Small Businesses – by the Numbers

June 24th, 2021 by

Here are some statistics to help you understand the depth and breathe of the small business market.

B2B marketers can use these statistics to create a strategy for contacting the owners of small businesses. These businesses need a myriad of goods and services to stay ahead of the curve. Insurance, accounting and payroll, marketing, office furniture and supplies – and so much more.

Just think, American Express has an entire Shop Small initiative. They know how important the small business market can be!

Remember – market to small business owners through as many channels as you can. This is the only way to cut through the clutter and get your message across.

Small Business Statistics

  • As of 2020, there were 31.7 million SMBs in the U.S (99.9% of all businesses).  This includes “side hustle” businesses and solopreneurs.
  • The SBA defines a small business as under 500 employees.
  • Out of these 31.7 million small businesses, 3.7 million are microbusinesses with one to nine employees.
  • Annually, small businesses create 1.5 million jobs and account for 64% of all new jobs in the U.S.
  • 15 million Americans work full-time for their own business.
  • Small businesses in America occupy between 30% and 50% of all commercial space, an estimated 20 billion to 34 billion square feet.
  • The number of small businesses in the U.S. has doubled since 1982.
  • California has the highest number of small businesses (over 4MM), followed by Texas (2.7MM) , Florida (2.5MM) and New York (2.1MM)
  • Most small businesses are in food and restaurants (12%), retail (11%), business services (11%), health, beauty & fitness (9%), accounting (7%)

Small Business and Social Media

  • 86% of small businesses use Facebook for advertising as their leading social media platform.
  • 73% of small businesses invest in social media marketing.
  • 60% of people discover new products on Instagram.
  • 130 million accounts open shopping posts to learn more about products every month.
  • One-third of the most viewed Instagram stories are from businesses.

Consumers Prefer to Shop Small

  • In 2020, 46% of consumers said they were more likely to shop at a small business.
  • 53% of people say shopping at small businesses gives back to their communities and gives them more purpose in their shopping habits.
  • 48% of people shop small businesses for higher-quality items and 45% for personalized service.
  • 91% of the time, consumers will choose small businesses when convenient, and 74% look for ways to support small businesses even if it’s not convenient.
  • Consumers (77%) are willing to pay more for a great customer experience from small businesses.

Small Business Finance

  • 66% of small businesses face financial challenges, with 43% claiming the most prominent challenge is paying operating expenses.
  • If revenue was lost for two months, 86% of small businesses would need to supplement funding or cut costs.
  • 40% of small enterprises have debts of $100,000 or more.
  • 43% of businesses asked for new financing in 2019.
  • In 2020, there was a 14% credit growth rate.
  • The approval rate of institutional loans for SMEs was 65% in 2019.
  • In 2020, small businesses experienced a 14% credit growth.
  • The average cost of starting a retail business is $32,000. However, store owners have reported starting with only $5,000.
  • 39% of small business owners use cash to start their business.
  • 20% of small business owners opted for a 401(k) business financing to start their business.
  • The biggest challenge small businesses face is cash flow.
  • The overall average loan amount is $107,000.
  • The average owner of a small business receives a salary of $69,593 per year.
  • At the end of 2020, nine million loans were given to SMEs, totaling $750 billion.
  • The average small business owner uses about 10,000 in startup capital.

Small Business Owners Work Hard

  • Businesses with founders aged 55 years or older are more likely to survive but less likely to have employees.
  • 81% of business owners work nights, and 89% work weekends.
  • Most small business owners work between 40 and 49 hours per week.
  • 32% of business owners have a completed bachelor’s degree, while 12% only finished high-school.
  • Millennials and Gen Z are 48% more likely to say they started their business because they were passionate about an idea.
  • 29% say their motivation for starting a business was to be their own boss.
  • Compared to baby boomers, millennials and Gen Z are 188% small business owners are more likely to have a side hustle.
  • 38% of Small business owners say discipline is needed to have an entrepreneurial mindset.
  • Women entrepreneurs are most likely to start a business in retail and wholesale (26%), government, health education, and social services (21%), and professional administrative services (18%).
  • Women of color own 50% of the woman-owned businesses
  • Minorities own 45% of small business firms
  • 52% of small business owners say their biggest challenge is finding quality labor
  • 3% of small business owners take a salary under $70K.

Small Businesses Use Technology

  • 84% of small enterprises are using at least one digital platform to share their products.
  • 79% are using digital tools to communicate with suppliers and customers.
  • Small businesses in 2021 plan to step up their digital efforts.
  • 55% of small business owners say that technology manages customer interactions.
  • The most important factors when looking for new technology are ease of use (69%), trustworthy vendor (63%), and price (61%).
  • Close to 85% of small enterprises have already invested in SaaS options in 2021.
  • On average, small firms use anywhere between 25 and 50 SaaS solutions.
  • 80% of small businesses are not taking full advantage of available technology.
  • Small companies that fully utilize technology earn two times more revenue per employee, experienced nearly four times the revenue growth annually, and were almost three times more likely to create jobs in the next year.
  • Nearly one-third of all businesses prioritize CRM platforms over other types of technology.
  • 28% of data breaches in 2020 involved small businesses.

The Future of Small Business

  • 65% of small businesses are more likely to invest in technology like artificial intelligence for automation.
  • By 2025, 80% of business owners who invested in personalization will stop funding projects due to a lack of ROI.
  • Online and digital channels will continue to grow. No-touch payments, including contactless cards and mobile payments, increased among small businesses in 2020.
  • Remote work is here to stay and will increase 13.5% even after the pandemic.
  • Continuity offers will continue to increase.
  • Customers will look to get more out of their money and place more importance on value.
  • Approximately 20% of small business enterprises fail within the first 2 years.

 

Thank you to Georgi Toderov at SemRush for much of this list. Other data was gleaned from the SBA, Oberlo, Small Biz Trends, and 99firms.

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