How many small businesses exist in the US in 2024?
Small businesses are the backbone of the American economy.
They create jobs, drive innovation, and help to keep communities vibrant.
According to the Small Business Administration (SBA), the United States hosts 33.2 million small businesses.
American small businesses employ over 60 million people and generate over $2 trillion in annual revenue.
Small businesses come in many sizes, from quaint mom-and-pop stores to larger corporations.
They operate in every industry imaginable, from retail to manufacturing to services.
This article will explore the number of small businesses in the United States, their impact on the economy, and the challenges they face.
- The United States has 33.2 million small businesses.
- American small businesses account for 99.9% of all the nation’s businesses
- Small businesses attributed with around 63% of new jobs created between 1995 and 2021.
- In 2021, an all-time high of 5.4 million new business applications were filed in the United States.
- American small businesses were attributed with 63% of new job creation between 1995 and 2021.
- The global pandemic started a rise in new small businesses.
How Many Small Businesses Exist in the US in 2024?
The United States is home to 33.2 million small businesses. Overall, American small businesses account for 99.9% of all the nation’s businesses
In 2021, an all-time high of 5.4 million new business applications were filed in the United States.
One reason for the rise of small business that occurred in 2021 was due to the global pandemic.
More people decided to work for themselves after being laid off or otherwise losing their jobs to business closures and such.
When the doors opened to millions of Americans, they walked through it and started turning their ideas, hobbies, and passions into businesses that could be operated from their homes.
Moreover, several e-commerce businesses rose during this time.
Likewise, the business and professional services sector went on an uptake due to the demand for personal and business consulting services.
Therefore, new firms were formed under the category of small business.
(US Chamber of Commerce)
What is a Small Business?
A small business in the United States is defined as an independent business that employs fewer than 500 people.
The Small Business Association (SBA) is responsible for defining what a small business is and other aspects of small business.
Even though these are small businesses, they play a huge role in the American economy and its workforce.
Let’s find out how important small business is in America.
How Important is the Small Business Role in the United States?
Small businesses play a major role in the American economy overall, but they also drive local economies around the country.
Furthermore, small businesses create jobs. In fact, small businesses contributed 63% of new jobs created between 1995 and 2021.
While 80% (27.1 million) of all American small businesses have no employees, over 46% of all employees in the United States work for small businesses.
That accounts for about 61.7 million employees.
Furthermore, 16% of American small businesses employ between 1 and 19 people.
Out of the 33.2 million small businesses in the United States, just over 650,000 of them employ 20 to 499 people.
Therefore, small businesses are a crucial part of the American workforce and its economy.
(Forbes Advisor, SBA)
What are the Benefits of Owning a Small Business?
There are several benefits of small business ownership in the United States, which is why more people in the country are jumping on the bandwagon.
Let’s briefly look at some top benefits:
- Boss-free independence – You are your own boss
- Flexibility for determining the hours and days you will work – You can also work outside of business hours if needed.
- Control and power over your organization, culture, employee hiring, etc.
- Creativity and passion fulfillment – You can enjoy your workday instead of feeling like it’s a burden.
- Making money is one of the priorities of small business owners – You must determine if the risk of being your own boss is worth it for you.
(Business News Daily)
What are Challenges Small Businesses are Facing Today?
The number one concern and challenge for small businesses today is inflation.
When inflation is in play, this is always a challenge for everyone, including small businesses.
Data revealed that 53% of small business owners in the United States cite inflation as their biggest challenge.
Throughout 2022, inflation was at the top of the list in challenges for small businesses.
In 2023, inflation is up as it’s been going up by 30% year-over-year.
Inflation is a challenge, but so is revenue generation.
Revenue generation came in second to inflation as a small business challenge with 22% of them cited this is a major concern.
When inflation is part of the equation, small businesses must pay more for supplies, equipment, inventory, rent, and anything they pay to maintain operations.
When supplies and necessities for small businesses cost more, they are forced to raise their prices just to cope with inflation.
Therefore, inflation impacts everyone.
Rise in Interest Rates:
The rise in interest rates is another challenge facing American small businesses.
In fact, 16% cite rising interest rates as one of their top concerns.
The Federal Reserve, in an effort to help inflation, decided to raise interest rates across the board.
So, for small businesses that depend on their lines of credit, loans, and credit cards to finance operations, those rising interest rates are taking its toll.
In the professional service firm arena, 22% say that the rising interest rates is one of their major challenges.
Supply Chain Interruptions:
A disruption in the supply chains has been cited as a small business challenge by 20% of owners.
While this percentage is down from the third quarter of 2022 (26%), it’s still a concern.
If there is an interruption that causes delays in the supply chain, small businesses have problems serving customers and keeping their businesses running.
As you might imagine, the manufacturing small business sector cited this issue out of 29% of them.
It comes as no surprise that getting access to capital is a major challenge for small businesses.
With high inflation, rising costs, supply chain disruptions, high interest rates, and revenue concerns, access to capital is something they need.
This challenge has become more of an issue over the past year as 6% to 18% of business owners citing it as a major concern.
Company size has an impact on how challenging or large the concern is for finding credit or loan sources.
For instance, among small business owners with between 1 and 4 employees, 15% said getting access to capital was challenging.
However, small businesses with between 20 and 500 employees accounted for 6% of those that consider access to capital a top challenge.
This factor also depends on the location of the small business.
(US Chamber of Commerce 2)
We now know that small businesses are essential to the American economy.
They create jobs, drive innovation, and help to keep communities vibrant.
Although there are many benefits to owning a small business in America, there are also challenges as we discovered in this article.
Keep in mind, we only covered the top benefits and challenges.
There is much to learn before starting a small business.
We hope we have not only answered the question: “How many small businesses exist in the US,” and equipped you with valuable information.