The US small business landscape tells an eye-opening story. A whopping 32.5 million small businesses operated across the country in 2022. These enterprises represent 99.9% of all American businesses. Small business owners form a remarkable economic powerhouse that stands both strong and vulnerable.
These businesses face major hurdles despite their huge numbers. The first year proves tough as 21.9% of small businesses don't make it. Each year, about 595,000 businesses shut their doors across the United States. But there's a brighter side to this story.
Most small businesses thrive, with 65.3% turning a profit. They generate 43.5% of the nation's GDP. The private sector workforce depends heavily on these enterprises, which employ 46% of all workers.
Our detailed analysis of small business statistics for 2025 uncovers fascinating facts about growth, success rates, failure patterns and revenue trends. Business owners and aspiring entrepreneurs can learn about the small business world through these numbers that will guide them through their business journey.
Surprising small business statistics you didn’t expect
Small business statistics in America tell a fascinating story that goes way beyond simple numbers. These surprising facts paint a different picture than most owners might expect.
99.9% of U.S. businesses are small businesses
Small businesses don't just have a seat at the table in the American business world—they are the table. The Small Business Administration (SBA) considers any business with fewer than 500 employees as small, and these enterprises dominate the U.S. business scene. This massive presence amounts to about 32.5 million small businesses across the country.
These small companies create 1.5 million jobs each year and make up 64% of all new jobs in the United States. Small businesses aren't just plentiful—they drive job creation in America.
Over 80% have no employees
A surprising fact shows that about 81% of small businesses run without any employees. These owner-operated ventures typically exist as sole proprietorships.
The numbers tell an interesting story: out of 32.5 million small businesses in America, about 26.4 million are one-person operations. This reality breaks the common perception of small businesses as local shops with staff. America's typical small business is actually a solopreneur—a freelancer, consultant, or independent contractor working solo.
More than 50% are home-based
Most people picture small businesses in storefronts or office spaces, but reality looks different. About 52% of all small businesses operate from home.
This trend has gained momentum since 2020 as technology makes remote work and digital business models easier than ever. Aspiring entrepreneurs should note that many successful businesses start in kitchen tables, spare bedrooms, or home offices—not expensive commercial spaces.
Women own 42% of small businesses
Small business ownership's face has changed over the last several years. Women now run 42% of all U.S. small businesses—roughly 13 million companies. These women-owned enterprises employ about 9.4 million workers and bring in over $1.9 trillion in revenue.
In spite of that, challenges remain. Women entrepreneurs still find it harder to access capital, and their loan approval rates stay lower than their male counterparts. We have a long way to go, but we can build on this progress as women continue to alter the map of entrepreneurship.
Minority ownership is growing faster
Minority business ownership stands out as one of the biggest changes in small business demographics. Minority-owned businesses now make up more than 18% of all U.S. small businesses—about 8 million companies.
These businesses grow at rates nowhere near the national average. From 2007 to 2018, minority business ownership jumped by 27%, while overall small business growth reached just 8%. Hispanic-owned businesses showed remarkable growth at 46% during this time.
Among other positive signs, minority business owners face unique hurdles, especially in funding. Only 31% of minority-owned businesses receive their full funding requests from lenders, compared to 49% of non-minority firms. This gap shows ongoing systemic barriers despite recent gains.
What counts as a small business in 2025?
The label "small business" covers way more types of companies than most people think. The SBA doesn't just count local coffee shops or boutiques as small businesses. They set specific size limits that change by a lot between industries. These limits help decide which companies can get federal programs and protection designed for smaller enterprises.
Employee and revenue thresholds
The Small Business Administration (SBA) still uses two main ways to define small businesses in 2025: how many people work there and yearly revenue. These limits aren't the same for everyone.
Different industries have their own employee limits:
- Manufacturing businesses can have up to 500-1,500 employees
- Wholesale trade companies must stay below 100-250 employees
- Transportation businesses can employ up to 1,500 workers
- Science and technology firms range from 150-1,500 employees
Revenue limits also change based on industry type:
- Construction companies qualify with up to $45 million in annual receipts
- Retail businesses can earn up to $47 million annually
- Agricultural enterprises have limits around $25 million
- A fruit and vegetable wholesaler qualifies differently than an apple orchard ($4 million versus $4.5 million)
These standards keep changing. The Small Business Jobs Act of 2010 requires the SBA to look at and update these limits at least every five years. They need to match current industry structures and market conditions. The SBA suggested raising size standards for 263 industries in August 2025. This would let more businesses qualify for federal contracts.
