Small businesses and start-ups are the pillars of the economy all over the world. With a considerable low risk of failure in the first year, more and more people are choosing to work for themselves over traditional employment. Owning your own business provides freedom and gives room for more creativity, but it might be scary due to the attached uncertainties. This is why we have prepared some statistics and facts to help established and aspiring entrepreneurs understand their industry a little better.
Small businesses are run by entrepreneurs and are the heart of today's economy. Below, we have highlighted some compelling stats and facts on entrepreneurship for 2020.
The facts and statistics listed above show that entrepreneurship is common across the globe. These stats also show that a significant number of entrepreneurs are not dropouts, as is commonly believed. Keep reading to learn more interesting facts.
From salaries to work hours and funding, we have compiled some of the most relevant statistics essential for the modern-day entrepreneur.
(Source: The Hill)
Entrepreneurs can be found everywhere around the world. A survey of 65 countries attained the number of active businesses and start-ups. Entrepreneur statistics from 2017 revealed that there were over 582 million entrepreneurs that year. The survey did not include closed businesses or businesses that were temporarily inactive.
(Source: Fit Small Business)
In 2018, the United States had over 15 million entrepreneurs. In the same year, the US ranked number one out of 137 countries as the best country for entrepreneurs. Entrepreneur statistics show that the United States has a 15.6% early-stage entrepreneurial activity. This makes it one of the highest amongst other developed countries. Experts say that by the end of 2020, the US would have 27 million full-time entrepreneurs.
(Source: Fit Small Business)
A significant proportion of businesses today were founded by their current owners. Entrepreneur data show that just 11.3% of entrepreneurs purchased their business. Also, 4.4% had the business transferred to them, and only 2.8% of entrepreneurs today inherited their business.
More than half of American entrepreneurs kick off their businesses from the comfort of their homes. This is thanks to technological advancements and other factors. Entrepreneurship growth statistics indicate that people who own homes are 10% more likely to operate their businesses from their houses.
In a survey, 95.1% of entrepreneurs said they had obtained a bachelor's degree. Another 47% were found to have higher degrees. Furthermore, 37% of those surveyed claimed to have been among the top 10 in college, and 52% said they were one of the top 10 in high school.
Entrepreneur statistics from 2018 show that many entrepreneurs obtained their capital from their own savings. The remaining 20% are funded by family members, investors, alternative lenders, or bank loans. Approximately 39% of entrepreneurs prefer to take the additional business loan to keep things going, while around 33% rather chose to downsize, cutting on staff and horse. Unfortunately, 28% of entrepreneurs simply decide to ignore their obligations. Some risks can be easily mitigated by opting for business insurance services and learning which risks can make your venture fail.
(Source: Small Business Trends)
Approximately 58% of business owners launched with less than $25,000. Lack of money can either make or break a business. Statistics show that 65% of business owners said they were not confident about whether they had sufficient funds to start their business. A small business study revealed that 93% of small business owners expected their business to survive for just 18 months due to a lack of sufficient funding.
Short-term loans are more accessible and are usually used for one-off business ventures. This is also true for lines of credit, also known as short-term lines of credit. They are accessible, and the average amount is $20,000. Furthermore, big banks generally loan an average of $564,000 and small banks, $184,000. Lastly, the average loan amount from the Small Business Administration, SBA, is $107,000.
Non-employer businesses are businesses without employees, where everything is run by a single person. New business statistics show that some entrepreneurs without employees, kick off their businesses without startup capital. This is also true for 7% of new businesses that have employees.
Studies suggest that the next wave of entrepreneurs would quit their jobs to control their careers fully. This number ties with a career change as another reason for being entrepreneurs at 43%. Other reasons, such as finance, family, and health issues, follow at 33%, 32%, and 15%.
Statistics on entrepreneurs revealed that a considerable amount of self-employed people make more money than they did working 9-5 jobs. 59% admitted having to work harder in their businesses. A whopping 68% said being entrepreneurs brought a proper balance between work and other aspects of their life. 55% said they have better health, and 49% admitted it was less stressful.
Although being an entrepreneur provides flexible working hours and gives you control, the pay isn't very attractive. Entrepreneurs statistics show that the average yearly salary for entrepreneurs is between $30,104, and $182,229 per year. This figure is variable as the pay depends on the industry and the location of the business. For larger corporations, the CEO earns an average of $161,361 yearly, while the average wage worker earns $56,492.
