Small Business Statistics 2024: Unlocking Key Trends and Insights

Small businesses are the backbone of the American economy. Our team compiled the most relevant statics of small businesses in 2024 to explore the current landscape of these vital enterprises.

Outline:

• Guidant’s Survey
• Forbes’s Survey
• Semrush’s Survey
• Frequently Asked Questions about Small Business Statics
• Conclusion

Guidant’s Survey

Here are the top statistics of Guidant’s annual Small Business Trend.

Business Type

Indie businesses are surging! Their share jumped 4% this year, while franchises dipped by the same amount. This trend is even stronger for startups: 27% of new businesses are independent, up from 21% last year. 

Meanwhile, only 32% of new businesses are franchises, and just 10% are existing franchises bought by someone new.

Top Industries

The top 3 industries for small businesses haven't changed from last year (Retail, Food and Restaurants, and Health & Beauty/Fitness). 

Here is the list of the top 9 leading industries:

1. Retail (16%)
2. Food and Restaurants (13%)
3. Health & Beauty/Fitness (12%)
4. Residential & Commercial Services (9%)
5. Construction (8%)
6. Business Services (7%)
7. Lodging (6%)
8. Education (5%)
9. Manufacturing (5%)

Top Plans for 2024 

• Increase Staff (24%)
• Invest in Digital Marketing (18%)
• Expand or Remodel (17%)
• Invest in Traditional Marketing (10%)
• Other (32%)

Cost to Start 

• < $50K (4%)
• $50K - $175K (27%)
• $175K - 250K (15%)
• $250K - $500K (27%)
• $500K -  $1MM (16%)
• > 1MM (13%)

Top States

• Texas (10%)
• California (9%)
• Florida (9%)
• Georgia (6%)

Small Business Biggest Challenges

77% of small business owners expect to survive in today’s economy. 5% don’t expect to, and 18% are unsure, which correlates with the biggest challenge identified: inflation or price increases.

Biggest challenges:

1. Inflation/Price Increases (23%)
2. Recruiting/Retention (19%)
3. Lack of Capital/Cash Flow (16%)
4. Marketing/Advertising (9%)
5. Administrative Work (8%)
6. Supply Chain Issues (7%)

Although 77% are optimistic about their survival, only 65% of businesses are currently profitable.

Small Business & AI

Most small businesses (83%) aren't using AI yet, even though it can boost efficiency and decision-making. 

Writing tools (ChatGPT, Jasper) are the most popular type of AI (21%), while others like image generation (4%) and inventory management (2%) are less common.

This might be because some industries, like food service (1.2%) and construction (1.2%), don't see a strong need for AI. On the other hand, information businesses (13.8%) use AI more than average.

A big reason for the slow adoption is that many owners (77%) just don't understand AI or its benefits. However, AI is likely to become more common across industries in the future.

Happiness Level of Small Business Owners

A significant majority (73%) reported feeling happy.  Within this group, 36% were very happy and 37% were somewhat happy. 

The remaining 27% were less happy, with a breakdown of 15% neutral, 8% somewhat unhappy, and 4% very unhappy.

Demographics of the Small Business Owners

Age Range

• Gen X (47%)
• Boomers (37%)
• Millennials (16%)

Gender

77% male and 26% female.

Ethnicity

• White (79%)
• Other (7%)
• Black (6%)
• Hispanic (5%)
• Asian (3%)

Education

• Bachelor's (44%)
• Master's (27%)
• High School/GED (15%)
• Associates (11%)
• Doctorate (4%)

Motivation to go into business

• Ready to be my boss (28%)
• Dissatisfaction with Corporate America (23%)
• Wanted to pursue my passion (14%)
• Opportunity to present me (11%)
• Not ready to retire (9%)
• Laid off / Jopb Outsourced (9%) 
• Other (7%)

The demographics of Guidant’s annual Small Business Trend (2024) relate in some aspects to MediaCulture’s survey (April 2023) that describes 51% of the entrepreneurs as: 

• 55 years old or older
• 80% are white
• 63% male

Of the 20% not white, only Asians were overrepresented owing 11% of small businesses while making up only 6% of the population

Election Year Insights

Political Parties

• Republican (43%)
• Democrat (19%)
• Libertarian (5%)
• Unaffiliated (33%)

Confidence in Political Climate

• Very confident: 5%
• Somewhat confident: 25%
• Neutral: 23%
• Somewhat unconfident: 32%
• Very unconfident: 14%

Feelings About Biden Admins' Response to the Economy

• Strongly liked: 2%
• Liked: 8%
• Neutral: 29%
• Disliked: 23%
• Strongly disliked: 37%

The small business vote

• Donald Trump (32%)
• Joe Biden (19%)
• Ron Desantis (16%)
• Nikki Haley (15%)
• R.F. Kennedy Jr. (4%)

Small Business Teams: Solo to 50+ Employees

21% of small businesses are run by solo entrepreneurs, reflecting a five-point increase from last year. 

Most businesses (36%) maintain small teams of 2-5 employees, highlighting the prevalence of close-knit workforces. 

Beyond solopreneurs and small teams, there's a range of businesses with larger teams: 

• 30% with 6-20 employees
• 10% with 21-50 employees
• Combined 3% with teams exceeding 50 employees (2% for 50-100 and 1% for over 100).

