Starting a business is no small task, yet there are millions of entrepreneurs around the world. This year, due to the COVID-19 pandemic, entrepreneurship took a hit, but entrepreneurs tend to be resilient people. 82 percent of small businesses have made workplace changes due to the COVID-19 pandemic, but the future for entrepreneurship is still bright. [1]
Anyone can start a business — that’s the beauty of entrepreneurship — but growing it is difficult, especially in tough economic times. Educating yourself on entrepreneurship is a great place to start, however.
Here, we’ll outline the most important statistics and trends that describe entrepreneurship today, both in the United States and the world.
Entrepreneurship is a worldwide endeavor and offers opportunities to self-motivated people everywhere. [2]
The Small Business Administration reports that there are nearly 34 million small businesses in the United States. That accounts for 99.9% of all businesses, and they’re all started by entrepreneurs. [3]
All of these small businesses put more than 60 million people to work. Yes, you did the math right — the average small business has just two employees. [3]
In fact, nearly 80% of small businesses comprise only the founder. Solopreneurship isn’t new, but it has gained popularity in recent years. [4]
Entrepreneurship has a solid record in the United States. According to Wealth-X research, there are 585 billionaires in the United States and 62% of them got there on their own. Only 20% of billionaires achieved this status through inheritance while 18% experienced a combination of both.[5]
The number of successful entrepreneurs in the world have contributed to a general feeling that entrepreneurship is a good career. There is obvious risk, but the reward is enticing to many. [6]
Because entrepreneurs work for themselves, they often set their own hours. For many, that means working when they want, which leads to strange working hours and, sometimes, long working hours. [7]
The highest level of education that one-third of entrepreneurs have reached is graduation. You don’t need to graduate college to have a great idea or run a successful business. [8]
Who doesn’t want to be their own boss? For 26% of entrepreneurs, being in charge is the primary motivation for starting a business. [8]
This is an interesting statistic that may change as a result of COVID-19. Just 3% of entrepreneurs claim a life-changing event like losing a job or a family tragedy drove them to entrepreneurship. With many people furloughed or laid off during the pandemic, this number may rise in time. [8]
Black Americans are the fastest growing demographic of entrepreneurs in the country. More than one-quarter of Black Americans are entrepreneurs already and many more are finding opportunities in entrepreneurship. [9]
The gig economy is growing, and more and more people are getting involved. However, not everyone is just a gig worker. Many entrepreneurs have built entire businesses dedicated to working in the gig economy. [10]
The majority of new entrepreneurs are well into their working lives. When you’ve worked for some time, you likely have more startup capital than someone fresh out of college, you have experience in the field you’re entering, and you may have more financial security as well. [8]
Another surprising trend in entrepreneurship? Homeowners are more likely to start businesses. Again, financial and personal security make starting a business easier. [11]
What isn’t so surprising is that most entrepreneurs want and plan to create jobs for others. After all, in order to grow, you’ll need more employees. [10]
The Global Entrepreneurship and Development Institute (GEDI) ranks developed countries annually on their entrepreneurial attitudes, abilities, and aspirations and the infrastructure that enables entrepreneurs to thrive. The United States ranks number one in the world, just ahead of Switzerland and Canada. [12]
This number represents 16% of the American workforce. That’s a significant chunk of workers who are so self-motivated to build their own businesses from the ground up. [13]
In fact, America’s official early-stage entrepreneurship rate ranks first in the world. [10]
With so many Americans starting businesses, it’s no surprise that nearly half of Americans consider it easy. Yes, the United States is the global leader in entrepreneurship, and at least part of that is a prevailing attitude that anyone can do it. [10]
That entrepreneurial attitude is put to good use every year, as nearly half a million startups are launched in the U.S. every single year. [14]
Some businesses are relatively easy and inexpensive to start. Others require much more investment. Nationally, the SBA reports that the average entrepreneur requires $10,000 to start a business. [15]
More than one-third of small businesses structure themselves as an LLC. 33 percent are S-Corporations, 19% are C-Corporations, 12% are sole proprietorships, and 4% are partnerships. [16]
Entrepreneurship requires significant personal investment. Two-thirds of entrepreneurs rely on their personal funds to solve financial issues rather than take out a loan or seek investment. [17]
However, of those entrepreneurs who do apply for a loan, most use that money to expand their business rather than find startup capital or pay debts. [18]
Contrary to popular belief, small businesses don’t fail nearly as frequently as you may think. Only 20% of businesses fail in the first year, 30% fail within two years, and 50% close within five years. That’s a lot of failure, but it’s not to say that those businesses didn’t turn a profit or end on the entrepreneur’s terms. [19]
Why do businesses fail? For nearly half of them, it’s because there simply isn’t a market for their product or service. You can’t succeed if you don’t understand your market! For 29% of businesses, running out of cash leads to failure, while 23% simply don’t hire the right people. [20]
Employees help your business grow, but they also come with significant expenses. For many American small businesses, exorbitant healthcare costs present an enormous challenge. Indeed, many businesses say paying for employee healthcare is their biggest challenge. [21]
Many small businesses live with extremely slim profit margins. Nearly one-third of American small business owners don’t pay themselves a salary, rather living off the profits of their business. 86.3 percent pay themselves less than $100,000/year. [22]
While you may not make money right away as an entrepreneur, most entrepreneurs don’t regret starting their business. There are many benefits to entrepreneurship — from setting your own schedule to being your own boss — that money isn’t the most important thing for everyone. [22]
The future is still bright for entrepreneurs. Since 1977, the startup failure rate has steadily decreased and — COVID-19 notwithstanding — appears like it is set to continue declining into the future. [23]
Entrepreneurship is risky, but the United States remains the best country in the world for entrepreneurs. Regardless of your interest or expertise, you can start a business in the U.S. and have a decent chance of seeing success. Despite the COVID-19’s impact on small business in the U.S., there is still considerable hope for entrepreneurs in 2021 and beyond.