It might be tempting to assume that headline-dominating large employers control all aspects of the U.S. economy, but that would be a mistake. Small businesses play an important role in creating jobs, sending products overseas and generating wealth for thousands of families.
Consider these nine amazing facts about small businesses in the U.S. from the Small Business Administration’s (SBA) Office of Advocacy, which recently released updated data. The office defines small businesses as an independent business with fewer than 500 employees.
1. Nearly all small. Virtually all U.S. firms are small businesses. Small businesses comprise 99.9 percent of all firms and 99.7 percent of firms with paid employees. Out of 29.6 million businesses, all but 19,000 are small. (2014 data)
2. Exporters? You bet. Nearly all U.S. exporters are small businesses. Small exporters numbered 287,835 in 2015, representing 97.6 percent of all exporting firms, and they were responsible for $440 billion in exports (32.9 percent of total known export value).
3. Job generators. Small businesses generate three-fifths of net new jobs, driving a big share of U.S. employment growth. In total, small businesses employ 58 million, or 47.8 percent of all private-sector employees.
4. Family’s all in. About one in five firms are family-owned. Industries that have the highest share of family-owned businesses are management of companies and enterprises (46.4 percent of firms in this industry are family-owned), real estate and rental and leasing (37.3 percent), and accommodation and food services (33.2 percent).
5. Home grown. Half of firms are home-based. This share of businesses has remained pretty constant over the last decade. A home-based business may have business activities taking place outside the home, but it is operated primarily out of the home. Nearly a quarter of small employer firms are home-based, while 4 of every 5 firms without paid employees are home-based. Only 0.3 percent of large employer firms are home-based. Industries where home-based businesses dominate are information (70.0%), construction (68.2%), and professional, scientific, and technical services (65.3%).
6. High-tech hiring. Nearly all employer firms (98.5 percent) in high-tech industries are small businesses. The majority of the 248,122 small employer firms in high-tech industries provide services in either computer systems design or architecture and engineering.
7. Industrious immigrants. Immigrants make up about one-seventh, or 14.4 percent, of U.S. business owners, with the greatest share of foreign-born owners in accommodation and food services (29.1) and transportation and warehousing (27.5 percent).
8. Bootstrappers. Business owners more often use personal and family savings to finance expansions (21.9 percent of small firms) than they use business loans from financial institutions (4.5 percent). Business profits and assets (5.7 percent) and business credit cards from banks (3.3 percent) are other popular sources of capital.
9. Survival rates. The one-year survival rate for businesses hit 79.9% in 2016 – the highest share since 2006. About half of all establishments survive five years or longer, and only one-third survive 10 years or more.
