According to a recent Pew Research Center survey, most U.S. adults (86%) say small businesses have had a positive impact on current national trends. In fact, small businesses received the most positive ratings of her nine U.S. institutions we questioned, surpassing even the military and churches.
Despite their name, small businesses are a big part of the United States. According to the Small Business Administration, these businesses (defined here as businesses with 500 or fewer employees) make up 99.9% of U.S. businesses. Most of these 33 million companies have no paid employees, and about 6 million of them have no paid employees. do. They account for just under half (46%) of all private sector employment.
As National Small Business Week approaches, let's take a look at America's small businesses and the public's attitudes toward them, based on federal data and research from the Center.
Pew Research Center conducted this analysis ahead of National Small Business Week to provide a glimpse into the current state of small businesses in the United States.
For the purpose of this analysis, a “small business” is defined as an employer business with fewer than 500 employees. This analysis is primarily based on data from several sources, including the Census Bureau's Annual Business Survey (ABS), Business Dynamics Statistics (BDS), and Business Formation Statistics (BFS).
The ABS has been conducted annually since 2017 and covers all U.S. non-farm businesses with paid employees and revenue of $1,000 or more. In the survey, the majority company owner is characterized as holding more than his 51% of the company's stock or capital. The Census Bureau counts multiracial business owners based on all racial categories they identify with. Hispanic business owners can be of any race. Learn more about ABS methodology here.
Data on the era of small and medium enterprises are obtained from the BDS. Data on the annual number of high trend business applications in the United States is based on the number of Employer Identification Number applications used for tax purposes and is not seasonally adjusted. Learn more about the BFS methodology here. Per capita calculations use state-level resident population data from the Census Bureau. Estimates are as of July 1, 2023.
This analysis also builds on recent Center findings. For more information on these research methods, please see the links in the text.
Notes on the definition of “small and medium-sized enterprises”
There is no single way to define “small business.” Economists may use facility or firm size or rely on industry-specific size standards based on average revenue. For this analysis, we used the U.S. Small Business Administration's broadest definition of an employer firm with fewer than 500 employees.
Ann Establishment is a business with one physical location.a hard is a business organization that may have multiple locations (that is, multiple facilities).
How “small” is a small business??
The latest estimates for 2021 from the Census Bureau's Annual Business Survey (ABS) show that of the approximately 6 million small businesses with employees, 49% have only one to four employees. About a quarter (27%) of employees have between 5 and 19 people. 8% he has 20-99. And only 1% of companies have between 100 and 499 employees. The remaining 14% had paid employees at some point this year, but not during the March 12 pay period that ABS uses to determine employment size.
Overall, small businesses employed an estimated 56.4 million workers and generated more than $16.2 trillion in revenue in 2021, according to ABS data. Perhaps unsurprisingly, small businesses with large numbers of employees tend to account for a larger share of total revenue than small businesses with fewer employees.
Who owns and operates small businesses?
While some small businesses are family-owned, the majority are not. Of the small businesses that reported this type of information in 2021, 27% were family-owned and 73% were not.
So-called “mom and pop stores” represent a relatively modest proportion of small businesses for which information is available. Overall, in 2021, his 10% of small businesses in the United States were equally jointly owned and operated by spouses. A further 11% were jointly owned by spouses but operated separately, with men more likely than women to be the primary manager.
Franchising is less common among small businesses. Only 5% of small businesses that reported this information operated fully or partially as a franchise in 2021.
From a demographic perspective, small businesses overall have a higher proportion of men. In 2021, approximately six (61%) of small businesses were majority-owned by men, and 22% were majority-owned by women. A further 14% were owned equally by men and women. (ABS defines majority ownership as owning at least 51% of the company's stock.)
Looking at small businesses for which estimates of majority owner race and ethnicity are available, most (85%) had majority ownership by White people in 2021. Small stocks are Asian American (11%), Hispanic adults (7%), and Black or African American adults (3%). Approximately 1% are estimated to be majority-owned by American Indians and Alaska Natives, or Native Hawaiians and other Pacific Islanders.
Related: A look at black-owned businesses in the US
Despite owning fewer shares in these companies overall, many Black and Asian Americans view entrepreneurship as an indicator of success, according to the center's research.
For example, 30% of Asian Americans say owning a business is important to their idea of the American Dream, according to the center's survey conducted from July 2022 to January 2023. .Additionally, 36% of Black adults say owning a business is important to them in their personal definition of financial success, and an additional 22% say it is financial success. necessaryaccording to a September 2023 study.
Still, Blacks and Asian Americans are more likely to value other indicators asked in these surveys, such as home ownership, a good family life, and being debt-free.
How many years ago have most small businesses been established?
Many small businesses have stood the test of time. As of 2021, the majority of these businesses (59%) had been in operation for at least six years, according to the Census Bureau's Business Dynamics Statistics. This includes 15% of his companies that have been in business for more than 25 years.
At the other end of the spectrum, nearly a third (35%) of small businesses were less than five years old in 2021, and 9% of them launched in the last year. (The bureau was unable to determine how old the remaining 6% of companies were in business.)
How often do new businesses open?
Small businesses are reporting financial and staffing challenges in the years following the coronavirus pandemic.But federal data reveals the staying power of entrepreneurship in the United States
According to Census Bureau data, the number of high-propensity business applications (applications that are likely to be a payroll business) remained relatively stable from 2009 to 2019. However, the number of applications is higher than before the pandemic, with approximately 1.8 million trending business applications in 2023, up from approximately 1.3 million in 2019.
At the state level, populous locations had the most business applications in 2023. Florida (225,809) topped the list, followed by California (221,571), Texas (151,888), New York (131,206) and Georgia (80,403). . However, the states with the most applications were Missouri, Wyoming, Delaware, Florida, and Colorado. per person That year.