It's an awesome survey to gain insights into business owners, isn't it? You can view the full infographic from Guidant's here.

Forbes’s Survey

Here are the main highlights of Forbes.

Small Business Employment Statistics

• 99.9% of all U.S. businesses are small businesses (33.3 million)
• Nearly half of all U.S. employees are employed by a small business (45.9% of the entire U.S. workforce, totaling 61.6 million people)
• 8 out of 10 small businesses operate without employees

Small Business Job Creation

• Small businesses have added over 12.9 million jobs in the last 25 years
• The leisure and hospitality industry has the highest average of jobs added per month over the last year
• The industry experiencing the highest demand for workers is professional and business services.
• The industry with the highest projected job growth is home health and personal care
• The number of U.S. jobs will increase by 87,000 in 2024
• By 2032, the number of U.S. jobs is projected to increase by 4.7 million

Small Business Salaries & Wages

Small business owners earn an average salary of $69,119, 16% higher than the national average wage of $59,428. 

But that number can swing wildly. Some owners make an average salary of $32,000, while others $147,000.

Online Small Business Statistics

• Only 71% of businesses have a website
• Over 25% of business is conducted online
• 76% of online consumers browse a company's website before visiting their physical store or location

Small Business Survival Statistics

• 20% of businesses fail in the first year, 30% by year two. By the five-year mark, 50% of businesses have ceased operations.
• Running out of money is a major hurdle for new businesses. 38% of failed businesses cite exhaustion of cash reserves or inability to secure additional funding.
• 42% of small businesses that fail within the first five years do so because of a lack of market demand, making it the second most common reason for closure.

Semrush’s Survey

Here are the main statistics gathered from Semrush's post.

Consumers’ Preference for Small Businesses

• 73% of Gen Z and 75% of Millennials would shop more at small businesses if they offered the same ease of shopping as large chain stores (GoDaddy, 2023)
• 64% of Americans experience a twinge of guilt after shopping at big chain stores, suggesting a preference for supporting local businesses (AT&T, 2022)
• 73% of consumers believe small businesses provide a more personal and positive customer service experience than large corporations  (Zendesk, 2019)
• 77% say they'd be happy to spend more at a small business that offers exceptional customer service (Zendesk, 2019)

Small Business Financing Statistics

Many small businesses rely on personal savings, credit cards, and local financial institutions (U.S. Chamber of Commerce, 2023) to get their ventures off the ground. 

A significant portion (60%) carry a debt load of $50,000 or less (Federal Reserve Board of Governors, 2022).

Characteristics and Habits of Small Business Owners

• Running a small business requires dedication. Over half (more than 50%) of owners report working more hours now compared to last year (U.S. Chamber of Commerce, 2023)
• A strong tradition continues! Nearly a third (28%) of small businesses with employees are family-owned (SBA Office of Advocacy, 2023)

Marketing Statistics for Small Businesses

• 15.3% handle marketing themselves, and a larger portion (56.9%) have dedicated in-house marketing teams (Campaign Monitor, 2023)
• Facebook remains a dominant platform (70%), followed by email marketing (64%) and paid search advertising (43%) (Campaign Monitor, 2023)

• Email marketing delivered the highest return on investment out of all channels for small business marketers in 2023 (Campaign Monitor, 2023)
• Small business marketers rank influencer marketing and SEO marketing as the most difficult channels to leverage (Campaign Monitor, 2023)
• Almost 50% report their marketing efforts are effective (Keap, 2020)

Frequently Asked Questions about Small Business Statics

What is the success rate of small businesses?

20% of businesses fail in the first year, 30% by year two. By the five-year mark, 50% of businesses have ceased operations.

Why do small businesses fail?

The most common reason why small businesses fail in their initial years is running out of money, accounting for 38% of closures. The second leading cause is a lack of market demand, particularly affecting 42% of businesses that reach the five-year mark.

What percentage of the market is small business?

99.9% of all U.S. businesses are small businesses (33.3 million).

What is the average small business?

• Demographics: The typical owner is likely to be a Gen Xer (47%) or Boomer (37%), male (77%), and white (79%). They're likely to have a college degree (71%).
• Motivations: The most common reasons for starting a business are independence (28%) and dissatisfaction with traditional work (23%).
• Industry & Location: Many businesses are in retail, food & beverage, or health & beauty. The top states are Texas, California, and Florida.
• Size: Most businesses are small! 21% are solopreneurs, and 36% have 2-5 employees. The remaining 43% have teams ranging from 6-100+ employees.
• Revenue: Owners earn more than the national average ($69,119 vs $59,428) but with significant variation.

Conclusion

Based on the statistics about small businesses, we can learn more about who they are, their needs, interests, challenges, and how we can help them achieve success. 

I hope this content helps you tailor your strategies and messages even more effectively! If you want to connect with local businesses or learn more about Resquared, visit our website.

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Sources:

• Guidant’s annual Small Business Trend 2024
• Forbes Small Business Statistics Of 2024
• 50 Small Business Statistics to Know in 2024
• U.S. Small Business Administration Office of Advocacy 
• Bureau of Labor Statistics (BLS)
• Federal Reserve Board of Governors
• U.S. Chamber of Commerce
• Zendesk
• Campaign Monitor
• Keap
• AT&T
• GoDaddy
• MediaCulture