Starting your own business doesn't necessarily mean fewer working hours. But it provides control and flexibility. In a survey of hundreds of businesses, 30% said that they worked 50-59 hours weekly, 19% said they worked for more than 60 hours a week, and 5% said they worked for less than 30 hours a week. Also, 44% of entrepreneurs said they take 16 days or more in a year to go on vacation, while only 2% said they never take any leave.
(Source: Small Business Trends)
Statistics about entrepreneurship show that businesses with two owners are likely to make 30% more money than a sole owner would. Also, these kinds of businesses tend to have three times more user growth and 19% less likely to experience premature scaling.
(Source: Washington Post)
Entrepreneurs with experience working in the same field are more likely to be successful. According to a study, the most successful businesses were owned by older entrepreneurs. Entrepreneur facts statistics show that the average age of these successful owners is 45. With more experience comes wisdom and, consequently, more investors.
(Source: Startup Stockpile)
The truth remains, you're not too old nor too young to start your business. The average age for entrepreneurs when they launched their first business is 40. Entrepreneur stats show that 5% of business owners were either divorced, separated, or widowed when they started their first business. Also, 60% had at least one child, while 44% had two or more children when they launched their first business.
(Source: FinanacesOnline)Studies suggest that New Zealand is the easiest country to start a business. On average, it takes just a day to start up a business. In comparison, Canada, Australia, Belgium, and the UK take more days. In the United States also, starting up a business is not an easy task. It takes around 6 days.
Entrepreneur startup statistics rank the District of Columbia as the best city for business start-ups in the country. With 71.1% of its population made up of youths aged 25-34, experts say Washington D.C. is the ideal place for entrepreneurs. It is followed by North Dakota, Colorado, and Nebraska. West Virginia was ranked as the least favorable place for entrepreneurs in the US.
Statistics about entrepreneurs revealed that 19.6% of self-employed professionals are construction workers and people who own one trade or the other. This group makes up the majority of entrepreneurs in the United States. This is followed by entrepreneurs in retail at 10.9%. Entrepreneurs in real estate, consulting, and personal/household services account for 10.7%, 10.3%, and 9.0%, respectively.
Minority groups in the US comprise US citizens who are Black, Hispanic, Asian, and Native American. Business ownership by minority individuals implies that the business is at least 51% owned by the minority group. In this section, we have stated some stats on businesses owned by minority individuals in the US. Let's take a look at them:
(Source: Small Business Trends)
A survey carried out in 2018, revealed that American businesses owned by minority ethnic groups, increased from 15% in 2015 to 45% in 2018. African Americans accounted for the most significant increase. Minority-owned business statistics from 2018 noted a massive 400% increase in the number of businesses owned by African Americans, between 2017 and 2018. More stats revealed that Hispanics were the second-largest minority business owners, accounting for 14%. Asians and Native Americans followed this at 8% and 4%, respectively.
Minority ethnic entrepreneurs, bring in $1 trillion in revenue to the American economy yearly. Furthermore, states such as Washington, Georgia, and Maryland, have the highest number of businesses owned by minority groups. Minority businesses make up about 28% of all businesses in Washington, D.C.
Minority business owners tend to receive higher interest rates on loans and shorter payback durations than white business owners. Statistics on small businesses show that minority businesses with lower than $500,000 in their yearly receipts are not likely to receive funding. This issue also stems from minority business owners having less net worth and thus not having enough collateral for these loans.
According to Entrepreneurship statistics, most African Americans open up small businesses that are under the service industry. 11% are involved in retail and 9% in transportation, communication, and utilities. 7% are involved in construction and 5% in finance, insurance, or real estate. However, 12% remained uncategorized in the survey.
(Source: Small Business Labs)
The growth rate of minority businesses is astounding and is ten times faster than the US SMBs growth rate. According to statistics, the number of businesses owned by minority ethnic groups experienced a 79% growth between 2007 and 2017. This number is estimated at 11.1 million.
In the US, an independent business owned and managed by one or more women who are Americans is referred to as a women-owned business. This business is controlled by at least 51% of American women. Below are some statistics and facts on businesses owned by women.
