Key Small Business Statistics for 2024: A Guide for Aspiring Entrepreneurs

Updated on December 29, 2023
Mentions in the media
Written by
Andrea Mercado
Writer
Edited by
Layla Varela
Editor
Fact-checked by
David Mercado
Editor
Small business statistics

Small businesses are defined by annual revenue or number of employees, though measures fluctuate dramatically between industries and countries. 

In the U.S., for example, they are facing diverse challenges. In 2023, over half of independent companies perceived a recession despite financial stability. What lies ahead, then?

Stay tuned as we outline 10 crucial small business statistics to consider in 2024 if you want to follow the path of entrepreneurship.

image 37

What exactly is a "small business?"

In business terms, a small business isn't just about the money it makes. The U.S. Small Business Administration (SBA) uses a couple of factors to decide if a company is 'small': average yearly earnings and the number of employees.

There, small businesses can earn anywhere from $1 million to over $40 million and have a staff of 100 to 1.500 people.

For a company to be called a small business, it must meet the size standard for its industry based on things like total earnings or the average number of employees over the past year.

Contextual Statistics on Small Businesses

In 2023, small enterprises stood out as the unsung heroes. In countries like the U.S. or the U.K., entrepreneurs drive over 90% of their economies. 

Here are some more contextual stats to understand the present and future of small businesses.

1. There are 33.2 million small businesses across the U.S.

Data from the SBA demonstrates how small businesses are substantial economic drivers in America. 

In the U.S., there were around 33.2 million small businesses in 2023, which means 99.9% of the companies in that country. 

This kind of enterprise employs roughly 6 million workers across the nation. Still, attention frequently goes to publicly traded giants versus the millions of home-grown, community-focused firms dotting the country.

2. Over 5.5 million enterprises in the U.K. are small businesses

Just as in the United States, the heartbeat of the U.K. economy lies in these countless small and medium enterprises.

As of October 2023, the entrepreneurial landscape in the U.K. boasted 5.6 million businesses. 

Out of this staggering figure, precisely 5,547,000 fell into the small or medium business category, constituting 99.05% of all companies in the U.K. 

image 41

3. 28% of individuals embark on the entrepreneurial journey to gain independence

A desire for independence fuels entrepreneurial dreams. 

A study by Guidant Financial reveals that 28% of individuals in the U.S. embark on the entrepreneurial journey to gain control of their time.

Beyond autonomy, motivations include a quest for happiness in large corporations (23%), passion-driven pursuits (13%), and a response to job loss, with 10% starting businesses after facing unemployment.

4. Millennials own 7% of U.S. small businesses

Despite assumptions of high entrepreneurial drive, millennials own only 7% of American small businesses today. In comparison, Gen Z owns 1%. Most fall under Baby Boomer control at nearly 40%, while Gen X owns 47%.

While a gap remains between generations, the millennial share grew 6% over previous estimates. 

With their numbers still expanding, millennials can continue assuming ownership of small firms as Baby Boomers retire in the coming years. 

image 40

Challenges Facing Small Businesses in 2024

Small businesses are dealing with challenges in late 2023 and beyond.

About half of small business owners need help finding job openings due to ongoing inflation, and the average salary for small business owners in the U.S. is just 3% higher than the average.

With hiring difficulties and squeezed profits squeezing budgets, small enterprises have repeatedly demonstrated resilience by innovating and leveraging cost-effective tools to withstand recessions.

Here are other small business statistics to consider in 2024.

5. 40% of U.S. small businesses struggle to find workers due to inflation

A recent survey of over 600 small business owners in the U.S. revealed that 40% need help filling job openings. This statistic comes in late 2023, as inflation continues hampering operations.

Optimism for business conditions in coming months also dropped to levels typically seen during recessions.

The monthly National Federation of Independent Business poll highlighted how hiring challenges, inflated costs, and squeezed profits persist for America's small enterprises.

6. The average U.S. small business owner's salary is 3% above the average annual wage

A small business owner's average salary is just 3% above the annual mean wage in the U.S., which is $58,260. 

Despite the perception that business owners and entrepreneurs are among the wealthiest, the reality is that the average small business owner's salary is modest, reaching $60,151. However, it's crucial to note that these figures vary significantly. 

