20 Small Business Facts That Will Keep You Up at Night
Starting your own business is a lot like falling in love—equal parts exhilarating and terrifying. For every wonderful, magical thing that can happen in the course of getting your business off the ground, there is always something that threatens to derail your dream of being an entrepreneur.
Henry Ford, founder of Ford Motor Company (and a man who knew a thing or two about failure) once said, “When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.”
There is something about the ability to direct one’s own fate that draws humans to entrepreneurship like moths to a flame. A University of Phoenix report indicates that 63 percent of adults under the age of 30 want to run their own business one day, and in the coming years there will certainly be more and more opportunities to do so.
Before you dive in your new entrepreneurial venture, you should know these 20 small business facts—even if they keep you up at night—because, as McDonald’s founder Ray Kroc says: “If you’re not a risk taker, you should get the hell out of business.”
- A small business is defined as an enterprise that has fewer than 500 employees. So technically, that kid who opens his lemonade stand on the corner every summer is a small business owner. Except…
- In order to be subject to federal income taxes, a small business must have annual business receipts of $1,000. So much for Billy’s lemonade stand. However, rather than gnash your teeth every tax season, be glad you made enough income to file!
- There are nearly 28 million small businesses in America. Of those 28 million, a full 22 million consists of one lone employee. Finally—a way to make money from being anti-social!
- Over 50 percent of the 120 million Americans in the workforce works in a small business. That means that the plumber you called to fix your pipes last week who can’t even afford a belt to hold his pants up is probably a small business owner.
- In 2009 a small business filed for bankruptcy every eight minutes. You probably didn’t notice, however, with the whole Harry Potter and the Half-Blood Prince craze that year.
- Approximately 543,000 new businesses are started each month. Which means you’re going to have to create something a lot more original than that bathroom finders app.
- Contrary to the popular belief that 50 percent of startups fail within the first year and 95 percent close shop by the 5-year mark, the truth is: 70 percent of small businesses remain in operation for at least two years, 50 percent are still around in five years, 33 percent in 10 years, and 25 percent after 15 years.
- With a small budget you may be wondering how to get the word out about your new business. In 2013, 52 percent of companies found new customers on Facebook. Which means that when people see you posting, liking, and commenting on silly animal videos, you can tell them you are doing market research.
- The fastest growing sectors in the world of small businesses include auto repair shops, dry cleaners, and beauty salons. To really get a leg up on the small biz sector, try opening a service shop that frosts your tips and cleans your shirts while you wait for your car!
- The average revenue for a small business is in the $44,000 bracket. Obviously, most small business owners derive their satisfaction from being their own boss rather than being rich.
- It takes as little as five days to start a business in the U.S. That same business startup in Brazil would take 107 days. It’s probably best to keep your South American trips to pleasure only.
- Here’s a scary fact: if a small company cannot resume business within 10 days of a natural disaster, it probably will not survive. Yikes. Now there’s a subject for your next horror movie, David Fincher!
- In 2011, the total revenue from all American small businesses reached $989.6 billion. Yes, that’s a “b”. Imagine what would happen to the U.S. economy if risk takers like you did not exist. In fact, Montana and Wyoming’s economies are actually dependent upon small businesses.
- If you’re unemployed right now, don’t worry: in 2011, 5.5 percent of self-employed people were out of a job the previous year. Steve Jobs, you’ll be happy to know, was a college dropout living with his parents when he, Steve Wozniak, and Ronald Wayne started Apple.
- Since 1990, large companies have eliminated 4 million jobs—but small businesses have added 8 million new ones. Way to go, small business owners!
- If the 77 million small business employees in the U.S. were a country, it would be the 17th most populous country in the world, just behind Iran. We’d all secede except for the fact that we’d never decide which entrepreneur would run our new country.
- It costs six times as much to start a small business in India as it does in the U.S. There is a reason people from around the world still believe in the American dream!
- On a related note, 12.5 percent of small businesses are made up of immigrants from other countries. As this Forbes study reveals: diversity is essential for innovation in the workplace.
- Small businesses inspire innovative ideas twice as much as big businesses, and tend to produce environmentally-friendly products. Like reusable chopsticks.
- Small businesses generate 13 times more patents per employee than large patenting companies. Innovators are far less likely to want to patent an idea that is going to belong to their big-name employer than to hold that patent themselves.
If starting your own business feels like a gamble, you are probably right. There are no guarantees in life. But as Albert Einstein once said, “A person who never made a mistake never tried anything new.” Entrepreneurs today have access to a host of resources (for example, online tools to create a quick invoice) that earlier businesses could only dream of. So grab hold of those resources and dream more than others think is practical!