Small Business Statistics (2026)

The United States has about 36.2 million small businesses, which the SBA Office of Advocacy generally defines as firms with fewer than 500 employees. That is 99.9% of all US businesses: the overwhelming majority of the private economy is small (see the table below).

They are not a rounding error on the economy either. Small businesses employ 62.3 million people, or 45.9% of the private-sector workforce, and account for 43.5% of US GDP. In short, small firms are close to half the jobs and payroll of the country.

The word "business" conjures a storefront with staff, but that is the exception. Roughly 8 in 10 small businesses have no employees at all: the Census Bureau counted 30.4 million nonemployer establishments in 2023, about 78.4% of all US establishments (see the table below).

These are freelancers, gig workers, sole proprietors, and side hustles. In the SBA's own tally, 81.9% of small businesses had no employees and only 18.1% (about 6.3 million firms) had any payroll at all. The typical American "business" is one person.

Even among the firms that do hire, most are small in the plainest sense. Of roughly 6 million employer firms, about 49% have just 1-4 employees and another 27% have 5-19, so about three-quarters of all employers have fewer than 20 people (see the table below).

Firms with 100 or more employees are barely 2% of the total. This long tail matters: policy debates about "small business" often picture a 200-person company, but the median employer is closer to a corner shop with a handful of staff.

The no-employee segment is not just large, it is the fastest-growing. From 2012 to 2023, nonemployer businesses grew about 2.7% a year on average, more than double the 1.1% pace of employer firms, per the Census Bureau. The employer share of all businesses fell from 24.6% to 21.6%.

The pandemic accelerated it: nonemployers jumped 4.9% in 2021 and 4.7% in 2022 as remote work and platform gigs proliferated. The solo economy now earns nearly $1.8 trillion a year, about 6.4% of US GDP on its own (Census).

Small businesses carry close to half the private-sector labor market. They employ 62.3 million workers, 45.9% of private employment, and pay 38.7% of total private-sector payroll (the payroll share is a bit lower than the jobs share because small firms pay less per worker on average).

The concentration varies sharply by state. In Montana small businesses account for 66.3% of employment, in Wyoming 65.2%, and in Vermont 62.1%: in rural states, small firms are effectively the whole job market.

Beyond jobs, small businesses generate 43.5% of US GDP, a benchmark the SBA Office of Advocacy has tracked for years. That means nearly half of everything the private economy produces comes from firms with fewer than 500 workers.

Their combined revenue is enormous: small employer firms alone reported more than $16.2 trillion in receipts in the latest Census figures, on top of the roughly $1.8 trillion earned by the nonemployer solo segment.

Small businesses are the economy's hiring engine. Over the latest year of data (March 2023 to March 2024) they created about 9 of every 10 net new jobs, adding a net 1.2 million positions, and opened 1.1 million new establishments (SBA).

That outsized share is a recurring pattern, not a one-off. Young and small firms churn: they hire aggressively when they launch and grow, which is why they drive net job creation even though many also close each year.

Starting is easy; surviving is not. About 22.1% of new US businesses close within their first year, roughly half (48.6%) are gone within five years, and 65.3% have shut by year ten, per BLS Business Employment Dynamics data (see the chart and table below).

The attrition is front-loaded. If a firm makes it past the first few years, its odds improve markedly, but the ten-year survival rate of about 35% means only one in three startups reaches its first decade. Of nearly 1 million recent openings, 218,861 closed inside twelve months.

Survival depends heavily on what you do. Information (28.4% first-year failure), professional/scientific/technical services (25.5%), and administrative services (24.3%) are the riskiest, while agriculture (14.3%), accommodation and food services (14.7%), and retail (15.6%) fail least often in year one (see the chart and table below).

The ordering can be counterintuitive: restaurants have a fearsome reputation, yet their first-year failure rate is below average. Over a decade the gaps widen, with information firms failing 70% of the time versus 47% for agriculture.

The cleanest long-run measure follows a single class of firms over time. Of all private-sector establishments born in March 2013, just 34.7% were still operating in March 2023, according to BLS (BLS).

By industry, agriculture, forestry, fishing and hunting survived best at 50.5%, followed by utilities (45.7%) and manufacturing (43.6%). Mining, quarrying, and oil and gas extraction fared worst, with just 24.5% of 2013 startups still alive a decade later.

When founders explain failure after the fact, cash and demand dominate. In CB Insights' analysis of startup post-mortems, running out of cash or failing to raise capital (38%) and no market need (35%) top the list, followed by getting outcompeted (20%) and a flawed business model (19%).

Running out of money is usually the symptom, not the disease: firms burn through capital because the product had no market, the timing was wrong, or the unit economics never worked. Note this sample is self-selected startups, not a representative census of all small businesses, so treat the percentages as directional.

Despite the odds, Americans are starting businesses at a record clip. New business applications hit 5,479,144 in 2023, the most ever recorded, edging past the prior peak of 5.41 million in 2021 and running far above the roughly 3.5 million of 2019 (see the chart above).

Formation cooled slightly in 2024 (fourth-quarter applications were down 4.2% year over year) but remained historically high. The surge since 2020 marks a durable step-change in entrepreneurship, not just a pandemic blip (Census Business Formation Statistics).

Ownership is broadening but still skews. Among about 5.9 million employer firms in the 2023 Annual Business Survey, 22.3% were women-owned, 22.6% were minority-owned, and 4.7% were veteran-owned (see the table below). A firm can count in more than one group.

Counting all businesses including solo ones, Census data show roughly 61% are majority male-owned and 22% majority female-owned, while about 85% are majority white-owned, 11% Asian American, 7% Hispanic, and 3% Black-owned.

Most small businesses are modest earners. More than half of all small businesses generate under $100,000 in annual revenue, and more than 90% bring in under $1 million. The average nonemployer earns only about $59,000 a year (roughly $1.8 trillion across 30.4 million firms, a derived figure).

The small-but-mighty exception is exports: in 2023, 97.2% of all US exporting firms were small (270,014 businesses), and they accounted for 33.0% of the export value of identified firms (SBA).

If you own or are starting a small business, the data argue for humility about odds and rigor about cash: half of firms do not reach year five, and the ones that die most often ran out of money chasing demand that was not there. Validate the market and guard runway before scaling.

As an investor, the same numbers explain why diversification matters. A single small company is a coin-flip over a decade, which is the case for owning a broad basket of established firms rather than betting your savings on one venture. Concentrated small-business risk is exactly the risk a diversified portfolio is built to spread.