Small Business in the US by the Numbers
Maybe you’ve heard that small businesses are the backbone of the United States economy. Or that small businesses are the biggest employers, job creators, and contributors to the National Gross Domestic Product (GDP). Frankly, we hear a lot of things about how great the United State’s small businesses are.
We’re here to tell you it’s true.
Yes, the mighty small business owner is the cornerstone of the day-to-day functioning of the United States. If we’re being honest, pretty much of the world’s economy. To the small business owners out there we say, “Kudos to you brave visionary, risk-taker, lover of the local, and all-around winner!”
Wait, is there some doubt? Let the numbers speak for themselves….
Small Business by the Numbers
How many small businesses are there in the United States? 28 million. That’s correct: 28 million small businesses in the United States. Not impressed? To put this in perspective, there are 18,500 large companies in the US. That’s 28,000,000 versus 18,500. Small businesses look great from this angle!
Of those 28 million, more than 22 million small businesses in the United States are individually operated, without any employees.
As impressive as the sheer number of small business owners, the number of Americans that rely on small businesses for employment is staggering. The most recent count, based on the 2010 Census, estimates individuals who are employed by small business at 120 million. That’s nearly the population of France and the United Kingdom combined. Considering that the United States has a total population of almost 324 million, it should be apparent by now that small business is big.
Demographics of Small Business Owners
Small businesses are both dearly beloved and diverse. Entrepreneurship has always been a gateway for underrepresented populations, especially minorities, women, and LGBTQ communities. There are significant strides to be made before the U.S. has a truly representative small business community, but small business owners are taking the lead. Despite the challenges of equality of access to resources like funding, loans, and societal barriers, entrepreneurship is one gateway to economic mobility.
This is what diversity looks like, according to the Small Business Administration’s data:
A gender gap still exists in the small business community: women-owned businesses are only 35.9% of the total small businesses in the United States. At 51%, the number of women in the United States is slightly more than half of the total population, so there is still plenty of room for the small business community to welcome women entrepreneurs. The same holds true for Latino-owned businesses in the United States. Latinos make up 17% of the total US population, with a population of 55 million, but the percentage of Latino-owned businesses was only 10.3% in 2012. The African-American population is faring slightly better in terms of small business ownership. African-American make up 13.2% of the United States population, and they own 11% of the country’s small businesses.
Small Business Contributions to the Economy
If you own a small business, it can be difficult to know if you’re going to make it. The overall failure rate of small businesses is almost 50%. Despite this, some small businesses do succeed and because of their success, so does the American economy.
The US has a GDP of almost $17 trillion. A GDP, or Gross Domestic Product, is a quantitative measure of the United State’s total economic activity.
The United State’s small business community contributes approximately $8.5 trillion to the economy, roughly half of the total $17 trillion GDP.
What does all this mean for the American small business owner?
We Work Smarter Together
The sheer size, scale, and economic power of American small business is unparalleled. For all that power, it is unfortunate that the small business community continues to be disconnected from one another, and have little voice in politics. It’s time to change that. It’s time that small business owners have an easy and meaningful way to connect with one another. This is the foundation of Townsquared: a free private network exclusively for small, local businesses.
Every day, small businesses are joining Townsquared with the intention of building a more connected, informed, and empowered small business community. Whether it’s working together on local issues, or confronting national issues, Townsquared members understand that we work smarter when we work together.