Small Business Statistics And Your Very Small Business
Do small business statistics mean anything to your business? Yes, because they show how important very small businesses like yours are!
Unfortunately it's hard to find up-to-date US small business statistics. Much that I found was over 5 years old, which is ancient! Hopefully with the new US census, there will be updated information available soon.
One of my favorite sayings is, “there are three kind of lies- lies, damned lies, and statistics." Mark Twain said he 'borrowed' the saying from Benjamin Disraeli.
Small business stastistics, like any, can be manipulated or interpreted to fit the need of the writer or reader. They are interesting but meaningless unless they apply in some way, to your business.
I've tried to find and interpret statistics about small business for the needs of my readers, and because I love trivia. Here's what I found... see if it makes sense to you and applies to your own business.
A small business in the U.S. is an independently-owned (not a government or other public agency) business with fewer than 500 employees. Our friends in the European Union define a small business as one with less than 50 employees. Austrailia says a small business has fewer than 15 employees. Interesting differences!
Some surprising small business statistics
- Small businesses employ just over half of all private sector employees
- Small business makes up 99.7 percent of all firms with employees (SBA stats.)
- They generate 64 percent of net new jobs over the past 15 years
- Hire 40 percent of hi-tech workers
- Are 52 percent home-based & 2 percent franchises
- Pay 44 percent of US private payroll
- Less than 7 million in annual receipts in non-manufactoring industries
- Create more than 1/2 of the nonfarm private GDP
Small businesses account for 64% of the 22.5 million new jobs created between 1993 & 3rd quarter of 2008
In 2008 there were 29.6 million businesses in the US. Small businesses represent 99.9% of those businesses as of 2006. Compared to 18,000 large businesses at the same time.
Small business failure statistics
The numbers I found about small business failure rates were different depending upon where I found them. That's what I meant about statistics and their "interpretation."
Survival rate for new firms- 7 out of 10 new firms w/employees last at least 2 years, and about 1/2 make it for 5 years.
In 2008, approx. 627,200 new employer firms began operations, and 595,600 firms closed that year. This makes an annual turnover of about 10% starting & 10% ending.
Firms with no employees have turnover rates 3 times as high as those of employer firms, probably because it's easier to open & close down that kind of business. A lot of these small business start-ups and business failures probably “fly under the radar” and would alter these figures if they were known.
Micro and very-small business statistics
A micro businesss is privately owned, with less than 10 employees. Theyre said to have a small annual sales volume, but it wasn't defined how much small is.
These micro-businesses are often sole-proprietorships or partnerships, but they can be some form of corporation.
Most home-based businesses are microbusinesses.
Of the microbusinesses, those with 1-3 employees are starting to be refered to as “very-small-businesses.”
In the U.S., small business accounts for about half of GDP & more than half of employment.
- The top job provider firms have fewer than 10 employees.
- 2nd place for provider of jobs are those businesses with 10-20 employees
- 3rd place are those small businesses with 20-100.
The statistics show that micro and very-small businesses like the ones encouraged on the Hungry Entrepreneur website are also “very-important-businesses” to the overall economy.
Some common small businesses (of any size) are convenience stores or other small retail shops, hairdressers, tradesmen, lawyers, accountants, restaurants, photographers, small scale manufacturing, etc. I've provided a list of 50
small business ideas.
Please check them out- one of these might just be the idea you've been looking for!
So- what do you take away from all of these small business statistics?
With figures like these, why isn't entrepreneurship taught in school? Not business school, but elementary and secondary school? It seems that small businesses form the backbone of the US economy. A little encouragement might develop a new generation of independent entrepreneurs... and make the small business statistics a different read!
Hungry Entrepreneur from Small Business Statistics