Small Business Demographics in the U.S.

There’s no denying the power of big companies and household name brands. But if you really want to get to the heart of business ownership in the United States, what you really need to explore? Small business ownership.

Small businesses play a huge role in creating new jobs and supporting the economy. But how many small businesses are there in the US? What are their business demographics—or, in other words, what kinds of businesses are they? And how are those small businesses responsible for moving our economy forward?

Let’s take a look at the state of small businesses in the United States—how many there are, what industries they’re in, and how small business ownership contributes to the economy in the US:

What Does “Small Business” Mean?

First things first—before we jump into how many small businesses there are in the United States, let’s quickly cover how the term “small business” is defined.

The U.S. Small Business Administration Office of Advocacy generally defines a small business as “an independent business with fewer than 500 employees.” The SBA, however, does have larger small business size standards for certain industries, including government contracting.

How Many Small Businesses Are There In The United States?

Now that you understand how small businesses are defined, let’s jump into the facts—starting with how many small businesses there are in the US.

According to the SBA Office of Advocacy’s most recent Small Business FAQs (which uses data from the US Census Bureau’s Statistics of U.S. Businesses, Nonemployer Statistics, and Small Business Pulse Survey, which collected data on how COVID impacted the small business community), as of 2020, there are 31.7 million small businesses in the United States—a solid one million increase from the 30.7 million reported in the 2019 report.

The most common number of employees of those small businesses? Interestingly, none. Of those 31.7 million businesses, 25.7 million—or 81 percent—have no employees (self-employed individuals known as “nonemployers”). The other 9 percent—or 6 million—are employer firms with paid employees. Of the small businesses that employ paid workers, an employee count of between 24 and 99 is the most common.

How Does The Number Of Small Businesses Compare To The Total Number Of Businesses In The US?

31.7 million is a lot of businesses—but how, exactly, does that number compare to the total number of businesses in the country?

According to the SBA Office of Advocacy, there are currently 21,139 large businesses in the United States—which means that small businesses make up a whopping 99.9% of all firms in the US. 

Small firms also make up:

• 99.7 percent of businesses with paid employees
• 97.5 percent of exporters
• 32 percent of known export value

How Many Americans Are Employed By Small Businesses In The United States?

Clearly, small businesses make up a huge part of the total businesses in this country. But how many people do those small businesses employ—and how many new jobs are those businesses creating?

Today, small businesses employ 60.6 million people in the US. That’s nearly half (47.1 percent) of the private sector workforce (those small businesses are also responsible for 40.3 percent of private sector payroll). 

Small business owners are also responsible for creating a huge percentage of the new jobs in America, directly contributing to the health and growth of the US economy. According to the Office of Advocacy’s 2020 Small Business Profile, small businesses created 1.6 million new jobs in 2019—and between 2000 to 2019, small companies created 10.5 million new jobs (65.1 percent of all jobs created during that period).

What Industries Have The Largest Share Of Small Business Employment?

While you can find businesses with a smaller firm size in virtually every industry, there are certain industries that tend to attract more startups, emerging small business owners, and people interested in starting their own business.

According to the Office of Advocacy, the industries that have the highest levels of small business employment in 2019 include:

• Health Care and Social Assistance: 8,984,159 workers
• Accommodation and Food Services: 8,542,661 workers
• Retail Trade: 5,526,296 workers
• Construction: 5,373,702 workers
• Professional, Scientific, and Technical Services: 5,190,980 workers
• Manufacturing: 5,039,772 workers
• Other Services (except Public Administration): 4,697,878 workers
• Administrative, Support, and Waste Management: 3,754,463 workers
• Wholesale Trade: 3,413,157 workers
• Finance and Insurance: 1,909,993 workers
• Transportation and Warehousing: 1,685,388 workers
• Educational Services: 1,645,96 workers
•  Real Estate and Rental and Leasing: 1,451,546 workers
• Arts, Entertainment, and Recreation: 1,428,531 workers

Get Out There and Start A New Business of Your Own

Clearly, small businesses make up a huge part of the economy in the United States—and even as we continue to navigate the challenges of COVID, that’s not going to change. So, if you feel the call to entrepreneurship, get out there and start a small business of your own!