Study

Small Business Statistics 2023-2024: How many SMB’s in USA and Worldwide

In 2023, small businesses constituted a substantial share of the global economy, representing over 90% of all businesses on a global scale. Moreover, they play a vital role in generating approximately 50% of the world’s total employment.

The small business statistics for 2023 not only reveal effective strategies but also provide valuable insights into the path forward.

Importance of Small Businesses Statistics 2023-2024

Small businesses are frequently regarded as the backbone of the economy due to their pivotal role in driving economic growth, creating jobs, and fostering innovation in both local communities and global markets. 

The specific criteria for defining a small business may vary from country to country, typically dependent on factors such as annual revenue or the size of the workforce.

Small Business Statistics 2023-2024

Global Small Business Market Size in 2023

The size of the global small business market is estimated to reach USD 11.6 trillion by the end of 2023, growing at a CAGR of 10.8% from 2019-2023. This indicates a strong potential for growth in this sector over the next few years. (Statista)

Number of entrepreneurs who own a Small Business worldwide

There are approximately 582 million entrepreneurs around the world who are starting or running their own businesses. This number has been steadily increasing due to advancements in technology and an entrepreneurial mindset among individuals.(Global Entrepreneurship Monitor)

How many small businesses are there in the world?

https://advocacy.sba.gov/wp-content/uploads/2023/03/Frequently-Asked-Questions-About-Small-Business-March-2023-508c.pdf

There are 400 million small businesses in the world, according to a survey from the SBA (Small Business Administration)

These statistics highlight the remarkable entrepreneurial spirit and drive that exists across various countries and industries

How many small businesses are there in the US? 

There are 8 million small businesses in the US in 2022 according to a survey by SBA. The survey’s findings reflect not only their sheer number but also shed light on their collective impact on communities nationwide. They contribute significantly to GDP, inject vitality into local economies, and bring unique products and services that enrich people’s lives. (Small Business Administration)

Small Business Ownership Statistics 2023-2024

Only 7% of small businesses are owned by millennials –

According to the latest Small Business Ownership Statistics, it has been revealed that millennials currently own a mere 7% of small businesses in the United States.(GuidantFinancial) 

Most small businesses are owned by entrepreneurs that belong to Generation X (46.5%) or the Boomer generation (45.5%)

These individuals, born between the mid-1960s and early 1980s, have harnessed their innovative spirit and determination to establish successful ventures across various industries. (Incfile)

There are more men as small business owners than women- 

Though this holds true, the gap between the numbers are decreasing at a rapid pace and the number of women entrepreneurs is gaining momentum in the last few years. At the moment, 43.2% of small businesses are owned by women.(Skynova)

How Many Small Business Owners are there in the US?

USA small business statistics 2023

Small businesses are the backbone of the United States economy, comprising over 99% of all businesses in the country. These small enterprises play a significant role in job creation, innovation, and overall economic growth. As such, understanding the state and trends of small businesses in the USA is crucial for forecasting their future growth.

There were approximately 31.7 million small businesses operating in the USA as of 2021. This number has been steadily increasing over recent years, with an average annual growth rate of 3.2%. In fact, since 2010, small businesses have added around eight million new jobs to the US economy.

The latest statistics show that there are 33 million small businesses in the US, which account for 99.9 percent of all US businesses (Small Business Administration). 

With these high numbers, practically every other business in America can be classified as a small business.

Small business owner demographics in 2023 – 2024

As we look ahead to 2023, there are some notable demographic shifts that will impact small business ownership and entrepreneurship.

1. Age:

The average age of a small business owner in 2023 is expected to be around 45 – 52 years old. (Statista)

This is a slight increase from previous years, indicating that more older individuals are choosing to start their own businesses rather than retiring or seeking traditional employment.

Additionally, the number of young entrepreneurs aged between 20-34 is projected to increase significantly by 2023. This can be attributed to the growing popularity of technology and innovation-based industries, which tend to attract younger generations.

2. Gender:

The gender gap in small business ownership has been steadily decreasing over the years, and this trend is expected to continue in 2023 and ahead. While men still dominate as small business owners, women are catching up at a rapid pace.

