Most Profitable Small Business In The World – It feels like everyone is starting their own small business these days, and that may be more true than you think. If you’re curious about small business statistics, this is the ultimate list.
To reveal real facts about small businesses, we did the research for you. This list will share key statistics and shed light on the state of the industry both in the United States and on a global scale. You’ll find out how successful small businesses really are, expose their failure rates, reveal their demographics, and much more.
Most Profitable Small Business In The World
Ready to learn how important small businesses are in 2023 with 50 facts? let’s dive in
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According to the US Census Bureau, most American businesses have fewer than five employees. So are these classified as “small businesses”? Kind of.
A small business is defined by the size of the business (number of employees) and/or its annual revenue. These definitions depend on the business industry and change from one to another. Company revenue caps can range from $1 million to $40 million, while maximum employee counts can range from 100 to over 1,500. These standards are decided by the US Small Business Administration. or SBA.
The SBA has a Small Business Size Standards Chart that lists all of these factors by industry, setting guidelines for businesses across the country. For example, soybean farmers can earn up to $2 million per year, while retail bakeries must have fewer than 500 employees to be considered a small business.
Regardless of these American specifics, around the world, many consider small businesses simply to be those with fewer than 250 people.
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Whether a company has 15 employees or 750, small businesses are an essential part of the global economy and are the primary driver of financial growth in the US. Running a small business is a lot of work, but it comes with some unique benefits.
Absolutely. The definition of the size of a company directly influences the amount of federal assistance it can receive. Some key benefits that small businesses can take advantage of include:
Now that you know more about small businesses and what sets them apart by definition, it’s time to look at the facts. Let’s start our list of small business statistics.
As of 2021, the SBA reported 32.5 million small businesses in the United States. Hundreds of thousands of small businesses open and close annually, but it has maintained a net increase in the past two years. Between March 2019 and 2020 there was a net increase of 42,650 new small businesses.
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Only 0.01% of businesses in the United States are not considered small businesses. Of the majority, 98% have fewer than 100 employees and 89% have fewer than 20 workers. These small businesses employ more than 61.2 million Americans. This represents 46.8% of the total number of workers nationwide.
In just 3 decades, the number of small businesses operating in the United States has doubled. These small businesses are even expanding into commercial properties. 30-50% of all retail space, estimated to be around 20-34 billion square feet, is occupied by small American businesses.
The US gross domestic product, GDP, is the market value of goods and services produced by businesses (employees and property) within the country. In 1998, small businesses generated almost half (48%) of GDP. Fast forward to 2014 and this statistic dropped to 43.5%. Regardless, the government views small businesses as vital because they are at the forefront of driving innovation, creating jobs, and generating economic growth.
5. Small businesses are responsible for 2 out of 3 jobs created in the last 25 years
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In the last quarter century, large companies have created more than 6.7 million net new jobs. Meanwhile, small businesses generated 12.9 million net new jobs during the same period. Job growth has been driven by small businesses that account for 66% of all new jobs in the past 25 years.
Right now, more than 65% of small businesses in operation were profitable in 2022. This is exciting news, as a 2018 study showed that only 40% of small businesses were profitable. Meanwhile, 35% of small businesses are not profitable.
In 2018, nearly one in 10 small businesses made more than $1 million per year. This number is likely to be higher today. There are 16% of less successful homeowners, making less than $10,000 per year. If you were to start a small business in 2022, the most lucrative industries are technology, healthcare, and energy.
According to a survey conducted in October 2021, more than three in four small business owners are optimistic about the future. The same survey revealed that 38% plan to hire more workers and 42% plan to increase investments in their businesses. Both statistics are significant increases from 2020.
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Small businesses related to health and social care have an 85% chance of surviving their first year. By year five, 60% will survive. The industry with the lowest first-year survival rate is the transportation industry, where only 75% survive the first year. By the fifth year in this industry, only 30% of the transport companies are still in existence.
More than 60% of owners consider their business to be successful and in “good health”. The next step, “very good health,” was the response of an impressive 30% of small businesses. The US Chamber of Commerce survey showed that small business owners’ optimism about success is high, despite current economic struggles like inflation, labor shortages and energy issues. supply chain.
The US Bureau of Labor Statistics reports that about 80% of small businesses will survive their first year. About 70% of companies with employees will survive their second year in business. Going forward, it is reported that 70% of small business owners will go bankrupt before their tenth year of operation.
More than 50% of small businesses will fail before their fifth consecutive year of operation. Only 30% survive their tenth year in business. Based on trends from the US Bureau of Statistics, these failure rates have remained constant for decades.
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Cash flow is one of the biggest problems for small businesses. 29% fail simply because they ran out of cash. A 2015 study showed that 27% of owners were unable to access the necessary capital to continue operating their business. Many small businesses consider cash flow to be their biggest challenge.
Small businesses apparently need to do some more in-depth market research before getting started. Because? More than 40% of them fail because there is no market need for their products or services. 19% say the failure was due to being “outdone”, while 17% say it was due to their poor product offering. This lack of market demand could also be the 14% of small businesses that fail due to poor marketing.
Nearly a quarter of failing small businesses attribute their demise to their teams. 23% say their business failed due to a lack of having the “right” equipment. Another 17% failed because they lacked a business model and 14% ignored their customers.
Nearly half of self-marketing small businesses aren’t sure if their efforts are working. 17% know that they are not working. This supports the idea that marketing, especially digital marketing, is elusive for small businesses. Many owners reported that their biggest challenge is getting a break from their business long enough to try marketing.
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It is quite common for small businesses to experience financial challenges. What is the most prominent financial struggle? 43% say paying operating expenses is the hardest thing they face. The median cost to launch a retail business is $32,000, and store owners have reported starting with just $5,000 saved.
Less than 30% of owners predicted their sales would exceed $200,000 two years ago. Meanwhile, 43% of full-time businesses estimated that their sales would be below $50,000 that same year. These sales statistics were affected by the pandemic as prior to it in 2018, only 37% were estimated to earn less than $50,000 and 32% forecast sales greater than $200,000.
Small businesses that are not employers, so those who operate them on their own earn a modest income. A 2017 report showed that the average non-employer had receipts for less than $47,000. Another study found that 45% of these non-employers had incomes of less than $25,000 a year.
According to one study, the majority of small business owners (86.3%) are paid less than six figures. This is surprising when you consider that the national median salary for CEOs is around $158,000. So it can be concluded that owners take less than they probably would in other scenarios, perhaps to reinvest in the business, hire more staff and expand opportunities for wellness. of your business. 30.07% of small business owners don’t even get paid!
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Small Business Statistics found that the average amount needed to start a business is $10,000. However, micro-businesses can start with as little as $3,000. Also, it is estimated that a quarter of small businesses start with no financing at all!
A survey of 600 successful small businesses in the US revealed that 65% of them weren’t entirely sure they had enough money to start. Most of them (93%) predicted a completion rate of less than 18 months. Regardless of the lack of cash up front, 82% of respondents
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