According to Forbes, small business owners earn an average of $29,000 on the lower end, while those on the higher end can command an average salary of $128,000, according to pay rate data from Payscale.

7. Small businesses in the U.S. face 9-12% interest rates for a loan 

As inflation's impact lingers, small businesses in the U.S. are grappling with significant hikes in core expenses. Despite a Federal Reserve effort to curb inflation, the national prime interest rate is 8.5%.

According to The Guardian, securing new loans comes at a hefty price for smaller companies not categorized as "prime" customers, with interest rates ranging from 9% to 12%.

With limited room to pass these costs to customers, many small business owners are streamlining operations to endure tight profit margins in the face of economic challenges.

image 38

Small Business Marketing Statistics

8. 94% of small businesses to increase marketing budgets in 2024

A recent survey found that 94% of small businesses intend to allocate more funds towards marketing efforts in 2024. Social media advertising is expected to receive the bulk of expenditures.

Statistics also show that 70% of small companies utilize social media advertising today. Over one-quarter of that group dedicates 10-30% of total marketing budgets to platforms like Facebook and Instagram.

The data highlights how cost-effective and targeted social reach has become for small businesses.

9. 83% of small businesses prioritize Facebook marketing

Regarding social media marketing, small businesses prefer Facebook over other platforms. 83% of firms surveyed said they focus on this platform, followed by 48% of small companies that allocate social media budgets to Instagram.

On the other hand, recent data also shows YouTube as consumers' most trusted social site, followed by Facebook and Instagram. At the same time, LinkedIn and TikTok receive less than half the attention of Facebook and Instagram. 

10. 75% of small businesses in retail heavily depend on the holiday season

Year-end celebrations hold immense significance for small businesses, particularly those in the U.S. retail and e-commerce sectors. 

Recent surveys show its crucial role in meeting annual revenue targets for 75% of small businesses. However, only 18% feel highly effective in retaining customers post-holidays.

image 39

Summary: Small Business Statistics for 2024

1. There are 33.2 million small businesses across the U.S.

2. Over 5.5 million enterprises in the U.K. are small businesses

3. 28% of individuals embark on the entrepreneurial journey to gain independence

4. Millennials own 7% of U.S. small businesses

5. Due to inflation, 40% of U.S. small businesses struggle to find workers 

6. The average U.S. small business owner's salary is 3% above the annual wage.

7. Small businesses in the U.S. face 9-12% interest rates for a loan

8. 94% of small businesses to increase marketing budgets in 2024

9. 83% of small businesses prioritize Facebook marketing

10. 75% of small businesses in retail heavily depend on the holiday season

FAQ

What's the impact of small businesses on jobs and the economy in the U.S.?

Small businesses are job-creating powerhouses. Almost two-thirds of all new jobs come from these smaller companies. Plus, they contribute a massive 44% to the total economic activity in the U.S.

So, it's clear that small and medium-sized businesses are the leading players in keeping the U.S. economic engine humming and people employed.

Are there any challenges for businesses going cashless?

Yes, there are challenges. Some entrepreneurs might find it challenging to set up digital payments, and not everyone has easy access to credit cards, especially people with lower incomes.

Additionally, there are also privacy concerns associated with eliminating cash transactions.

How do small businesses plan to market in 2024?

Small businesses are getting tech-savvy with their marketing. According to a recent Taradel survey, they're looking to use Facebook a lot (about 68.5% of them) in 2024, and direct mail is still in the game, with almost 60.3% planning to use it. 

A strategy on trend? Mixing social media and direct mail. This combo helps small businesses expand their reach and connect with more potential customers, ensuring their messages stand out.

Final Thoughts

Small businesses are vital in many countries' economies, providing jobs for millions of workers globally. 

In 2023, many challenged inflation and faced hiring issues but showed resilience and innovation to fuel growth.

In 2024, many are gearing up to boost their marketing investments. 

Thanks to the affordability of social media advertising, small companies can use these platforms to reach specific customers more efficiently.

Sources:

Related Articles

Andrea Mercado is a tech-focused journalist and copywriter with over 5 years of experience covering innovation, edtech, AI, and internet trends across media outlets. She is passionate about how technology can democratize access to education and is an avid learner when it comes to emerging tech like AI. Her articles and webinars help readers stay informed on the latest tech developments.
crossmenu linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram