Small Businesses in America – 11 Amazing Facts
Even in this age of corporate mergers and dominance by large firms, small businesses continue to have a profound impact on the economy of the United States. In fact, most Americans probably know someone who is employed by a small business.
The Small Business Administration (SBA) defines a small business as one that employs fewer than 500 people, but even businesses with fewer than 20 employees far outnumber larger firms. Collectively, these firms are in many ways the foundation of the American economy, as the following facts demonstrate.
Fact #1 Small Businesses Employ the Most Americans
More Americans work for small business owners as opposed to larger firms. They employ over 50% of the working population, or about 120 million people.1
Fact #2 Small Businesses Create the Most Jobs
Not only do small businesses collectively employ more people than larger firms, they also create far more new jobs. Since 1995, small businesses have consistently generated over 65% of net new jobs.2
Fact #3 There are a Lot of Small Businesses
Small business owners number nearly 28 million in the U.S. as of 2013. Of these, over 22 million are solo ventures, known as “nonemployer” firms because they do not have additional employees on the payroll.3
Fact #4 Almost Every Business is a Small Businesses
There are two figures to consider here: the percentage of employer firms that are small companies, and the percentage of all companies that are small business owners.
Small business dominates both categories: 99.7% of America’s approximately 5.68 million businesses are small, and by adding in nonemployer firms, small businesses account for 99.9% of all companies. In fact, small business owners with less than 20 employees account for 98% of all businesses.4
Fact #5 Most Small Businesses are at Home
Home-based businesses account for 52% of small businesses.5
Fact #6: Small Businesses Are Productive
Small business owners account for 42.9% of payroll in the private sector. They are also responsible for 46% of private sector output, and 33% of exporting value.
Fact #7 Small Business Owners Are Diverse
According to the Small Business Administration (SBA), business ownership is on the rise in minority communities. In 2007, at the start of the recession, minorities accounted for 11.5% of business ownership, but by 2012 their share increased to 14.6%.7
Fact #8 Small Business Owners Are Aging
On the whole, business owners tend to be older than non-business owners anyway, but this trend is increasing, notably among small business owners. In 2007, about 46% of business owners were 50 or older, but by 2012 this had risen to 50.9%. At the same time, business owners in the 35-49 group went from 38.8% to 33.2%. Baby boomers appear to be primarily responsible for this trend.8
Fact #9 Small Businesses Would Make a Big Country
If all 77 million American small business owners were their own country, they would be the 17th most populous country in the world. In population terms, they would be slightly larger than Iran9 and more than twice the size of Canada.10
Some of the fastest growing small business sectors include specialty food stores.
Fact #10 Fastest Growing Small Businesses
Some of the fastest growing small business sectors include accounting services, IT support services, consulting—including security, human resources, and many others, architect firms, and specialty food stores.11
Fact #11 Small Businesses Create the Most Patents
Compared with larger firms, small businesses create thirteen times more patents per employee. 12 That’s a lot of innovation!
Small business owners are responsible for more employment, job creation and innovation than major corporations. Collectively small business owners exert a massive impact on the economy, providing for tens of millions of individuals and families. The effects of these enterprises are far-reaching, as small business owners in turn use their revenue to buy goods and services, thus keeping others employed.
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