In a nutshell: Big businesses may get all the attention, but 99.9% of all companies in the United States are, in fact, small businesses.

Reading the news, you might think that large companies are the only companies operating in the United States. But that’s not the case. Start-up and small businesses rarely get the credit they deserve, but they are the engine that drives the national economy due to their enormous power to create and maintain jobs. Here are some facts to help put small business in perspective.

Unless noted otherwise, all information cited is from the U.S. Small Business Administration’s (SBA’s) advocacy website.

What Is a Small Business?

The SBA defines a small business as any for-profit organization with fewer than 500 employees. There are small businesses in every industry sector. The majority of small businesses are self-employed individuals; these firms are classified as nonemployers as they have no other paid employees.

How Many Small Businesses Are There?

There are nearly 30,000 businesses in the United States, as 99.9% are small businesses. When nonemployer businesses are excluded, small businesses with paid employees are 99.7% of all companies.

Small Businesses Do Much Commerce Abroad

Small companies are making a mark in imports and exports. The U.S. Department of Commerce says that 98% of importers and 97% of exporters were companies with fewer than 500 employees. In terms of dollar value, these companies combined only accounted for one-third of all international trade.

Many Small Businesses Are Not Young Businesses

One-fourth of all small businesses are more than 20 years old. Nonemployer businesses tend to be younger, on average, than other small businesses.

Many small businesses are owned by minorities:

  • Women-owned: 9.9 million businesses with $1.4 trillion in annual receipts
  • Black or African-owned: 2.6 million businesses with $150 billion in annual receipts
  • Veteran-owned: 2.5 million businesses with $1.4 trillion in annual receipts
  • Hispanic-owned: 3.3 million businesses with $474 billion in annual receipts
  • Asian-owned: 1.9 million businesses with $700 billion in annual receipts
  • American Indian and Alaska Native-owned: 272,000 businesses with $39 billion in annual receipts

How Often Do Small Businesses Fail?

There’s little doubt that start-ups and small businesses do fail, but the chances of shutting down decline significantly the longer the business has been open. For small businesses with employees, two-thirds survive at least two years and half survive at least five years. These rates are fairly consistent across different industries — including restaurants.

Why Do Start-Ups Fail?

There are many theories about why start-ups fail — Google links to thousands of pages on this very topic — but some of the most likely culprits are:

  • Poor management
  • Lack of experience
  • Insufficient cash flow
  • Lack of market demand

For resources to help launch or run your start-up or small business, check out the Small Business and Smart Management sections here on Business Administration Information.

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