Small businesses must meet these basic requirements:
- They must make profit (any legal structure works)
- Someone must own and run them independently
- They can't dominate their field nationally
- They must operate in the U.S. or its territories
Companies need to count both their own numbers and their affiliates' when checking their size. Affiliates are groups that can control the business, even if they don't use that control.
Common misconceptions about 'small' businesses
People often think small businesses are tiny operations. The reality surprises many – companies with hundreds of workers and millions in revenue can still be "small" by federal standards. To name just one example, an aircraft maker with 1,500 employees still counts as small.
Business owners' freedom comes with limits. Studies show many owners skip vacations. About 26% never take two weeks off at once.
New entrepreneurs often think small businesses only take cash. This old model doesn't work anymore. People of all ages prefer tap-to-pay and digital payments. Businesses must adapt quickly.
Starting costs catch many first-time owners off guard. Basic needs like office supplies and insurance cost more than predicted. This creates cash flow problems.
Small businesses compete well with big corporations in quality and service. Research shows businesses that focus on customer experience see their revenue grow by 80%. Small companies excel here through tailored service and stronger relationships.
These companies shape America's economic foundation. From solo ventures to businesses with hundreds of workers, small businesses prove more diverse and powerful than most realize.
Small business success and failure rates
Small business success and failure rates in America paint a clear picture of entrepreneurship's tough reality. These patterns give business owners vital insights to help them succeed.
21% fail in the first year
Most people think small businesses fail right away. The truth is different – 79% of small businesses make it through their first year. Only 21% don't survive this critical time. The U.S. Bureau of Labor Statistics backs this up with similar numbers, showing 20.4% of businesses close within a year of opening. These survival rates have stayed steady lately, though they shift a bit with the economy.
The timing of a business launch plays a big role in its survival. Companies that started during tough times like the 2001 and 2008 recessions didn't do as well. Right now, about 595,000 businesses shut down each year in the United States. This represents about one-fifth of all new companies.
50% fail by year five
Year five stands as a major milestone many businesses never reach. The U.S. Bureau of Labor Statistics shows 49.4% of businesses don't make it to their fifth year. Different sources agree on this – the Small Business Administration reports that between 1994-2021, 49.2% of businesses survived five years.
A new business has about equal odds of reaching its fifth birthday. Most failures happen in the first two years. After that, the numbers keep dropping steadily through year five.
Only 34% survive past 10 years
Staying in business gets harder as time goes on. About 34% of businesses make it past ten years. The Bureau of Labor Statistics tells us 65.3% of businesses close before their tenth year. Looking at data from 1994-2021, the Small Business Administration found a similar 33.8% ten-year survival rate.
Companies that get through their early challenges often become stronger. About 69.5% of businesses that reach five years keep going for at least ten. This trend continues – 76.5% of ten-year-old businesses make it to fifteen years.
Healthcare has the highest survival rate
Each industry faces its own challenges. Healthcare businesses lead the pack in survival rates. They show a first-year success rate of about 60%, better than most other industries.
Several other industries also show strong staying power:
- Agriculture, forestry, fishing, and hunting (50.5% survive ten years)
- Utilities (45.7% survive ten years)
- Manufacturing (43.6% survive ten years)
- Real estate and rental/leasing (42.2% survive ten years)
These industries do well thanks to steady customer demand, high startup costs, and rules that protect existing businesses.
Construction and tech have the highest failure rates
Construction and technology businesses face the toughest odds. Two-thirds of construction companies close within five years. Looking at businesses that started in March 2011, only 35.9% were still running by March 2022.
Tech companies don't fare much better. The information technology industry sees one of the highest failure rates – 74.9% don't make it through their first year. Tech startups face even tougher odds. About 90% of them end up failing, and 10% close in their first year.
Mining and extraction businesses also struggle, with only 24.5% lasting beyond ten years.
These high failure rates in construction, tech, and extraction often come from high startup costs, fast-changing technology, unpredictable demand, and fierce competition.
These industry-specific patterns help entrepreneurs plan better and manage their risks in different sectors.
Hidden reasons small businesses fail
Small businesses often fail because owners miss early warning signs of hidden challenges. Statistics paint a clear picture of failure patterns. Learning why it happens can help owners spot danger signals before their business goes under.
Lack of market demand
About 35% of small businesses close because nobody wants what they're selling. This problem could easily be avoided, but many business owners rush to launch without doing their homework. They skip the research that would tell them if customers actually want their products.