Female-owned businesses grew at a rate five times faster than the national average between 2007-2018. By the end of 2023, it is estimated that women will make up nearly half of all small business owners worldwide.(Businesswire)

This shift towards more gender diversity in entrepreneurship can be attributed to increased access to education and resources for women as well as changes in societal norms regarding traditional gender roles.

3. Geography:

In terms of geographical distribution, Asia has emerged as a prominent hub for small business ownership, with countries like China and India accounting for nearly half of all entrepreneurs worldwide. 

This can be attributed to factors such as population size and economic growth in these regions.

However, the United States alone has over 33 million small businesses, making up nearly 99% of all businesses in the country. 

Similarly, European countries such as Germany and France also have high numbers of small businesses contributing significantly to their respective economies.

Industries:

When it comes to industries, there are several sectors that stand out in terms of small business ownership statistics. These include retail trade, accommodation and food services, professional services (such as legal or accounting firms), construction, healthcare and social assistance. These industries tend to have lower barriers to entry.

Popular technological fields that top the distribution of start-ups include FinTech (7.1%), Life Sciences(6.8%), and AI(5.0%) (Statista)

Which is the Fastest Growing Small Business 2023-2024?

As an entrepreneur or small business owner, it is essential to stay informed about the fastest growing industries in order to capitalise on potential opportunities and stay ahead of the competition.

1. E-commerce:

 E-commerce has been a rapidly growing industry for several years now, and its growth shows no signs of slowing down. With the rise of online shopping and a shift towards digital transactions, e-commerce is expected to continue its upward trajectory in the future. According to Statista, global e-commerce sales are projected to reach $6.54 trillion by 2023, more than doubling from $3.53 trillion in 2019.

2. Health and Wellness

The health and wellness industry has seen steady growth over the past decade as consumers become more health-conscious and prioritise self-care. This trend is expected to continue as people adopt healthier lifestyles and seek out products and services that promote physical and mental well-being

Spending associated with Small Businesses 2024

Labour Costs:

When it comes to small business costs, labour often takes centre stage, occupying a significant chunk of the expenditure pie. With an average contribution of 70%, it is no surprise that this aspect holds such importance.

Inventory Management:

Following closely behind as another notable expense is inventory management. For many small businesses, maintaining sufficient stock levels can prove challenging yet essential for meeting customer demands efficiently. 

Balancing the delicate act of stocking enough products without overextending resources requires vigilant attention and strategic decision-making from business owners

Advertising Costs: 

Lastly, advertising stands out as an intriguing cost factor within small businesses’ financial structure – surprisingly accounting for just 1% of revenue on average! 

Understanding these intricacies enables aspiring business owners to navigate through potential hurdles confidently and make informed decisions regarding resource allocation in pursuit of entrepreneurial success.

What is the projected Small Business growth rate for the next 10 years?

Market analysis suggests that the overall small business growth rate will witness an increase of approximately 5% annually, which translates to significant expansion opportunities. 

This surge can be attributed to several factors such as technological advancements, globalisation, evolving consumer preferences, and supportive government policies focused on fostering entrepreneurship.

Statistics on Home based Small Business 

Home-based small businesses often come with lower startup costs compared to traditional brick-and-mortar enterprises, making them accessible to people from various financial backgrounds. Here are some numbers pertaining to home-based businesses-

1.  50% of businesses are home-based businesses.

Statistics show that there are over 400 million small businesses in the world, out of which approximately 50% operate from home. This number is expected to continue growing as people seek flexibility and freedom in their work lives.(Findstack)

2. There are roughly 15 million home-based businesses in the U.S.

According to recent statistics, there are approximately 15 million home-based businesses in the United States. This makes up around half of all small businesses in the country. Home-based businesses have been on the rise in recent years, with more and more people choosing to start their own venture from the comfort of their own home. (Fundera)

From bustling online marketplaces to creative consulting services or even artisanal crafts produced at kitchen tables, these home-based businesses contribute significantly to local economies while fueling personal growth for countless individuals across America.

How many small businesses fail in the first year?

According to recent studies, it is estimated that around 20% of small businesses fail within their first year of operation. This percentage increases to approximately 50% by the end of the fifth year, and by the tenth year, only about one-third of small businesses are still operating. (Fundera)

One of the main reasons for small business failure is lack of proper planning and market research. 

