Small Business Statistics: Key Trends and Facts to Know in 2024

Small businesses play a crucial role in the global economy by driving innovation, creating jobs, and contributing to economic growth. Despite their limited resources and sometimes localized operations, their impact is significant. They bring fresh ideas, provide employment opportunities, stimulate economic activity, and promote inclusive growth.

By exploring small business statistics, we can gain a deep understanding of their impact and shed light on the challenges they face and the opportunities they create. To provide the most accurate and up-to-date information, we have carefully analyzed the most recent data from the most reputable sources. Our analysis includes updated statistics and offers more detailed insights into small business demographics, challenges, and opportunities.

The United States has a thriving entrepreneurship and economic activity landscape, with 33,185,550 small businesses. These enterprises, including various industries and sectors, play a vital role in the nation’s economy, fostering innovation, creating job opportunities, and driving local and regional growth.

Small businesses and job creation

Between 1995 and 2021, job creation significantly differed between small and large businesses.

During this period, small businesses generated 17.3 million jobs compared to large companies, accounting for only 10.3 million.

In terms of overall job creation, small businesses account for approximately 62.7% of the net new jobs created during this timeframe.

This demonstrates the substantial contribution of small businesses in driving employment growth and supporting the economy.

Small businesses by state

California is at the forefront regarding the number of small businesses within its borders, boasting an impressive count of 4.1 million.

Following closely behind are the states of Texas and Florida, which showcase their entrepreneurial spirit with 3.1 million and 3.0 million small businesses, respectively.

The impact of small businesses goes beyond their sheer numbers, as they also play a significant role in job creation across the United States.

California leads the way in this aspect, where small business owners have contributed to the employment of an impressive 7.4 million individuals. 

Following closely behind is Texas, where small businesses have provided job opportunities to 4.9 million people.

New York also stands out with 4.1 million small business employees, showcasing the robust labor market created by entrepreneurial endeavors in the state.

Small business count by size and industry

Statistics on small businesses by size and industry highlight the diversity of small businesses across sectors, showcasing the varied landscape of entrepreneurship and economic activity.

The abundance of small businesses in sectors like Professional Services, Construction, and Retail Trade suggests a dynamic and competitive business environment driven by the demand for specialized services, infrastructure development, and consumer goods.

• Professional, Scientific, and Technical Services (4,594,752)
• Other Services (3,554,298)
• Construction (3,483,077)
• Real Estate and Rental and Leasing (3,268,764)
• Transportation and Warehousing (3,051,341)
• Administrative, Support, and Waste Management (2,946,753)
• Retail Trade (2,734,304)
• Health Care and Social Assistance (2,723,766)
• Arts, Entertainment, and Recreation (1,700,200)
• Accommodation and Food Services (1,048,567)
• Finance and Insurance (991,851)
• Educational Services (990,473)
• Wholesale Trade (675,837)
• Manufacturing (593,849)
• Information (445,353)
• Agriculture, Forestry, Fishing and Hunting (277,390)
• Mining, Quarrying, and Oil and Gas Extraction (97,122)
• Utilities (20,176)
• Management of Companies and Enterprises (18,236)
• Industries not classified (11,406)

Economic outlook

More than half (56%) of small business owners reported an increase in their revenue in 2022 compared to the previous year, 2021. 

This has made small business owners feel more optimistic about the future of their businesses, with a majority expressing a positive outlook. A significant number of them (65%) anticipate growth in their revenue within the next 12 months.

Funding choices

Data shows a significant increase in business owners planning to secure funding for their businesses in the coming year, with 82% expressing this intention, a notable 12-percentage point rise compared to the figures recorded in the previous spring. But how do they plan to do so?

Small Businesses Demographics

In today’s dynamic business landscape, small businesses serve as vibrant hubs of diversity, embracing a wide array of individuals from various backgrounds. From dedicated workers to ambitious entrepreneurs driving their growth, small businesses present a rich tapestry of our society.

Small businesses ownership share by gender

The latest statistics reveal a significant presence of women in the workforce and as small business owners. Women account for 47.3% of the workforce, showcasing their growing participation in various industries. Additionally, women own 43.2% of small businesses, highlighting their entrepreneurial spirit and contribution to the economy.

According to data, males own a total of 17,796,959 small businesses. This figure encompasses two types of small businesses: those with and without employees.

Out of the total, 14,300,000 small businesses are owned by males but do not have any employees. These businesses work by a single individual responsible for handling all aspects of the company, such as management, operations, and customer interactions.

The remaining 3,496,959 small businesses owned by males have grown beyond the scale of being a one-person operation and have hired individuals to assist with various tasks.

