Many people dream of starting their own business to have more financial freedom, more flexibility, or simply to work in a different field. Check out these small and medium-sized business statistics and find out where to start.
Starting a business from scratch and setting up an online store can be a daunting task. It can be especially scary if you’re not familiar with your chosen niche and haven’t yet considered topics like investing in social media management and marketing campaigns. With hard facts and figures, you’ll have a better understanding of the risks and opportunities you may encounter in the process.
With this in mind, we have compiled the following eleven small and medium-sized business statistics. We hope these numbers will help you understand the importance of SMEs in the economy and their impact on local communities.
INTERESTING SMALL AND MEDIUM-SIZED BUSINESS STATISTICS
THERE ARE 32.5 MILLION SMES IN THE US
According to the latest small and medium-sized business statistics, there are 32.5 million small businesses in the United States, representing 99.9 percent of all businesses.
A small firm is one with less than 500 employees, according to the Small Business Administration (SBA). As a result, a lot of intriguing startups in the US fit this description of a small firm.
Small business is defined differently in each nation. But in the EU, businesses with less than 50 workers are regarded as small businesses. In Australia, a small business is one with fewer than 15 employees.
Most U.S. companies, according to small business data, employ fewer than 500 people. Additional examination of these data reveals that there are roughly 23 million companies with fewer than 20 employees and 38 million companies with fewer than 100 employees.
SMALL AND MEDIUM-SIZED BUSINESSES GENERATE 44% OF U.S. ECONOMIC ACTIVITY (GDP)
The market value of the goods and services generated by companies in the United States, whether they are employee-owned or owner-operated, is known as the gross domestic product (GDP). In 1998, SMEs produced nearly half (48%) of GDP; by 2014, that share had fallen to 43.5%. However, the government views SMEs as critical because they lead innovation, create jobs, and contribute to economic growth.
WOMEN REPRESENT 52.34% OF ALL SOLE PROPRIETORSHIPS
Women are more likely to be independent than to run a business with employees. Additionally, data demonstrates that there are few female founders of major corporations. Women own just 32.59% of companies with four or more employees. In the US, women are the owners of 45% of companies. The gender pay gap is narrowing as more women run firms in the United States. In 2020, 54.98% of U.S. businesses will be owned by men, down significantly from 60% in 2018.
IN THE U.S., 50% OF BUSINESSES ARE HOME-BASED
A few years ago, telecommuting was a dream. However, advances in technology have made it possible to work from home. Statistics on home-based work show that 50% of SMEs work from home, of which 60.1% have no employees.
12% OF SMES HAVE NO EMPLOYEES OTHER THAN THE OWNER
Sometimes the owners themselves manage the business. Statistics show that there are approximately 2.5 million veteran-owned businesses in the United States, of which more than 2 million are run without employees. In some cases, owners run small repair or service businesses themselves.
44% OF US ECONOMIC ACTIVITY IS CONTROLLED BY SMES
Approximately 90% of the world’s businesses are SMEs and 50% of global jobs are created by SMEs. According to the World Bank, SMEs account for 40% of national income. Most SMEs depend on loans from domestic banks and generate economic flows that indirectly contribute to national development.
65.3% OF SME OWNERS REPORT THAT THEIR BUSINESS IS PROFITABLE.
SME growth statistics revealed that the top three priorities of entrepreneurs this year are increasing staff (51.04%), restructuring or expanding their business (41.02%), and increasing investment in digital marketing (39.70%). In addition, aspiring entrepreneurs should focus on hiring reliable staff, investing in digital marketing, and providing a competitive experience for their customers.
SIX OUT OF TEN SMALL BUSINESSES GREW ORGANICALLY OR WITH FINANCIAL SUPPORT
JP Morgan’s SME profitability statistics also show that SMEs are the most vulnerable. 31% of organically grown companies and 20% of financed growth companies do not survive to the fourth year. Many SMEs generate revenue through partnerships with other SMEs, which is a perfectly healthy way to grow a business. Recent reports on SME success rates confirm that financing is not the only way to grow a business. More than 50% of small businesses grow organically, generating revenue primarily through partnerships with other small businesses.
ONE-THIRD OF SMALL BUSINESS OWNERS START WITH LESS THAN $5,000
Lack of funding remains one of the main reasons why many people fail to launch the business of their dreams. It is also the reason why many start-ups fail. In a survey of more than 600 small business owners, 58% said they started their business with less than $25,000. Of those, 93% said their business would only last 18 months due to a lack of funds.
SOCIAL MEDIA IS THE MOST POPULAR ADVERTISING PLATFORM FOR SMES
About 87% of SMEs advertise their products on online platforms. Social media remains the most used platform (64%), while 49% use other platforms. According to Small and medium-sized business statistics, the most used social media application is Facebook at 86%. This is followed by YouTube (51%), Instagram (47%), and Twitter (41%). For knowing it better first read the small business marketing statistics.
DIGITALLY ORIENTED SMES ARE BETTER PREPARED FOR MARKET FLUCTUATIONS
71% of existing SMEs survived the pandemic through digitization. 35% of emerging SMEs digitized less than 50% of their processes before COVID-19 and adopted more customer-facing online services, such as contactless payments, contactless pickup and delivery, and alternative COVID services to protect their business.
In terms of revenue, SMEs that have adopted technology pay twice as much to their employees as those that have not. In addition, digitized SMEs have four times the annual revenue of non-digitized SMEs. So fully digitized SMEs are three times more likely to grow their business and create jobs in the coming year. Rankster Tech is one of the top companies in the US that provides digital marketing services for small and medium-sized businesses.
The year 2022 will undoubtedly be a pivotal year for small business activity around the world. With the coronavirus pandemic bringing unexpected changes and new challenges, it is important to have all the data to determine the next steps.
It may not be the best time to start a business, but the truth is that there are many untapped opportunities in the e-commerce space. Now you know all the small and medium-sized business statistics, then what is stopping you to start your business?
And as you take your first steps into the world of e-commerce, it’s worth taking advantage of Rankster Tech‘s digital marketing and web development services.