How Much Do You Know About Small Business?
There’s more to it than one statistic
Ask the average person what they know about small businesses, and you’re likely to get the one statistic that we’ve all heard: half fail within five years. While that’s not exactly accurate, the fact is that many new businesses fail. In a future post I’ll dig into the details of that statistic, and what it’s really based on.
For now, let’s agree that starting a business can be risky. How well one prepares, the path one takes, and the support network are critical elements for success. Don’t forget that Jeff Bezos started “Earth’s Biggest Bookstore” in July 1994 — as a small business.
To begin, what is a small business anyway?
All businesses, whether large or small, started as small businesses. The tales of Microsoft, Hewlett-Packard, Apple, etc. are legion. Starting with nothing but an idea and an empty garage…you know the rest.
Just for the sake of clarity, let’s look at some other small business stats you may be less familiar with. To begin, what is a small business anyway?
The SBA (US Small Business Administration) generally defines a small business as an independent business having fewer than 500 employees. To put that in context, the average size of small businesses is about 15 employees.
If we break things down, there are 20,516 large businesses in the US. This includes all the big ones you’ve heard about — everything with more than 500 employees.
There are over 32 million small businesses in the US
In contrast, there are just over 32.5 million small businesses. Yes, million. Small businesses comprise 99.9 percent of all businesses, and 99.7 percent of businesses with paid employees. Small businesses account for more than 60 percent of net new job creation since 1995. And they contribute 43.5 percent of gross domestic product (GDP).
Not only do many small businesses not fail, they thrive.
Small business owners thrive as well. According to the University of Minnesota in a recent report, owners have five primary advantages over their employee counterparts:
— Independence — more than 70 percent of working adults would like to be their own boss
— Lifestyle — control of your schedule, where and how you live, with no worries of layoffs
— Financial rewards — there is no salary cap or upper limit to earnings potential
— Learning opportunities — business owners aren’t limited and are constantly learning new ways to grow
— Personal satisfaction — there is nothing more satisfying than using your skills to build the life you want
All that said, business ownership isn’t right for everyone. It can be hard work, you need to be internally motivated with a clear goal, and it can take time to reach that goal. But for those who make the effort and commit, the rewards are great.