Good market research helps find gaps in the market, checks if business ideas work, and tells you who might buy. Without this groundwork, businesses waste time and money on products that end up with no buyers. Companies that take time to study their market before launch have a much better shot at lasting success.
Running out of capital
Small businesses struggle to find affordable funding. Last year, 81% of owners who tried getting business loans found it tough to get reasonable rates. Money problems forced half to stop growing and kept 41% from grabbing new opportunities.
The core team faces some tough financial challenges: 77% deal with rising costs, 52% have cash flow problems, and half see weak sales. To cope, 53% use their personal money and 51% have used up their savings. Even businesses with plenty of customers can fold under money pressure if they run dry.
Poor management and planning
Bad management can tank a business fast. Research shows most business leaders don't know how to manage well. Good managers need to know how to delegate, motivate people, handle conflicts, and think ahead – skills that technical know-how alone won't give you.
Poor management hits hard: productivity drops, people quit, and money gets wasted. You'll see it in messy workflows, unclear rules, manual bottlenecks, and bad task handling. Businesses with better managers are more productive, make more money, and grow faster. That shows just how much good management matters.
Weak marketing strategies
The economy might be looking up, but 73% of small business owners doubt their marketing helps their goals. They're not sure which methods reach customers best and can't find time to run campaigns properly.
Marketing basics trip up many small businesses: 81% worry about the economy's effect on their business, and 56% spend just an hour or less each day on marketing. The biggest hurdles are finding new customers (60%), measuring success (33%), and limited time and money (32%). One study found 78% of small businesses fail because they lack a solid business and marketing plan.
Legal and compliance issues
Following regulations can get tricky for small businesses. Breaking legal rules can get pricey with fines, court battles, and possible shutdown. States might say a business has "fallen out of good standing" if it breaks the rules.
Businesses often slip up by missing yearly reports, skipping franchise taxes, losing their registered agent, or letting licenses expire. The fallout can hurt: losing your business name, getting locked out of courts, facing fines, personal liability, tax problems, and trouble expanding to other states. On top of that, it damages your reputation, which makes getting loans harder and more expensive.
Revenue and growth statistics you should know
Small businesses show remarkable patterns in revenue and growth across various sectors and regions. These revenue standards provide significant context for current entrepreneurs and anyone who wants to start a business.
Average revenue by business type
Business revenue changes substantially based on size and structure. Non-employer firms—businesses run by owners without extra staff—bring in yearly revenue of about $49,489.
The numbers look quite different when we add employees:
- Businesses with 1-4 employees make around $387,000 each year
- Companies with 10-19 workers pull in $2,164,000 annually
- Small businesses as a whole average $1,221,884 in yearly revenue
The size of a business directly affects its earning potential. Most non-employer firms (78%) make less than $50,000 yearly. All but one of these businesses (99.8%) generate less than $1 million in annual revenue.
Top-performing industries in 2025
Professional services, financial activities, wholesale and retail trade lead the pack in small business revenue. Each sector has between 3.5 to over 7 million businesses.
The fastest-growing small business sectors in 2025 include:
- Clothing and fashion retail (riding the e-commerce wave)
- Consulting services (perfect for seasoned professionals)
- 3D printing services (expected to reach $135.4 billion by 2033)
Healthcare stands out with strong survival rates and stable revenue among major sectors. Construction has shown impressive hourly earnings growth at 3.27% throughout 2024-2025, with workers earning $35.78 per hour on average.
How many small businesses are profitable?
American small businesses showed strong performance in 2022, with 65.3% operating profitably. Most small enterprises aim for profit margins between 7% and 10%.
Recent financial health surveys show:
- 65% of owners say their business is doing well
- 67% feel good about their cash flow
- 30% saw lower profits as of May 2024
A 2023 survey revealed that while 34% of small business owners made less than $50,000 annually, 9% crossed the million-dollar mark.
Small business growth statistics by state
Location plays a vital role in small business success. Wyoming, Colorado, and Florida rank as the top three states for small business success in 2025. Each state's performance depends on several factors:
- Wyoming leads in new business applications (1,954.6 per capita in early 2025)
- Florida has the most small businesses (13,822 per 100,000 people)
- New Hampshire approves the most SBA loans (22.3 per capita)
- North Dakota offers the biggest SBA loans ($751,082 on average)
The Midwest currently creates more jobs than other regions, with Ohio leading the pack in small business employment. Dallas tops all metro areas in small business job growth, thanks to its booming construction sector.
