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Small Business Statistical Research
Key Takeaways
- About 33-34.3% of small businesses survive by 10 years, i.e., approximately 65.7 - 70% of them fail within 10 years.
- Most small businesses start to generate profits after 2 to 3 years, but they become more successful after reaching 7 to 10 years in business.
- 36,984 nonemployer small businesses in the US generate $1 million to $2.49 million a year in revenues.
Introduction
The report below entails the failure (in percentage) of small businesses in the US within i] two years, ii] five years, and iii] ten years. Also, it provides the number of small firms generating revenue of at least i] $1 million, 2] $5million, and iii] $10 million.
The Percentage of Small Businesses that Fail in the US Within a Given Period
- In the US, there are about 31.7 million small businesses. Of these firms, 31.8 - 33% of them fail within the first two years.
- Within 5 years, about 50% of them fail. For example, "49.3% of small businesses founded in March 2013 were closed by March 2018."
- About 33-34.3% of small businesses survive by 10 years, i.e., approximately 65.7 - 70% of them fail within 10 years. For example, "66.3% of small businesses founded in March 2008 were closed by March 2018." However, according to an Inc. article (published in 2015), 96% of businesses also fail within this period.
Other Helpful Findings Regarding Small Businesses Failure
- As per research conducted by SBA on about 700,000 US small businesses between 2010 and 2019, it was discovered that 120,157 businesses failed after 1 year, 246,673 failed after 5 years, and 374,715 failed after 10 years.
- On average, 1 in 12 businesses closes every year.
- Most small businesses start to generate profits after 2 to 3 years, but they become more successful after reaching 7 to 10 years in business.
- According to the Small Biz Trends survey in 2013, It could be found that "40% of small businesses are profitable, 30% break-even, 30% continually lose money, and 9% have a chance of surviving 10 years."
- The failure rate of small businesses has decreased by 30% since 1977.
The US Small Businesses Annual Revenue
- According to the SBA definition, "a small business is one that has fewer than 1,500 employees and a maximum of $38.5 million in average annual receipts." However, as per a report by The Kickass Entrepreneur, 80% of small businesses in the US are run/managed by the owner, i.e., they don't have employees.
- Therefore, according to a survey conducted by the US Census Bureau in 2017 regarding one person (nonemployer) business, i.e., small businesses run by one person (the owner), it was found that there were:
- i] 36,984 small businesses in the US generating $1 million to $2.49 million a year in revenues.
- ii] 2,229 businesses generating between $2.5 million to $4.99 million in revenues annually.
- iii] 356 nonemployer businesses generating $5 million or more per year in revenues.
- In 2017, there were 7.6 million employer businesses in the US, i.e., those with employees. Out of that number, 89% had less than 20 employees.
- In the US, 15% of small businesses that have 5-9 employees generate an average revenue of $1.08 million per year, firms with 20-99 employees generate about $7.124 million in revenue annually, while those that have 100-499 employees (0.10% of small businesses) make an average revenue of over $40.775 million annually.
Other Helpful Findings Regarding Small Businesses Revenue
- On average, the US nonemployer businesses generate a revenue of about $46,978 per year.
- In 2015, small businesses making less than $5 million per year in revenue experienced an average growth of 7.8% in annual sales.
- In 2020, 43% of small businesses in the US operating full-time estimated their annual sales to be under $50,000, while bigger firms (27%) projected their sales to be more than $200,000 at the end of the year.
Research Strategy
To find the statistical data on the US small businesses, we utilized government reports by the US Census Bureau and US Small Business Association. Also, we leveraged information from news and media articles published by reputable sources like Forbes and Zen Business. We could find all the requested data from these sources plus additional/helpful findings on the topic. We have also provided these sources, i.e., Small Biz Genius, Review42, and Fortunly, which provide links to various statistics on the US small businesses.
NOTE: Most of the information provided is over 2 years because most research/surveys/census conducted on the US small businesses were done in 2016 and 2017, according to various reputable sources in the public domain.