Phone: (512) 447-2112
Address: 2204 Willow St, Austin, Texas, USA
Email: [email protected]
The numbers tell a stark story about small businesses in America. These 33.3 million enterprises make up 99.9% of all U.S. businesses. The harsh reality shows that 20% of them don't make it past their first year.
Small businesses stand as the true foundation of the American economy. These companies have generated more than 12.9 million jobs in the last 25 years. They create 1.5 million new positions each year, which represents 64% of all new U.S. jobs.
The success story has another side though. The survival rates drop by a lot as time passes. About 30% of businesses close their doors by year two, and half of them shut down by year five.
This piece will dive into the most relevant small business growth statistics and revenue data for 2025. We'll look at small and medium business statistics that show key success factors and red flags. These numbers will help you create strategies that keep your business thriving instead of becoming just another failed venture statistic.
The Real Numbers: What Small Business Statistics Reveal in 2025
Total number of small businesses in the U.S.
The United States has 36.2 million small businesses in 2025. This number shows a remarkable 9.7% growth since 2020.
The U.S. Small Business Administration defines a "small business" as an independent company with fewer than 500 employees.
These companies operate in a variety of industries, with the highest numbers in:
- Professional, Scientific, and Technical Services (4.88 million)
- Transportation and Warehousing (4.09 million)
- Other Services (3.86 million)
- Construction (3.66 million)
- Real Estate and Rental and Leasing (3.51 million)
Small businesses create jobs and boost economic growth. They give work to 59 million Americans, which makes up 46.5% of the private sector workforce. This number dropped slightly from last year's 61.7 million people.
Percentage of U.S. businesses that are small
99.9% of all U.S. businesses are small businesses. This huge majority shows how crucial these companies are to America's economy.
Think about this – one small business exists for every 10 Americans. This mix of small companies promotes competition, breakthroughs, and stability.
Small businesses generate 44% of U.S. economic activity. Over the last 25 years, they created two out of every three new jobs in America.
How many are solo vs. employer firms
Most small businesses run without employees. Recent data shows 29.8 million small businesses—82% of the total—are non-employer firms.
The employer firms break down like this:
- 5.72 million businesses have 1-19 employees
- 654,501 businesses have 20-499 employees
About 55% of all small businesses operate from home. Most solo operations (78%) earn under $50,000 yearly, which shows the money challenges many owners face.
Women own 42.7% (12.7 million) of all non-employer businesses, bringing in $411.6 billion. Women-owned employer firms keep growing, reaching 1.3 million in 2022, up from 1.1 million in 2017.
How Many Small Businesses Survive—and for How Long
1-year, 5-year, and 10-year survival rates
About 20.4% of small businesses don't make it through their first year. Half shut down by year five. By year ten, 65.3% of businesses close. Only a third reach their tenth anniversary.
Businesses that make it past five years have a much better shot at lasting, with nearly 70% surviving for at least ten years.
Industries with highest and lowest survival
Industry plays a huge role in business survival.
- Agriculture: 12.5% fail in year one, 49.5% close by year ten (safest sector)
- Information sector: Highest first-year failure rate at 25.8%
- Mining, quarrying, oil and gas: 76.4% close by year ten
- Retail trade: Only 15.8% fail in year one
- Real estate and leasing: 16.1% close in year one
Location matters too. Businesses in New Jersey, New York, and Pennsylvania show the best first-year survival rates at 78.6%.
Franchise vs. independent business survival
Franchises are 6.3% more likely to survive year one than independent businesses, and 8.4% more likely by year two. This advantage fades after the early years.
Deeper studies show independent businesses often do better long-term. In retail, independents hit a 73.1% survival rate compared to 61.3% for franchises.
Why Small Businesses Fail: The Top Reasons
Lack of capital and cash flow issues
82% of small businesses close because they run out of money. Poor cash management, little savings, and debt are common causes. Half of businesses keep less than 15 days of cash on hand, making them vulnerable.
No market need for the product
42% of startups fail because they misread customer demand. Many try to create demand instead of meeting existing needs. Skipping market research is a major factor.
Poor planning and weak business models
Companies with reorganization plans are six times more likely to survive tough times. Many businesses lack clear goals, adaptability, and communication.
Marketing and customer acquisition failures
60% of owners say finding customers is their biggest challenge. Around 22% of failed businesses didn't market properly. Smaller businesses often lack marketing budgets, face strong competition, and struggle with new digital tools.
Small Business Growth Statistics You Can’t Ignore
New business applications in 2024 and 2025
The U.S. saw 5.5 million new business applications in 2024, a 3.7% increase from 2023. The first quarter of 2025 shows a 2.1% rise. Applications remain 30% above pre-pandemic levels.