New business applications have doubled since pre-pandemic times, with over 5 million applications filed yearly since 2020. Entrepreneurs submitted 1.75 million new business applications by April 2024.
Funding facts that surprise most owners
Business owners find financing one of their toughest challenges. Many don't know about significant funding facts that could affect their success. Good business planning needs a solid grasp of these financing patterns.
78% of businesses are self-funded
Most entrepreneurs start their business with their own money. About 77% of startups without employees use personal funds to get started. Business owners keep using their own resources even after launch.
They put profits back into the business or use personal savings during growth. Entrepreneurs often try multiple funding approaches at once. They sell assets, ask family members to help, or sell products and services in advance.
Average startup cost is $30,000–$40,000
The cost to start a business often surprises new entrepreneurs. Small business owners typically spend $40,000 in their first year. A home-based business might need just $2,000-$5,000 to start. Brick-and-mortar stores need much more, usually $30,000-$100,000 or higher. Staff costs take up much of this budget. Each employee's total cost runs about 1.25 to 1.4 times their base salary.
Only 25% of SBA loans are approved
Most business owners can't get government-backed financing. SBA loans have just a 25% approval rate. Recent numbers show some improvement though. About 59% of applications got either full (34%) or partial (25%) approval in 2023. Race still plays a role in loan access.
White-owned firms got all their requested funding 56% of the time. Black-owned businesses only received full funding 32% of the time.
Credit cards vs. loans: what most owners choose
Credit cards have become more popular than traditional loans among business owners. Loans offer better deals with higher limits (up to $5 million for SBA options) and lower interest rates (6.6-13.75% vs 18-36% for cards). Credit cards give quick access to money without extensive paperwork.
Most small business credit cards need a good credit score (670+) but don't ask for specific business history or revenue levels. This easy access explains why 52% of small businesses used credit cards in part during economic downturns.
Conclusion
Small business statistics show resilience and importance in the American economy despite major challenges. These enterprises make up 99.9% of all U.S. businesses, yet many owners don't know the surprising facts behind the numbers. The sheer volume of 32.5 million small businesses shows their collective power, but a 21.9% first-year failure rate shows how risky entrepreneurship can be.
The data points in this piece challenge what most people think about small businesses. More than 80% have no employees, and over half run from homes instead of commercial spaces. The ownership landscape has changed too, with women now running 42% of small businesses.
Minority ownership has grown by a lot faster than the national average.
Each industry tells a different success story. Healthcare businesses have the best survival rates. Construction and technology ventures face tough odds. Business owners can set realistic expectations by learning about these industry patterns.
Every failed business has specific causes that owners can tackle head-on. About 595,000 businesses close each year mainly due to low market demand, not enough capital, poor management, weak marketing, and compliance problems.
Money matters make the business trip even tougher. Though 65.3% of small businesses turn a profit, most start small – 78% fund themselves with startup costs between $30,000-$40,000. Getting loans isn't easy, with only 25% of SBA loans getting approved.
These statistics give current and future business owners valuable context for their business trip. The small business world offers both chances and risks. Businesses succeed when they plan well, have enough money, manage well, and market smart – whatever industry or location they're in.
The numbers might look scary, but they also show how to succeed. Businesses that do detailed market research, get enough funding, use strong management practices, and create good marketing strategies have a better shot at joining the 34% that last beyond ten years.
Small businesses are the foundations of the American economy. They contribute 43.5% to the nation's GDP and employ 46% of private-sector workers. Their future depends on entrepreneurs who bring both passion and practical thinking to business ownership, guided by the real numbers that define small business success in 2025 and beyond.
FAQs
Q1. What percentage of U.S. businesses are considered small businesses?
An astounding 99.9% of all businesses in the United States are classified as small businesses, totaling approximately 32.5 million enterprises.
Q2. How many small businesses operate without employees?
Over 80% of small businesses in the U.S. are nonemployer firms, meaning they are run solely by their owners without additional staff.
Q3. What is the average startup cost for a small business?
The average startup cost for a small business ranges from $30,000 to $40,000, with first-year operational expenses typically around $40,000.
Q4. What percentage of small businesses survive their first five years?
Approximately 50% of small businesses survive their first five years of operation, according to data from the U.S. Bureau of Labor Statistics.
Q5. How do most small business owners fund their startups?
About 78% of small businesses are self-funded, with owners using personal savings, selling assets, or reinvesting profits to finance their ventures.
