Small businesses are the backbone of the American economy (and in many parts of the world) and are responsible for nearly half (44%) of economic activity in the US [1].
Want to know more about the impact small businesses have on the American workforce, which industries tend to rely most on small businesses, and which demographic groups own the most of small businesses? We gathered the most relevant small business statistics for 2024. Let’s dive in.
In this article 📝
- Key findings
- How many small businesses are there?
- Small businesses by size and industry
- Small business failure statistics
- Small business statistics by state
- Small businesses employers by industry
- Small business loans
- Small business owners by gender and race
- Gross job gains in the U.S. private sector
- Small business problems
Key findings
- There are 33.2 million small businesses in the US.
- The vast majority – 27.1 million – of small businesses have no employees.
- With 4.2 million small businesses, California leads the ranking with the highest count of small businesses in the country.
- Small businesses in the US employ 61.7 million workers, accounting for 46.4% of the workforce and 39.4% of payroll.
- Banks provided $102.7 billion in new loans in 2021 to businesses that bring in $1 million or less in annual revenue.
- Around 21.5% of small businesses in the US are owned by women.
How many small businesses are there?
There are 33.2 million small businesses (generally defined as a business with less than 500 employees) in the US. This includes 27.1 million businesses with no paid employees and 6.1 million employer firms. [2,3]
Small businesses by size and industry
Most (81.7%) small businesses in the US do not have paid employees, while only 1.96% have 20 or more employees [2].
The highest number of small businesses provide professional, scientific, and technical services (with 4.6 million businesses). This is followed by other services, excluding public administration (3.6 million) and construction (3.5 million).
Small business failure statistics
The latest small business statistics show that approximately 20.8% of all businesses fail within the first year. This failure rate is largely driven by small firms [4].
During the first two years, 28% of all businesses will fail, and 48% during the first 10 years. Just 25% of companies make it beyond 15 years in business.
Starting a business? Don’t let your name be the first mistake! Try our business name generator today.
Small business statistics by state
With 4.2 million small businesses, California leads the ranking with the highest count of small businesses in the country. Small businesses in California employ 7.4 million workers. This comes as no surprise since California is the nation’s largest economy. With a large population and some of the highest per capita incomes in the US, California provides many opportunities to operate a successful small business [5].
Only 7 states in the US have more than 1 million registered small businesses. These are: California, Florida, Georgia, Illinois, New York, Pennsylvania, and Texas. These states employ 26.9 million workers across all 7 states.
When accounting for the resident population (18 years old and over), Florida ranked number one as the most entrepreneurial state. Florida has 165,699 small businesses per 1 million residents. This is followed by Wyoming (159,730) and Colorado (149,476). To put this in perspective, the average number of small businesses per 1 million across all states is 123,321.
More details:
| State | Number of small businesses (small business share in state) | Small businesses per 1 million residents (18+) | Small business employees (small business share in state) |
|---|---|---|---|
| Alabama | 417,092 (99.4%) | 105,254 | 822,668 (46.8%) |
| Alaska | 74,587 (99.1%) | 133,894 | 138,517 (52.3%) |
| Arizona | 641,025 (99.5%) | 111,093 | 1,111,492 (42,5%) |
| Arkansas | 264,245 (99.3%) | 112,516 | 497,605 (47.2%) |
| California | 4,242,612 (99.8%) | 138,997 | 7,433,443 (47.9%) |
| Colorado | 691,230 (99.5%) | 149,476 | 1,176,312 (47.6%) |
| Connecticut | 360,127 (99.4%) | 124,389 | 741,920 (48.2%) |
| Delaware | 93,686 (98.5%) | 115,623 | 195,792 (47.4%) |
| District Of Columbia | 79,047 (98.2%) | 144,423 | 257,236 (48.6%) |
| Florida | 2,974,046 (99.8%) | 165,699 | 3,590,380 (40.5%) |
| Georgia | 1,181,720 (99.6%) | 140,635 | 1,718,962 (42.5%) |
| Hawaii | 141,460 (99.3%) | 123,776 | 272,459 (49.3%) |
| Idaho | 183,972 (99.2%) | 124,674 | 347,193 (56.3%) |
| Illinois | 1,245,340 (99.6%) | 126,278 | 2,474,824 (44.7%) |
| Indiana | 534,640 (99.4%) | 101,582 | 1,241,750 (43,8%) |
| Iowa | 273,623 (99.3%) | 110,509 | 644,100 (46.6%) |
| Kansas | 258,384 (99.1%) | 115,026 | 601,426 (49.7%) |
| Kentucky | 364,200 (99.3%) | 103,828 | 722,253 (43.3%) |
| Louisiana | 471,240 (99.5%) | 133,551 | 905,726 (52.7%) |
| Maine | 151,212 (99.2%) | 132,940 | 293,748 (56.3%) |
| Maryland | 634,622 (99.5%) | 131,717 | 1,175,929 (49.4%) |
| Massachusetts | 718,467 (99.5%) | 127,285 | 1,536,912 (45.4%) |
| Michigan | 911,914 (99.6%) | 115,076 | 1,907,526 (47.9%) |
| Minnesota | 534,397 (99.4%) | 120,822 | 1,255,183 (46.0%) |
