Updated September 2016. We’ve updated this post with a few new and interesting bits of information. The total now sits at 19 fun facts.
The American small business landscape has changed. Online is the new normal, businesses are now as likely to be based out of a house as out of a storefront, and large businesses are dropping billions of dollars on tech start-ups. Here are fifteen statistics mapping today’s small business landscape.
1. About 50% of small businesses fail in the first four years. A glass half-empty, half-full stat, if ever there was one. (Source: Bureau of Labor Statistics) >> Tweet this stat.
2. 76% of small business owners report facing marketing challenges. The growth of online marketing has increased the complexity small business owners have to face when marketing their companies. (Source: Capital One) >> Tweet this stat.
3. America is built on the backs of individuals, and 79.66% of small businesses are self-employed individuals. (Source: NASE) >> Tweet this stat.
4. Even when we’re not working on our own, we prefer small groups. Over a third of the US working population is employed at businesses with fewer than 100 employees. (Source: US Small Business Administration) >> Tweet this stat.
5. Private businesses continue to be the life-blood of the American economy. Less than 1% of American businesses are publicly traded. (Source: Wall Street Journal)>> Tweet this stat.
6. For business with fewer than 5,000 employees, the average employment is 13 people. (Source: US Small Business Administration) >> Tweet this stat.
7. Small business owners are getting older. 51% of small business owners are over 50 years old, while only 16% are under 35. (Source: US Census Bureau via Wall Street Journal)>> Tweet this stat.
8. Businesses with less than five employees make up 62% of all businesses in the US. Source: US Small Business Administration) >> Tweet this stat.
9. For employees, there are often very tangible benefits of moving to a larger business. Employees at businesses with over 100 employees make 31% more, on average, than employees at sub 100 businesses. Source: US Small Business Administration) >> Tweet this stat.
10. The complexity of financial accounts has changed the way we operate. More than 50% of small businesses now have a CFO or controller managing their accounts.(Source: Wall Street Journal) >> Tweet this stat.
11. The IRS may loom large in our minds, but its impact has been low, recently. The IRS audited just 0.5% of S Corporations and Partnerships in 2012. (Source: IRS) >> Tweet this stat.
12. In 2014, the IRS assessed $2.1 billion in civil penalties against business income tax filers. (Source: IRS) >> Tweet this stat.
13. Of the 1.09 million penalties assessed by the IRS, 47% were for delinquent payment, while less than 0.5% were for inaccuracy. (Source: IRS) >> Tweet this stat.
14. Americans still start their businesses on their own backs. 77% of small businesses rely on personal savings for their initial funds. (Source: Wells Fargo-Gallup poll) >> Tweet this stat.
15. While around 9% of all American businesses close each year, only 8% are opened. (Source: Gallup) >> Tweet this stat.
16. Only four out of every ten new entrepreneurs are women. This is a gap that has widened slightly since 1996. (Source: Kauffman Index) >> Tweet this stat.
17. Most businesses are owned by people over 50, most entrepreneurs are under 50. In 2014, only 26% of new entrepreneurs were over the age of 55. (Source: Kauffman Index) >> Tweet this stat.
18. Millennials are optimistic about their businesses. Three out of four millennial business owners expect to see their businesses improve over the next year. (Source: Wells Fargo) >> Tweet this stat.
19. Despite it being my least favorite payment method – ever – 90% of small businesses accept checks. Cash is a close second, at 72%. (Source: Wells Fargo) >> Tweet this stat.
While there are scary stats out there, companies that run tight ships can keep themselves afloat through even the roughest weather. You can keep an eye on the latest small business finance and accounting trends at Capterra’s finance blog. Good luck out there.
What other small business statistics can you think of? Leave them in the comments below!
Images by Abby Kahler