Top states for small business growth
- Florida: 7.8% increase in 2024
- Texas: 7.1% increase
- North Carolina: 6.5%
- Arizona: 6.3%
- Georgia: 5.9%
Mid-sized cities like Austin, Nashville, Raleigh, and Phoenix grow twice as fast as national averages.
Industries seeing the fastest growth
- Professional, scientific, and technical services: +8.2%
- Healthcare and social assistance: +7.5%
- Accommodation and food services: +6.8%
- Retail trade: +5.4%
- Information services: +9.3%
Revenue and Profitability: What Small Businesses Are Really Making
Average revenue by business size
- Solo entrepreneurs: $49,489 yearly
- Businesses with 1-4 employees: $387,000 yearly
- Businesses with 10-19 employees: $2,164,000 yearly
Most owners take home about $69,119 per year. 86% earn under $100,000 personally.
Percentage of profitable businesses
65.3% of small businesses are profitable. Around 41% earned at least $1 million in revenue last year, while 18% made under $100,000.
Top-performing industries by revenue
- Tobacco: 31.9% margin
- Entertainment software: 27.4%
- Retail REITs: 25.4%
- Consulting: $103,425 average yearly
- Mobile app development: $181,499 yearly
- Real estate: $58,960 median yearly wage
The pet industry ($261 billion in 2022) and fashion resale (expected 127% growth by 2026) show strong future opportunities.
Who Owns Small Businesses in 2025?
Breakdown by gender, race, and veteran status
- Men: 59%
- Women: 41%
- White/Caucasian: 76.2%
- Black/African American: 5.2%
- Asian-American: 4.8%
- Latino/Hispanic: 4.7%
- Veterans: 4.7% (273,542 firms)
Trends in women and minority ownership
Women started nearly half of all new businesses in 2024. Minority entrepreneurship surged post-pandemic, with Black women entrepreneurs making up 46% of all Black-owned businesses.
Age and education of business owners
- Gen X: 47%
- Baby Boomers: 40-41%
- Millennials: 13-16%
- Gen Z: 1%
Most start later in life: 51% at age 55+, 43% at 35-54, and only 6% before 34. About 47% hold a bachelor’s degree.
Digital Presence and Marketing: Where Small Businesses Stand
How many have websites and mobile apps
71% of small businesses have websites. 48% now offer mobile apps, up 16% from last year. Many hesitant owners worry about costs or tech skills.
Use of social media and email marketing
- Facebook: 82%
- YouTube: 71%
- TikTok: 58%
Email marketing delivers $36 return per $1 spent. 64% of small businesses use it.
Impact of digital tools on revenue
Businesses using digital tools and automation see stronger revenue, profits, and hiring results. AI adoption continues to grow.
Funding and Financial Health of Small Businesses
How most businesses are funded
Owners often start with personal savings, retirement accounts, or help from family and friends. External sources include bank loans, SBA loans, venture capital, crowdfunding, and angel investors.
Loan approval rates and average loan sizes
Q1 2024 average small business loans dropped to $83,348 (down from $109,668 in Q1 2023). Approval rates held at 51.3%. SBA loans averaged $391,584.
Self-financing vs. external capital
28% of small businesses had no debt in 2023. Others mix strategies, combining self-funding with outside capital.
Conclusion
Small business statistics tell a mixed story of challenges and opportunities for entrepreneurs in 2025. Half of all small businesses don’t make it past five years. Yet these enterprises power the economy by creating 64% of new jobs and making up 99.9% of all U.S. businesses.
Cash flow problems and lack of market fit remain the biggest risks. At the same time, digital adoption, state-level growth, and sector booms open opportunities. Business owners who plan well, secure funding, and embrace technology can increase their survival odds.
FAQs
Q1. How many small businesses are there in the United States in 2025?
There are approximately 36.2 million small businesses in the United States as of 2025. This represents a significant increase of nearly 9.7% since 2020.
Q2. What percentage of small businesses survive their first year?
About 80% of small businesses survive their first year. Around 50% close by their fifth year, and only about one-third make it to the ten-year mark.
Q3. What are the top reasons small businesses fail?
The main reasons include cash flow problems, lack of market need, poor planning and weak models, and marketing failures. Financial mismanagement accounts for 82% of failures.
Q4. How many small businesses have a digital presence?
71% of U.S. small businesses have a website, and 48% offer mobile apps. Social media use is also high, with Facebook (82%), YouTube (71%), and TikTok (58%) leading.
Q5. What is the average revenue for small businesses?
American small businesses earn about $1,221,884 annually on average. Solo entrepreneurs average $49,489, while businesses with 1-4 employees generate around $387,000 yearly.