| Mississippi | 270,534 (99.3%) | 119,600 | 441,099 (46.0%) |
| Missouri | 542,700 (99.4%) | 112,756 | 1,153,956 (45.3%) |
| Montana | 129,180 (99.3%) | 145,291 | 250,680 (66.8%) |
| Nebraska | 182,684 (99.1%) | 122,504 | 413,735 (48.3%) |
| Nevada | 313,257 (99.2%) | 125,907 | 540,004 (42.8%) |
| New Hampshire | 138,199 (99.0%) | 120,982 | 308,296 (49.7%) |
| New Jersey | 953,416 (99.6%) | 131,187 | 1,870,946 (49.2%) |
| New Mexico | 161,921 (99.0%) | 97,907 | 346,374 (53.7%) |
| New York | 2,267,870 (99.8%) | 144,562 | 4,134,448 (48.1%) |
| North Carolina | 994,576 (99.6%) | 118,344 | 1,747,897 (44.4%) |
| North Dakota | 75,265 (98.8%) | 126,181 | 196,770 (55.7%) |
| Ohio | 996,693 (99.6%) | 108,413 | 2,196,836 (44.7%) |
| Oklahoma | 367,405 (99.4%) | 119,806 | 718,033 (51.1%) |
| Oregon | 402,928 (99.4%) | 118,399 | 893,405 (54.4%) |
| Pennsylvania | 1,099,158 (99.6%) | 106,224 | 2,565,473 (46.2%) |
| Rhode Island | 108,360 (98.9%) | 121,777 | 227,699 (51.2%) |
| South Carolina | 463,549 (99.4%) | 111,303 | 837,615 (43.0%) |
| South Dakota | 90,274 (99.0%) | 130,707 | 208,353 (58.0%) |
| Tennessee | 652,795 (99.5%) | 118,406 | 1,150,008 (42.2%) |
| Texas | 3,110,293 (99.8%) | 137,787 | 4,936,912 (44.5%) |
| Utah | 324,821 (99.3%) | 132,624 | 625,571 (45.5%) |
| Vermont | 78,883 (99.0%) | 148,191 | 157,131 (60.2%) |
| Virginia | 795,624 (99.5%) | 116,717 | 1,590,258 (46.0%) |
| Washington | 657,529 (99.5%) | 107,103 | 1,443,940 (49.8%) |
| West Virginia | 111,614 (98.8%) | 78,423 | 269,473 (48.6%) |
| Wisconsin | 462,292 (99.4%) | 99,484 | 1,273,045 (48.8%) |
| Wyoming | 72,081 (98.9%) | 159,730 | 132,595 (64.1%) |
Small businesses with paid employees by industry
Nearly all (99.7%) of employer firms are classified as small businesses, but they employ less than half (46.4%) of the US workforce in the private sector and account for 39.4% of payroll in the country [6].
When ranked by industry, the small business share among all employers ranges from 69.9% (management of companies and enterprises) to 99.8% (construction and other services, excluding public administration).
The share of employees in small businesses ranges widely depending on the industry, from 17.4% (information) to 84.5% (other services, except public administration). In 3 industries (construction, other services, agriculture, forestry, fishing and hunting) the vast majority (80.8% or more) of employees are working for small businesses.
Small business loans
In 2021, reporting banks (under the Community Reinvestment Act) provided $102.7 billion in new debt lending to firms with revenues of $1 million or less, which accounted for 29% of all reported new financing for businesses in the US [7].
Still using smoke signals to promote your business? Time for an upgrade! Learn how to make a small business website today.
Small business owners by gender and race
According to the Census Bureau, 21.5% (1,236,231 registered entities) of all firms with less than 500 employees are owned by women, while another 14% (807,564 firms) are owned equally by women and men [6].
According to the latest small business statistics, businesses owned by racial minorities account for 20% (1,150,404 companies) of all employer firms with fewer than 500 workers in the US, while another 1.7% have equal business ownership by minority and non-minority [6].
💡 Note: The count by group includes only classifiable businesses. The share of the total is calculated from all reported businesses (which may be greater than a sum of individual groups).
Gross job gains in the U.S. private sector
Small businesses accounted for 77% of gross job gains in the US private sector from Q1 2021 to Q2 2022 [8].
Between January 2021 and December 2022, there were reported 66.8 million gross job gains in the US private sector across firms of all sizes, including 51.8 million among firms with less than 500 employees, suggesting a growing pace of economic expansion. In the same time frame (January 2021 – December 2022), small businesses have generated 77% of the jobs added to the economy.
Small business problems in the U.S.
During a survey of small businesses in the US in 2023, 26% of respondents ranked inflation as the single most important problem for their business. That’s a 4 percentage point increase over the past year), followed by quality of labor (24%) and taxes (15%). Those looking to form a small business should consider sourcing a higher amount of capital to keep up with rising inflation [9].
Sources:
[1] https://advocacy.sba.gov/2019/01/30/small-businesses-generate-44-percent-of-u-s-economic-activity/
[2] https://advocacy.sba.gov/wp-content/uploads/2022/08/Small-Business-Economic-Profile-US.pdf
[3] https://www.census.gov/data/tables/time-series/econ/susb/susb-historical.html
[4] https://www.bls.gov/bdm/us_age_naics_00_table7.txt
[5] https://advocacy.sba.gov/wp-content/uploads/2022/08/State_Profiles_2022.pdf
[6] https://data.census.gov/table?tid=ABSCS2020.AB2000CSA04&nkd=EMPSZFI~655
[7] https://www.ffiec.gov/craadweb/national.aspx
[8] https://www.bls.gov/charts/business-employment-dynamics/gross-job-gains-gross-job-losses-size.htm
[9] https://www.statista.com/statistics/220371/single-most-important-problem-for-small-businesses-in-the-us/
