Small businesses are the backbone of the U.S. economy, but the reality behind that family saying is more surprising and complex than the slogan suggests. Small businesses are more diverse and resilient than popular myths about them imply as they navigate the real risks surrounding financing, cash flow, and survival. Drawing on the most recent federal data from the Small Business Administration, the Census Bureau, the Bureau of Labor Statistics, and other sources, here are facts that show us who America’s small businesses are, how many people they employ, how they thrive, and the odds of survival.
13 Small Business Facts
1. There are 36.2 million small businesses in the U.S. (Source)
This number makes up an incredible 99.9% of all American businesses.
2. Small businesses employ 62.3 million people in the U.S. (Source)
This accounts for 45.9% of the private-sector workforce.
3. Small businesses account for 43.5% of the U.S. GDP. (Source)
That’s nearly half of the country’s economic output, proving how essential small businesses are to America.
4. From March 2023 to March 2024, small businesses created roughly 9 out of 10 new jobs. (Source)
This is a net increase of around 1.2 million jobs in a year.
5. Many small businesses don’t employ anyone. (Source)
There are around 29.8 million “non-employer” firms, meaning sole proprietors are the sole operators of the business with no paid staff.
6. California has the most small businesses in the nation. (Source)
There are 4.34 million small businesses in California, 3.52 million in Texas, and 3.49 million in Florida.
7. Montana relies on small businesses the most. (Source)
Small businesses employ 66.3% of Montana’s workforce, the highest percentage of any state.
8. Small business owners are diverse. (Source)
Women own 44.6% of American small businesses. Hispanic Americans own 16.5%, and veterans own 5.3%.
9. Survival of small businesses is better than myths claim. (Source)
About 20.4% of new businesses fail in their first year, better than common knowledge claims. However, half close within their first five years. 65% close within ten years.
10. The top reason start-up small businesses fail is a lack of market need. (Source)
42% of small businesses fail for this reason, and 29% fail because they run out of cash to sustain themselves.
11. Access to capital is the biggest hurdle to small business success. (Source)
Lack of capital from investors or lack of loans is the biggest barrier to the growth and survival of small businesses.
12. Small businesses are the most prevalent and most important in rural America. (Source)
Small businesses account for over 56% of employment in rural America, where many farmers and laborers work. Small businesses employs 48% of people in urban areas by comparison.
13. Beyond the daily work of keeping the business running, small business owners must also manage the growing cybersecurity challenge. (Source)
A recent report found that more than 40% of cyberattacks target small businesses.
Featured image photo credit: Vitaly Gariev
