Small businesses drive the U.S. economy. Small businesses employ almost half of America's total workforce and account for 43.5% of America's GDP. They are an important part of the economic ecosystem where large and small businesses are vendors, employees, partners, and customers of each other.
This data center includes facts, statistics, and data visualizations about the contributions of small businesses to the economy and the unique challenges faced by Main Street businesses.
Small businesses revitalize the economy.
Percentage of U.S. companies are small and medium-sized enterprises
small and medium sized businesses in the usa
Over the past 20 years, small businesses have accounted for approximately 40% of the U.S. gross domestic product (GDP), representing trillions of dollars of economic activity. In 2014, small businesses generated approximately $5.9 trillion. By comparison, large corporations generated $7.7 trillion in national GDP in the same year.
Small businesses are large employers.
of Americans are employed by small businesses
Americans employed by small businesses
Although most small businesses (80%) have no employees, small businesses provide jobs for nearly half of America's workforce. The chart below shows how companies create millions of jobs with overtime. For example, all small businesses that employ 10 to 19 people add up to more than 500,000 jobs to the U.S. economy over a 10-year period. And small businesses pay a lot.On average, small businesses pay The employee earns $30.42 per hour, or $63,000 per year.
Jobs created by small and medium enterprises 1996 – 2021
Small business jobs created after pandemic recession
Small businesses are innovative.
Small business owners who make meaningful contributions to the economy and job creation also exemplify America's innovation and entrepreneurial spirit.
Entrepreneurship has boomed in the years following the COVID-19 pandemic. Records were broken in 2021 alone 5.4 million new business applications were filed, and in 2022, nearly the same number of 5.1 million were filed.
Check out the interactive map below that tracks the latest data on the surge in entrepreneurship in each state and county across the country.
Click on a state to see details.
SBA data shows that small businesses historically filed the majority of patents even before the pandemic. Companies with 5 to 9 employees have more patents per employee than any other company, nearly twice as many patents as large companies in 2016. That same year, small employers (1-4 employees) filed more than 270 patents per employee. 10% of all patents filed that year.
Small businesses are suppliers, vendors, and customers.
Small and medium-sized enterprises are an important part of the supply chain. If invoices are not paid immediately, small businesses must cover unpaid revenue through additional lines of credit. Bridging financing options for small suppliers ultimately increase costs and minimize profits for companies.
Unfortunately, late payments occur frequently. On average, half of all invoices are not paid on time.American Chamber of Commerce Immediate payment pledgeWe are asking businesses to pay their small suppliers and vendors faster.
Ownership of small businesses is diverse.
The innovation and diversity of small businesses is a reflection of the entrepreneurs behind them. Almost half of small business owners are women, and four out of ten small business owners are foreign-born.
One in five is owned by racial minorities, with Hispanics making up the majority. In fact, according to the SBA, Hispanic owners handle one in four of his new businesses. Collectively, Hispanic-owned businesses pay more than $100 billion annually to 1 million employees.
Small businesses face major challenges.
Once small businesses hit the ground, they must fight to stay in the air. Small businesses must build brand recognition and consumer trust while simultaneously competing for market demand, employees, and funding. According to data, 20% of small businesses go bankrupt in the first year, and 65% go bankrupt within their 10 years.
Data shows that lack of market demand and lack of capital are two of the biggest challenges small business owners face in keeping their doors open. In addition, to survive the current economic situation, Attract and retain talent and are resilient after unexpected crises? Natural disasters These are also part of the current reality of being a successful small business owner.
Small businesses with the highest success rate:
Many small and medium-sized enterprises are self-financed.
Capital is one of the strongest headwinds small businesses face. The smallest businesses (0-4 employees) are most likely to use personal savings to finance their operations. Larger small businesses (5-500 employees) still tap into personal savings, but are more likely to rely on credit cards and local banks and credit unions to fund their businesses.
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Managers of small and medium-sized enterprises are shown Loan applications are time-consuming, there is little information available about funding sources, and ineligibility remains the biggest barrier to securing financing.
Small businesses are having trouble finding workers.
Labor shortages are also a headwind facing small business leaders. There are currently 9.6 million jobs available in the United States, but only 5.8 million unemployed workers are needed to fill them.
41% of small business leaders Indicated They are struggling to fill job openings, with over 90% having trouble finding qualified applicants. The highest concentrations of small business employees are in education and health services, professional and business services, wholesale and retail trade, manufacturing, and leisure and hospitality. These same industries include most severely affectedLabor shortages are putting pressure on small business employers.
Learn more about the labor shortage and understand the current state of the U.S. workforce at the America Works Data Center.
Small businesses are healthy. They are concerned that the economy is not.
Q2 2023 shows that even though the majority of small business owners report that their businesses are healthy, they remain concerned about the broader economic outlook in the country. MetLife and the U.S. Chamber of Commerce Small Business Index . Only 24% of small business owners say the U.S. economy is doing well. Slightly more (30%) say their local economy is healthy.
Small business owner claims his business is in good shape
Small business owners say they are satisfied with their cash flow
The overall Small Business Index score fell slightly from 62.1 to 60 in the first quarter survey as small business owners' outlook for the national economy weakened. They are not alone in their concerns. According to the CEO Confidence Index, the trustworthiness of CEOs of large companies had hovered around 6.3 points at the beginning of the year, but had slightly declined to 6.1 points out of 10 in March 2023.
How the U.S. Chamber of Commerce supports small businesses.
The U.S. Chamber of Commerce has a long history of supporting and advocating for small businesses. We work every day to give small businesses a bigger voice in Washington, connect entrepreneurs with federal officials, and advocate for policies that help small businesses grow, not hinder them.
our Small Business Councilis a group of 100 small business owners from across the country who regularly travel to Capitol Hill to lead our efforts and advocate for policies that keep Main Street businesses thriving.
Since 2017, we have partnered with MetLife to conduct a quarterly survey of small and medium-sized businesses. Small business indexprovides valuable insight into the current challenges and opportunities for small businesses and informs our advocacy in Congress.
Through our small business platform CO—which helps nearly 20,000 businesses every day and had over 6 million site visitors last year alone, provides the tools and insights small businesses need to ensure their resilience in the face of any challenge. doing.
Learn more about the U.S. Chamber of Commerce's small business activitieshere.
Looking for the latest small business outlook?
Every week, the U.S. Chamber of Commerce's deputy director for small business policy summarizes the latest data and what it means for the health of America's small businesses.
About the author
Stephanie Ferguson is Director of Global Employment Policy and Special Initiatives. Her research on labor shortages has been cited in the Wall Street Journal, the Washington Post, and the Associated Press.
Isabella has created amazing visualizations that address pressing issues such as the worker shortage, the benefits of hiring veterans, the longevity of small businesses, and the future of work.