The US entrepreneurship statistics show that women entrepreneurs are increasing steadily. Compared to just 402,000 businesses in 1972, the number of women-owned businesses has since exploded. More stats show that these businesses owned by women make $1.8 trillion each year. However, it only accounts for 4.3% of the total revenue in the private sector.
People who identify as women, own 4 in every 10 businesses in the United States. While men remain the majority of business owners, these numbers are impressive. Entrepreneur statistics from 2019 revealed that women started 1,821 new businesses every day in that year. Additionally, women of color were the driving force in 2019, as they accounted for 64%.
Women-owned businesses contribute an impressive quota to curbing unemployment in the US. An estimate of 8% of Americans are employees in women-owned businesses. Also, statistics on entrepreneurship in the US show that women-owned businesses are growing yearly at 5%. This growth rate is incredible as it is growing two times faster than other firms.
Studies show that the number of women-owned businesses that sought loans increased by 13% in 2018. However, the average loan amount received by women-owned businesses in that year was 31% lower than men-owned businesses. Statistics on small businesses revealed that the average loan amount received by enterprises owned by women in 2018 was $48,341, while men-owned businesses received $70,239.
Considering that African American women only make up 13.7% of the US women population, this is quite incredible. Still, compared to other minority women groups in the US, they have a 20% lower yearly revenue. Entrepreneurial statistics show that African American women-owned businesses have an average annual revenue of $24,000, while other minority groups have $142,900.
Becoming an entrepreneur can be tasking and challenging. This section was created to inform established business owners and all the aspiring entrepreneurs out there. Here are some intriguing stats on the survival rate of small businesses
As scary as the failure rate of businesses may be, it shouldn't stop you from starting your business. The entrepreneurship failure rate shows that just about 20% of businesses don’t make it past their first year. It gets better when you realize that the chances of your business failing reduce as the years go by. Multiple statistics indicate that only 10% of businesses that survive the fifth year fail in the sixth year. Also, just a 6% fail in the tenth year.
The health care and social assistance industry has the fastest growth rate, compared to other industries surveyed. Research shows that this industry is projected to grow by 21% in the coming years. Small business statistics show that 85% of businesses in this industry make it through their first year. About 75% also survive their second year, and 60% remain active by their fifth year.
The claim that restaurants have a higher failure rate than most industries is a myth. Statistics show that restaurants have the same failure rate as insurance agencies. An extensive study covering about 98% of businesses in the United States revealed that restaurants are 2% less likely to fail than other service businesses. The research also showed that restaurants had a higher survival rate than real estate agencies, which have a 21% failure rate. Lastly, restaurants with 21 employees or more have nine months longer lifespan than other businesses of similar size.
Entrepreneurship data indicates that the construction or transportation and warehousing industry has the highest risk of failure. According to some statistics, about 75% of businesses in the construction industry make it through the first year. 65% survive the second, and just 35% are still in business by the fifth year. For the transportation and warehousing industry, 75% survive the first year, and 65% survive the second. Just 40% make it to the fifth year.
(Source: Guidant Financial)
Research shows that 32% of small business entrepreneurs reported inadequate cash flow as a major challenge. More entrepreneurship stats revealed that 22% were faced with the issue of recruiting quality hires and retention of employees. However, there was a 13% drop in the number of business owners facing difficulty in tasks like bookkeeping and payroll.
Entrepreneurs are the people behind small businesses. Small businesses are the pillars of the economy. While the risk of failure might be glaring, the chances of survival are promising. Taking the bold step of starting your business will not be easy, but statistics show that it would most likely be worth it.
Research shows that the longer a business survives, the more likely for the entrepreneur to record high profits. Entrepreneurship statistics show that about 78% of small businesses are profitable. About 80% of small businesses are still active after a year, and 50% remain in business after five years. Furthermore, businesses that have been active for about eight years are the most profitable generating up to 78% profit.
The primary reason for business failure amongst entrepreneurs is the lack of demand and cash. Research shows that 75% of all venture-backed companies fail. Stats on small businesses revealed that 20% of all businesses never make it past their first year. About 70% survive their third year while 62% are active after the fourth year. Lastly, the failure rate of businesses in the United States after five years is 50%.
A significant proportion of entrepreneurs today do not have a college business degree. Entrepreneur statistics show that only 26% of today’s entrepreneurs are college graduates. 18% have a postgraduate degree, and 14% have an associate degree. Also, 20% stopped their education at a high school level, and 5% did not complete high school.
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