in 2023 surveys.
- Insurance costs rose 20% for 62% of US small businesses in 2023.
- Competition from big corporations impacts 70% of US small firms.
- 54% of US small businesses face payment delays from clients in 2023.
- Technology adoption lags in 40% of US small businesses due to costs.
- Work-life balance issues affect 68% of US small business owners.
- 59% of new US small businesses fail due to lack of market need.
- E-commerce adoption challenges 75% of traditional US small retailers.
Challenges Faced Interpretation
For the American small business owner in recent years, navigating inflation, labor woes, and cash flow cliffs while dodging cyberattacks and regulatory mazes has felt less like pursuing the dream and more like running an endless gauntlet where simply staying upright is a heroic feat.
Demographics
- In 2022, approximately 33.3 million small businesses in the US were owned by entrepreneurs, representing 99.9% of all US businesses.
- Women owned 12.3 million businesses in the US as of 2022, accounting for 42% of all businesses with employees.
- In 2021, 19% of US business owners were Hispanic or Latino, marking a 34% increase from 2017.
- Black or African American business owners operated 3.5 million businesses in the US in 2021, up 14% from 2017.
- Asian-owned businesses numbered 5.2 million in the US in 2021, comprising 10% of all employer businesses.
- The average age of a US small business owner in 2022 was 50 years old.
- 56% of US small business owners have a college degree as of 2023.
- In 2022, 25% of US business owners were veterans.
- Millennials (born 1981-1996) owned 23% of US small businesses in 2022.
- Gen Z entrepreneurs started 12% of new US businesses in 2023.
- 70% of US small business owners are married as of 2023.
- Rural US business owners numbered 6.5 million in 2022, 20% of total owners.
- Immigrant business owners in the US operated 3 million firms in 2022, 28% of new entrepreneurs.
- In 2023, 15% of US business owners identified as LGBTQ+.
- Baby Boomers owned 50% of US small businesses in 2022.
- Native American-owned businesses reached 400,000 in the US in 2021.
- 62% of US small business owners are men aged 50-64 in 2023.
- Pacific Islander-owned businesses grew 26% to 50,000 in the US from 2017-2021.
- 45% of US small business owners have 10+ years of industry experience in 2022.
- Self-identified disabled business owners operated 4.5 million US firms in 2022.
Demographics Interpretation
The archetypal 50-year-old male business owner is still in the building, but he’s now sharing the American entrepreneurial stage with a roaring, diverse chorus that is fundamentally rewriting the script.
Employment and Operations
- 88% of US small businesses have fewer than 20 employees as of 2022.
- US small businesses created 12.9 million net new jobs in 2022.
- 82% of US small business owners handle multiple roles including HR in 2023.
- Service industries account for 79.3% of US small employer firms in 2022.
- Average small business operates 14.4 years before closing in the US.
- 60% of US small businesses are home-based as of 2023.
- Construction sector small businesses numbered 2.3 million in the US in 2022.
- 35% of US small businesses use freelancers for operations in 2023.
- Retail trade small firms made up 10.4% of US employer businesses in 2022.
- US small businesses average 10 employees per firm in 2022.
- Manufacturing small businesses employed 2.3 million in the US in 2022.
- 75% of US small businesses operate in just 4 industry sectors in 2023.
- Transportation small firms totaled 1.2 million in the US in 2022.
- 92% of US small businesses have fewer than 500 employees by SBA definition.
- Wholesale trade small businesses numbered 600,000 in the US in 2022.
- 55% of US small businesses adopted remote work post-2020.
- Agriculture small firms accounted for 1% of US employer businesses in 2022.
- 47% of US small business owners work over 50 hours per week in 2023.
Employment and Operations Interpretation
The American small business is a resilient, overworked, and home-based engine of job creation, where a handful of people wearing a dozen hats in just a few service-focused industries somehow keep the whole improbable show running for an average of fourteen years.
Financial Performance
- In 2022, US small businesses generated $17.0 trillion in annual receipts.
- Small businesses accounted for 44% of US economic activity by GDP in 2022.
- The average annual revenue for a US small business was $1.2 million in 2022.
- 80% of US small businesses survive their first year, but only 50% after five years in 2023 data.
- Small firms with fewer than 20 employees paid 45.9% of private payroll in 2022.
- US small businesses employed 61.7 million workers in 2022, 46.4% of private workforce.
- Average small business loan size in the US was $547,000 in 2023.
- 29% of US small businesses reported profit margins of 10% or higher in 2022.
- Cash flow issues affected 82% of US small business failures in 2023.
- US small businesses held 27.5% of business wealth in 2022.
- Average startup costs for US small businesses averaged $30,000 in 2023.
- 64% of US small businesses are profitable within the first year per 2023 surveys.
- Small business net income averaged $50,000 annually in 2022 for sole proprietors.
- Venture capital funding to small businesses totaled $330 billion in the US in 2022.
- 72% of US small business owners finance startups with personal savings in 2023.
- Inflation impacted 89% of US small businesses' finances in 2023.
- Average debt-to-income ratio for US small businesses was 1.5:1 in 2022.
- 41% of US small businesses increased revenue by 20%+ in 2022 post-pandemic.
- US small businesses exported $475 billion in goods in 2022.
Financial Performance Interpretation
Despite generating a colossal $17 trillion and forming the backbone of the American economy, the typical small business owner navigates a high-wire act of razor-thin margins, cash-flow anxieties, and personal financial risk, where survival is a hard-won victory against sobering odds.
Growth and Trends
- US small business applications hit 5.5 million in 2022, a record high.
- AI tool usage grew to 25% among US small businesses in 2023.
- 58% of US small businesses plan expansion in 2024 per surveys.
- Online sales revenue for US small businesses rose 30% in 2022.
- Sustainable practices adopted by 52% of US small firms in 2023.
- Gig economy integration in 67% of US small businesses by 2023.
- 40% growth in US minority-owned businesses from 2017-2021.
- Remote work enables 20% revenue boost for US small businesses.
- Social media drives 54% of new customers for US small firms.
- 75% of US small businesses using data analytics saw growth in 2023.
- Franchise ownership grew 5% annually for US small businesses.
- Exporting small businesses increased 12% in the US in 2022.
- 62% of US small businesses invested in digital transformation in 2023.
- Women-owned businesses grew 94% faster than average from 1977-2019.
- Cloud computing usage hit 91% in US small businesses by 2023.
- 48% of US small businesses plan hiring more in next 12 months.
- Mobile payments adopted by 85% of US small retailers in 2023.
Growth and Trends Interpretation
The American small business spirit is roaring back, armed with an arsenal of A.I., driven by data, dancing on social media, and expanding with an optimism not seen in years—proving that while the entrepreneur's hustle has gone high-tech, their scrappy ambition is utterly timeless.
Sources & References
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