Small Business Statistics 2025

“Small businesses are the engine of our economy, the glue — they really are — the glue, the heart and soul of communities,” remarked Joe Biden at The National Small Business Week in May 2023.

He went on to state that small business owners “account for 40 percent of the gross domestic product of America.”

Woah, that’s huge.

Let’s look at more such intriguing small business statistics.

How Many Small Businesses Are There in The US?

Although ‘small’ business might be a misnomer, they comprise nearly all businesses in the US.

There are around 33.2 million small businesses in the US right now, and they comprise 99.9% of all the firms in the US. (U.S. Chamber of Commerce, 2023)

How ‘Small’ Are Small Businesses?

According to the U.S. Census Bureau, 49% of small businesses had only one to four workers in 2021. (U.S. Census Bureau, 2021)

Small businesses with more employees also tended to take up a larger share of revenue. (Pew Research, 2024)

81.7% of Small Businesses Are “Nonemployer Firms”

81.7%, or 27,104,006 firms, in the U.S., are “nonemployer firms”, i.e. they don’t have any officially paid employees. (SBA, 2023)

What is The Success Rate of Small Businesses?

The failure rate is quite high initially, but it diminishes with time.

The Failure Rate of Businesses Is Around 20% in the Initial Year, and 10.7% after 2-4 Years

Firm Age (Years)	Failure Rate in Percentage (2019)
0	19.7%
1	13.5%
2–4	10.7%
5–9	8.2%
10+	5.9%

As you can see the failure rate is highest in the initial year with a percentage of 19.7.

This slowly decreases to around 10% in 2-4 years and nearly 6% after 10 years. (Federal Reserve, 2022)

Small Businesses Generate More Than 44% of U.S. Economic Activity

As shown, small businesses are an integral part of the U.S. economic growth. (SBA, 2023)

Over Time, Small Businesses Contribute to Millions of Jobs Created

As firms age, they employ more and more workers. (U.S. Chamber of Commerce, 2023)

61% of Small Businesses Use AI to Automate Daily Tasks

96% of small businesses that have already used AI say that it is useful for streamlining tasks. (Pymnts, 2024)

More Than Half of SMBs With Growing Revenues Use AI in Some Way

Only one-third of small businesses use AI, but from the SMBs with growing revenues-more than half use AI tools. (Pymnts, 2024)

Businesses with 5-9 Employees Received More Patents Per Employee Than Any Other Business

They also got nearly twice the amount of patents that large businesses this, although this was in the year 2016. (U.S. Chamber of Commerce, 2024)

Micro-employers- small businesses with less than 4 people, constituted 10% of the patents that were applied for that year.

Small Business Breakdown By Industry

Here are some statistics on the share of small businesses by industry, from The U.S. Chamber of Commerce.

The transportation and utilities industry has the largest share of small businesses in the business world, at around 94%.

Next comes financial activities at 87%, followed by Information at 80%.

Manufacturing has a smaller share of small businesses at around 60%.

Small Business Ownership Statistics

Let’s take a look at the people who own small businesses.

61% of Small Businesses Were Majority-Owned By Men in 2021

22% were majority-women-owned firms, and the rest were jointly owned by men and women. (Pew Research, 2024)

Here is the demographic breakdown of small business ownership by Forbes Advisor and U.S. SBA:

• Men comprised of 57% of small business ownership

• Women owned businesses, whether solo or joint ownership, comprised 43% of the share

• Veterans owned 6% of small businesses

• 14% of businesses were Hispanic owned businesses

• Racial minorities owned 20% of small businesses

There seems to be a large gender gap regarding who owns small businesses.

According to another census, Hispanics own 25% of new businesses.

Nearly One in Four New Businesses is Hispanic-owned

There are around 5 million businesses that are owned by Hispanics, and they contribute $800 billion annually to the US economy. (U.S. SBA, 2023)

Small Business Revenue Statistics

Let’s look at some of the statistics on how small business firms generate revenue, such as job creation and average income.

45.9% of Americans Are Employed By a Small Business

The small businesses that employ their workforce account for nearly half of the American Employees.

Small Businesses Contributed to 55% of the Total Net Job Creation from 2013 to 2023

Small business firms, taken to be firms with 250 or fewer employees, employed an average of 46% of the covered workforce. (Bureau of Labor Statistics, 2024)

The Average Salary For a Small Business Owner is $69,838 in 2024

According to PayScale, the base salary for a small business owner is almost $70,000, with a range of $31,000-$150,000.

Here is a graphic showing how the pay varies according to experience level:

Initially, the pay is around 35k dollars and goes up with experience, until it plateaus around 10-19 years, and decreases beyond that.

