40 Stand-Out Small Business Statistics [2026]: How Many Small Businesses Are In The United States?

Research Summary. Despite various challenges, small businesses remain a vital part of the American economy, adapting to new market conditions and continuing to drive innovation and job creation.

So, how many small businesses are currently operating in the U.S.? Our data analysis team has found that:

• There are 33.2 million small businesses in the United States.

• 61.7 million people in the U.S. are employed by small businesses.

• Small businesses have created an average of 525,000 new jobs each year since 2000.

• 20% of small businesses fail within their first year.

• Only 55% of small businesses survive five years or more.

For more detailed insights, see our analysis on:
Challenges| Trends | Demographics | Employment | Financing | Customers

Small Business Survival Rate by Years in Business

General Small Business Statistics

• Less than half of all employees in the United States work for small businesses.

  A Census Bureau survey found that approximately 47.3% of U.S. employees work for small businesses. This percentage has shifted slightly over the years, but small businesses still employ a significant portion of America’s workforce.

  Data shows that 5% of the U.S. workforce is employed at small businesses with one to four employees, 12.6% work at companies with five to 10 employees, 16.7% are employed at businesses with 20 to 99 employees, and 14% work for organizations with 100 to 499 employees.

• 88.1% of small businesses have fewer than 20 employees.

  According to the U.S. Census Bureau data, 56% of small businesses have one to four employees, while 32.1% have five to 19 employees.

  These small businesses employ nearly 18% of U.S. workers, with 5% at businesses with one to four employees, and 12.6% at firms with five to 19 employees.

• 99.9% of America’s business community is comprised of small businesses.

  Approximately 99.9% of businesses in the U.S. are classified as small, meaning they typically have fewer than 500 employees. Notably, small businesses contribute to nearly 45% of U.S. economic activity (GDP).

• New business applications continue to surge.

  In 2022, there were 1,536,432 new business applications, marking a record high and showcasing the entrepreneurial spirit in the U.S. Following this trend, 2023 has seen an increase in new business applications as well.

New Business Applications Through September (2022-2023)

Small Business Challenges

• Just 55% of small businesses survive past their fifth year.

  With 20% of small businesses failing within their first year and about 45% by their fifth year, the journey for small businesses can be challenging. Estimates suggest that only 25% of small businesses survive past 15 years.

• Financial management remains a top challenge for small businesses.

  Many small business failures are linked to financial management and cash flow issues. With 1 in 5 small businesses closing within their first year, effective bookkeeping and budgeting are crucial.

  Common pitfalls include mixing personal and business finances, neglecting expense tracking, poor budgeting, and errors in tax reporting.

• Loan approval rates for small businesses remain low.

  As of 2023, small business loan approval rates at major banks are approximately 13.8%, significantly lower than pre-pandemic levels. Small banks offer slightly better approval rates at around 19.1%, compared to over 50% before the pandemic.

• Cybersecurity threats are a growing concern.

  43% of cyber attacks target small businesses, yet only 14% have adequate defenses in place. Furthermore, 45% of small business owners believe their cybersecurity measures are insufficient.

• Phishing is the most common cyber attack.

  57% of cyber attacks against small businesses involve phishing or social engineering tactics.

Small Business Trends and Predictions

• Small business applications continue to rise.

  In 2022, the number of small business applications surged, continuing a trend of increased entrepreneurship across the country.

• Job availability at small businesses is changing.

  Currently, only 47% of U.S. employees work for small businesses, compared to 54.5% in 1988, indicating a shift in the job market landscape.

Small Business Demographics

• Approximately 30% of Americans are self-employed.

  As of 2023, approximately 28.2% of the U.S. labor force is self-employed, highlighting a robust entrepreneurial environment.

• Women-owned businesses are on the rise.

  32% of small businesses in the U.S. are owned by women, marking a significant increase in female entrepreneurship.

• California leads in small business numbers.

  California has the highest number of small businesses in the U.S., followed by Texas, Florida, New York, and Illinois. In these states, small businesses constitute 99.8% or more of all businesses.

Small Business Employees

• 43% of small business owners report high job satisfaction.

  Despite challenges, 43% of small business owners express that they are very happy with their jobs.

• Small business owners are working longer hours.

  Many small business owners work significantly longer hours compared to their corporate counterparts, often exceeding 50 hours per week.

• Remote work options are now prevalent.

  A significant number of small businesses are continuing to offer remote work arrangements, with many investing in technology to support this shift.

Small Business Financing Statistics

• Startup costs for small businesses vary widely.

  Initial startup costs can range from $2,000 to $5,000 for most microbusinesses, while ongoing costs can average around $184,830 annually for a small business with five employees.

• Many small businesses rely on retained earnings for funding.

  As of 2023, 69% of small business owners fund their operations with retained earnings, highlighting the importance of financial stability.

• Profitability rates have fluctuated.

  63% of small businesses reported profitability in 2020, reflecting the ongoing economic challenges faced during the pandemic.

Small Business Customers

• Consumer spending at small businesses is robust.

  47% of Americans shop at small businesses multiple times a week, which emphasizes their importance in local economies.

• Investment in local communities is significant.

  For every dollar spent at a small business, approximately 67 cents remain in the community, contributing to local economic growth.

• Social media usage among small businesses is high.

  77% of small businesses utilize social media for customer engagement, sales, and marketing efforts, reflecting the shift to digital platforms.

Small Business FAQ

1. What is a small business?

   In the U.S., a small business is defined as one with less than $40 million in revenue and fewer than 1,500 employees. The definition varies by industry based on employee count and revenue metrics. The U.S. Small Business Administration typically classifies small businesses as those with fewer than 500 employees.

2. What is the success rate of small businesses?

   The success rate of small businesses is 80% in the first year, declining to 25% by year 15. Generally, small businesses have a 55% survival rate during their first five years. However, these rates decrease as the business ages.

3. Are small businesses important to the U.S. economy?

   Yes, small businesses are crucial to the U.S. economy. They account for an estimated 45% of GDP and employ nearly 60 million Americans.

4. How many new small businesses start each year in the U.S.?

   Approximately 625,000 new businesses open each year, according to the SBA. However, many of these face significant challenges in their early years.

5. What percentage of small businesses are profitable?

   About 63% of small businesses are profitable. This figure reflects a decline compared to previous years, primarily due to economic disruptions.

Conclusion

With small businesses comprising 99.9% of all businesses in the United States, it’s evident that they play a crucial role in the economy, employing around 61.7 million Americans. The current landscape shows an estimated 33.2 million small businesses operating, with 88.1% employing fewer than 20 individuals.

While challenges such as access to financing, competitive pressures, and cybersecurity threats persist, the future of small businesses looks promising. Approximately 47% of Americans shop at small businesses frequently, contributing significantly to local communities and the overall economy.

References

1. JP Morgan Chase Co. “Small Businesses Are An Anchor Of The U.S. Economy.” Accessed in 2023.

2. U.S. Small Business Administration. “2023 Small Business Profile.” Accessed in 2023.

3. Forbes. “2023 Small Business Trends and Challenges.” Accessed in 2023.

4. U.S. Census Bureau. “Annual Business Survey Release Provides Data On Minority-Owned, Veteran-Owned, And Women-Owned Businesses.” Accessed in 2023.

Author

Elsie Boskamp

Elsie is an experienced writer, reporter, and content creator. As a leader in her field, Elsie is best known for her work as a Reporter for The Southampton Press, but she can also be credited with contributions to Long Island Pulse Magazine and Hamptons Online. She holds a Bachelor of Arts degree in journalism from Stony Brook University and currently resides in Franklin, Tennessee.