When you think of U.S.-based businesses, companies like Apple and Google often come to mind. However, one could argue that it’s the smaller businesses, defined as businesses with fewer than 500 employees, which drive the U.S. economy. Here are 10 interesting facts about small businesses in the United States:
- Small businesses outnumber corporations by a ratio of 1162:1. There are more than 28 million small businesses in the U.S., according to the U.S. Small Business Association Office of Advocacy.
- 70% of small business are one-person outfits. It’s hard to believe that 70% of U.S. small businesses are owned and operated by one person.
- The U.S. small business workforce is made up of 77 million people. A country with 77 million citizens would be the 20th largest country in the world, in between Turkey, which has roughly 80 million citizens and Thailand, which has approximately 68 million citizens.
- The U.S. is one of the best countries in the world in which to start a business because, on average, it only takes six days to start a business. Compare that to countries like India and China where it typically takes longer than a month to legally start a business.
- The U.S. is also one of the best countries in the world in which to start a small business due to business start-up expenses. On average, U.S. small businesses cost $32,500 to launch per capita. Contrast that number to countries like India, where the average start-up cost per capita is $204,900, which is roughly six times as much.
- Anywhere from 60%-80% of all new jobs are created by small businesses.
- It’s difficult to assign an exact percentage to this statistic because employee counts are constantly fluctuating. For example, a company with 498 employees is classified as a small business. When that company hires three new people, it is no longer a small business. When that company fires four people, it reverts to its original small business status.
- 57% of the United States’ private workforce is employed by small businesses. These facts paint a rosy picture of American small businesses, but there are less encouraging facts, too.
- A small business goes bankrupt about every 8 minutes. This is probably an overstatement because this statistic came from the U.S. Small Business Association Office of Advocacy in 2009, which was not a particularly good year for the U.S. economy. Still, it’s a sobering reminder of how often small businesses do go under.
- Half of small businesses close within five years. On a slightly more optimistic note, about 70% of small businesses stay will celebrate a two-year anniversary. It’s not known how many of these businesses close due to financial problems or because the owner simply no longer wanted to run it.
- Following a natural disaster, if a small business can’t reopen after ten days, it will probably fail. 80% of small businesses that do not reopen within ten days of a natural disaster will permanently close within one month. This speaks to the precarious nature of many small businesses.
While mega companies like Walmart and Coca-Cola receive the lion’s share of attention, it’s important to appreciate the underdogs who also significantly contribute towards driving the economy.