40% of many small businesses fail as there is no demand for their products or services in the market. 19% fail because of competition and 17% fail due to poor quality of products or services.(Fundera)

Many entrepreneurs have a great idea or product but fail to do thorough research on the target market, competition, and potential challenges they may face. 

This leads to misalignment between the business concept and customer needs, resulting in low sales and ultimately failure.

How many small businesses closed in 2022?

The year 2022 was a tumultuous time for businesses of all sizes, especially small businesses. With the global pandemic still lingering and its economic impact affecting industries across the board, it is no surprise that many small businesses have been forced to shut down.

According to data from the International Council for Small Business (ICSB), an estimated 61% of small businesses worldwide have permanently closed in 2022. This equates to over 1.6 million small businesses shutting their doors for good.

This significant number of closures reflects the harsh reality faced by many small business owners as they struggle to stay afloat amidst lockdowns, supply chain disruptions, and reduced consumer spending. This trend is not limited to a particular region or country but has been observed globally.

According to the Global State of Small Business Report, countries such as Bangladesh and Ireland saw some of the highest numbers of small business closures with approximately 50%. In North America, the United States reported around 60% of small businesses closing down in 2022.

Asia Pacific also experienced a large number of closures, with India being one of the hardest hit countries at nearly 75%. Many Asian countries heavily reliant on tourism were also affected, such as Thailand with over half of its small businesses closing down.

Trends Impacting Small Businesses in 2023 – 2024

1. Technological Advancements: 

The rapid pace of technological advancements has greatly influenced the way small businesses operate. From digital marketing strategies to cloud-based solutions for data management, technology has become an indispensable aspect of running a successful business. 

In 2023, we can expect even more advancements such as artificial intelligence and automation to further revolutionise how small businesses function.

2. Shift towards E-commerce: 

With the rise of online shopping and e-commerce platforms, more consumers are turning towards purchasing goods and services online rather than in physical stores. 

This shift is expected to continue in 2023, making it crucial for small businesses to adapt to this trend by establishing an online presence or investing in e-commerce capabilities.

3. Remote Workforce: 

The COVID-19 pandemic has accelerated the trend of remote work, with many companies opting for telecommuting as a permanent solution even after the pandemic subsides. 

This presents both challenges and opportunities for small businesses – on one hand, it allows them to tap into a larger pool of talent without geographical limitations; on the other hand, they may struggle with managing remote teams effectively.

Small Business Facts and Trivia

  • Did you know that over 90% of enterprises worldwide are classified as micro-businesses with fewer than ten employees? 

These tiny but mighty ventures employ nearly two billion people globally. 

  • In recent years, it has been observed that more than 40% of new American entrepreneurs are women – a truly inspiring statistic! 
  • Despite their size, small businesses generate approximately 44% of U.S. economic activity! (SBA)
  • On a global scale, approximately 38% of small firms utilise specialised software in their day-to-day operations.
  • According to Guidant’s happiness scale, a striking 39% of small business owners have confidently rated themselves as “very happy.” 
  • During COVID-19, 70-80% of SMEs worldwide lost 30-50% of their income( (Mckinsey)

Small Business Employment Statistics 2024

Small business employment statistics provide us with a fascinating glimpse into the global economy, showcasing the immense impact of small businesses on job creation.

How many jobs are created by small businesses worldwide?

Small businesses are significant employers globally, providing jobs for about two-thirds of workers worldwide. In fact, according to a study by the International Labour Organization (ILO), small and medium-sized enterprises (SMEs) account for more than half of all formal jobs globally.

When you wonder how many people work in small businesses, in the US, they employ 61.7 million Americans, accounting for 46.4% of the private sector workforce.(Centier)

Small businesses created 17.3 million net new jobs between 1995 and 2021, whereas large enterprises created 10.3 million. 

Since 1995, small firms have created 62.7% of all new jobs. These figures were turbulent in 2020, with almost 15 million jobs lost in the second quarter. Over 8.6 million of these were employment losses in small enterprises. However, small business employment increased rapidly following the recession. (Small Business Administration).

Conclusion

In conclusion, small business statistics for 2023 present an optimistic outlook for entrepreneurs across various industries.  It is noted that there is a steady increase in the number of new startups, with estimates suggesting that over 600,000 ventures will be launched in 2023 year alone. Moreover, these businesses are projected to contribute significantly to job creation, accounting for approximately 60% of total employment opportunities in many countries.