Small businesses ownership by veterans

Veterans exhibit a higher level of ownership in small businesses compared to their representation in the overall workforce. Specifically, while comprising 5.0% of the workforce, veterans own 6.45% of businesses.

Small businesses ownership share by race

Diving deeper into statistics, we notice a rich diversity and dynamism of small business ownership across different ethnic groups in the United States, with each community making valuable contributions to the economy.

The highest number of small businesses is owned by the White population, with a staggering figure of 25,219,883. However, it is worth noting that the Hispanic community follows closely behind, with an impressive count of 4,228,625 small businesses, reflecting this group’s diverse and vibrant entrepreneurial endeavors. Furthermore, the Black or African American and the Asian community also display a noteworthy presence, with 3,239,551 and 2,651,835 small businesses, respectively

Small Businesses’ Challenges and Concerns

Business owners continue to express significant worries regarding inflation, commodities prices, and supply chain challenges. Moreover, there has been a noticeable increase in concern over rising interest rates in the past year, with approximately two-thirds of business owners expressing unease about the current interest rate levels.

Impact of Inflation on small businesses

Ongoing inflationary concerns persist, necessitating operational adaptations and prompting price adjustments. A substantial 88% of businesses report being affected by inflation, leading to 60% of small enterprises opting to raise their prices in response.

Due to inflation, business owners are:

• Raising prices - 60%
• Revaluating cash flow and spending - 42%
• Reducing business costs - 31%
• Losing sales  - 26%
• Increasing employee wages - 23%

Supply chain challenges

According to the latest data, an overwhelming majority of 73% of small businesses acknowledge that their operations are currently being affected by supply chain issues.

Due to supply chain issues, business owners are:

• Raising prices - 49%
• Revaluating cash flow and spending - 34%
• Reducing business costs - 34%
• Losing sales - 19%
• Increasing employee wages - 19%

Labor shortage

A majority of 52% of business owners report that labor shortages adversely affect their operations, resulting in increased work hours and the need to raise wages. In addition to longer working hours, business owners are reducing the products/services offered.

Due to labor shortage, business owners are:

• Working more hours - 49%
• Having difficulty filling job openings - 33%
• Raising wages to attract talent - 31%
• Modifying their business hours - 26%
• Reducing their products/ services offered - 24%
• Losing customers due to staffing issues - 21%

Rent payment issues

Amidst the ongoing progression of 2023, an alarming trend of soaring rent prices is adversely impacting small business owners, with a record-breaking 54% stating that they are paying more compared to their expenses in the previous months.

Industries most vulnerable to rent issues

Industries that are particularly vulnerable to the inability to meet their rent obligations include Travel/Lodging, Retail, Construction, and Restaurants, all of which have surpassed the 44% mark.

Small Businesses and Technology

Embracing technology allows small businesses to enhance operations, improve efficiency, reach audiences, and remain relevant in an increasingly digital world. Over the past year, the digital optimization of small businesses has seen a significant increase, with 80% of business owners adopting technology solutions.

Reasons for implementing digital tools

Digital tools play a pivotal role in significantly enhancing the operations of small businesses. According to small business owners, these tools offer immense benefits by optimizing their processes, leading to remarkable efficiencies such as saving valuable time by 65%, maintaining impeccable organization at 60%, and effectively managing cash flow at 53%.

• Saving time - 65%
• Staying organized - 60%
• Managing cash flow - 53%
• Reaching new customers - 38%
• Increasing customer satisfaction - 38%
• Streamlining marketing tactics - 65%
• Implementing sustainable tactics - 65%

How are small businesses incorporating technology?

A significant majority of business owners (60%) who have taken the initiative to optimize their businesses digitally have embraced accepting various cashless payments. 

Furthermore, 52% have transitioned to conducting business banking online or through mobile apps. However, it is surprising that only 37% of small business owners recognize the importance of establishing a solid presence on social media platforms.

• Accepted more forms of cashless payments - 67%
• Conducted business banking online or in mobile apps - 52%
• Created and/or bolstered the business social media presence - 37%
• Implemented more digital- first marketing strategies - 35%
• Implemented an online sales process - 31%
• Used a cloud-based platform - 25%

Wrapping up

Small businesses are the backbone of economies, playing a vital role in driving job creation, fostering innovation, and promoting local development. They contribute significantly to employment opportunities, with many jobs originating from small businesses. Despite facing obstacles, small businesses demonstrate remarkable resilience, leveraging technology and their inherent strengths to fuel economic growth.

Most small businesses have a positive outlook, expecting their revenue to increase. This optimism reflects their determination and entrepreneurial spirit, highlighting their ability to adapt and thrive in an ever-changing marketplace.

• Alignable
• Bank of America
• U.S. Small Business Administration, Office of Advocacy