The pay for 20+ years is $78k, around $7k less than the amount paid to those with 10-19 years of experience.

Increasing age seems to be a factor in the decrease in pay.

What Are the Challenges That Small Businesses Face?

Rising financial costs, weak sales, and limited credit were some of the challenges reported by small businesses.

To expand on that, here is what a report from the Federal Reserve says.

77% of Firms Identified the Rising Costs of Goods, Services, and Wages as Their Number One Challenge

This figure is still lower than the previous year’s one at 81%.

44% Cited Weak Sales as a Major Problem

Some of the measures businesses used to remedy these issues were to raise charges levied by the business, use personal funds, or cut down staffing.

29% Reported That the Availability of Free-Flowing Credit Was a Concern

Around 23% of businesses have either a delayed payment or have defaulted due to insufficient funds.

Small Businesses Are Struggling to Find And Keep Good Workers

In the U.S., there are 8.5 million job vacancies but only 6.5 million candidates. (U.S Chamber of Commerce, 2023)

Are There Any Risks in Lending to Small Businesses?

There areemerging trends that seem to indicate that small businesses are more likely to default on their loans or delay their payments.

Although the risk is higher than large businesses, it isn’t objectively high

Lending to Small Businesses is Considered Riskier Than Large Businesses

Lending credit to small businesses is generally regarded as riskier than lending to large businesses.

Small businesses fail slightly more often than larger ones.

One possible reason for small business failure is that the failure rate in the initial years of a business is much higher. (Federal Reserve, 2022)

The Failure Rate of Firms That Employ Fewer People Is Higher Than Those That Employ Many People

Although, the failure rate is capped at only 12% according to this table. (Federal Reserve, 2022)

Firm Employment	Percent
1–4	11.8%
5–9	5.1%
10–19	4.6%
20–99	3.6%
100–499	1.9%

Small Business Cybersecurity Statistics

Small businesses are less protected against cyber threats.

Adding cybersecurity protection into the business model seems to be a wise choice, given the rise in cyber threats lately.

Here are some statistics from Verizon’s 2024 Data Breach Investigation that detail how much organizations are vulnerable to threats, and how much they could lose.

68% of Breaches Involve Human Error, or a Human Falling Victim to a Cyber Attack

This demonstrates how people who work in the company may unwittingly have a role to play in cyber attacks.

Training and awareness of these scams among company employees can reduce the risk of such an event happening in the future.

How much do companies stand to lose during such an attack?

The Median Loss Per Breach Is $46,000

62% of cyber threats involved extortion of some kind, or ransomware attacks.

Organizations That Align Their Cybersecurity Programs to Business Goals Are 18% More Likely to Improve Customer Satisfaction

They are also more likely to increase trust and employee productivity. (Accenture, 2023)

Organizations That Adopt Cybersecurity Practices Are 5.8x More Likely to Have Better Digital Transformations

Cyber transformers, using strong cybersecurity operational practices, outperform the others. (Accenture, 2023)

Consumer Sentiment Around Small Businesses

What do customers define as a ‘Local’ business?

According to a survey by Red Egg Marketing, a majority of customers say that local businesses operate within their city.

Local businesses also tend to have a lot of support from customers, as over 71% of customers say they went out of their way to support them.

Almost all of the customers (93%) have bought from a local business.

Around 33% of consumers shop at a local business at least once a week.

When asked why customers shop locally, a vast majority (77.19%) said that they did so to support local businesses.

54.39% say that local shops are of better quality, while 30.85% say the products are more accessible.

What’s more, 71.26% of consumers actually research a brand before purchasing a product from them!

When asked, 82.7% of shoppers would rather support a local business than a large corporation.

Around 67% collect brand information from the brand’s website.

Yet another report by Reuters shows a different story.

Confidence in Small-businesses in the U.S. slipped to the Lowest Level in More than 11 Years in March 2024

This was due to rising concerns about inflation. (Reuters, 2024)

There also seems to be a divide between small business owners and their customers.

91% of Small Business Survey Respondents Feel They Offer Customers a Convenient Online Experience

Yet, only 21% of customers and 19% of GenZ feel the same. (GoDaddy, 2023)

Final Thoughts on The Future of Small Businesses

Forbes surveyed small business experts small business experts to figure out what are the key insights these businesses have to keep in mind, concerning the future.

Here are some of them:

• Businesses should focus on building their local community

• Priority should be given to improving customer experience

• Personalization is a useful way to strengthen client relationships

With improving artificial intelligence tools as well, small businesses are getting much easier to launch by self employed entrepreneurs, and their future looks bright as well.