52 Business Ownership Statistics You Must Know: 2024 Demographics & Challenges

Businesses play a vital role in nation-building. Not only do they contribute to the economy, but they also benefit the community by providing jobs. Behind a successful business are hard-working individuals who not only have a vision but also the grit to follow through with their ideas.

In this compilation of business ownership statistics, you will get an idea of the general business landscape that an aspiring entrepreneur will enter into. You will also learn the demographics of small business owners, their ownership share in the market, and the top challenges they are facing. In this way, business-minded individuals can take inspiration from them. At the same time, they’ll be well aware of what they need to hurdle to turn their business into a successful one.

General Business Ownership Statistics

Businesses can either have a physical or online presence. Business owners who want to open a physical store have to consider the costs of opening one plus, the challenging economic climate brought about by the COVID-19 pandemic. This is in addition to learning the steps on how to start a business. Conversely, there is a trend of digital-first businesses opening physical shops to provide an omnichannel experience to their customers.

Small Brick-and-Mortar Businesses

• According to statistics of U.S. businesses, in 2020, the number of small companies in the US hit a whopping 31.7 million, making up 99.9% of the total number of businesses in the country. (Oberlo, 2020)
• The US state with the highest concentration of small businesses is California with 4.1 million. It is followed by Texas (2.8 million), Florida (2.7 million), New York (2.2 million), and Illinois (1.2 million). (Oberlo, 2020)
• 28% of local shop owners in the United Kingdom inherited their family business. In contrast, 72% started their business. (Association of Convenience Stores, 2020)
• 41% of local shops in the UK are owned by family partnerships. (Association of Convenience Stores, 2020)
• There are 372 community-owned shops trading in the UK. These shops have a success rate of 94% and generate more than 700 paid jobs. (Association of Convenience Stores, 2020)
• Two in five direct-to-consumer brands own at least one brick-and-mortar store, helping drive offline ad spend. (Interactive Advertising Bureau, 2019)
• The cost of starting a retail store ranges between $2,000 and $100,000, depending on one’s vertical. (U.S. Chamber of Commerce)

Online Store Owners

• 26% of small business owners in Canada said that they provide products or services online. Among these business owners, 30% said that they saw an increase in online sales since the COVID-19 outbreak.
• In contrast, 25% said their sales are equal to pre-COVID levels. (Canadian Imperial Bank of Commerce, 2020)
• 30% of direct-to-consumer brands say that opening brick-and-mortar locations is one of their leading priorities. (Interactive Advertising Bureau, 2019)
• To date, there are 1,700 physical stores operated by digitally native brands. Digital brands are expected to open 850 more stores by 2023. (Forbes, 2019)

Business Ownership Demographics

Entrepreneurship in the U.S. is a mixed bag of owners who come from different races, age groups, and gender. Demographics of small business owners based on surveys reveal that US entrepreneurs are predominantly White, causing a racial wealth gap. Women, Hispanic, Black, Asian, and immigrant owners have made their mark in the entrepreneurship scene, posting double-digit shares in ownership. However, the pandemic has caused quite a number of businesses owned by women and minorities to shut down. As a result, their share in business ownership has also decreased.

Business Ownership by Gender

• In 2019, 61% of all small business owners in the US were male. In contrast, only 39% were female. (JP Morgan, 2020)
• 73% of female entrepreneurs in the US left traditional nine-to-five jobs to start their own small businesses. (Bluehost, 2020)
• The number of female business owners decreased from 5.4 million to 4 million from February to April 2020. (National Bureau of Economic Research, 2020)
• In Europe, Russia had the biggest share of business ownership by women at 31.2%. This is followed by Portugal (30.2%), Spain (29.9%), and Hungary (28.4%). (Mastercard, 2019)
• Women owne 31% of all small businesses or franchises in the US. (Guidant Financial, 2021)
• Among female entrepreneurs, 34% hold a bachelor’s degree. On the other hand, 27% have a master’s degree while 8% have a doctorate degree. Meanwhile, 20% have a high school diploma or GED and 11% have an associate degree. (Guidant Financial, 2021)
• 29% of women entrepreneurs in the US said the reason why they started their business was to be their own boss. (Guidant Financial, 2021)
• 30% of women entrepreneurs in the US have owned their business for 10 years or more. (Guidant Financial, 2021)
• 46% of women entrepreneurs have two to five employees. On the other hand, 19% have between six to 10 employees. (Guidant Financial, 2021)
• 22% of women entrepreneurs spent between $175,000 to more than $1 million to launch their business. (Guidant Financial, 2021)
• 58% of women-owned businesses are profitable. However, profitability is down by 18% compared to the previous year due to the pandemic. (Guidant Financial, 2021)

Business Ownership by Race

• In 2019, 61.8% of all small businesses in the US were owned by White Americans. On the other hand, White Americans also owned 55.7% of new firms. (JP Morgan Chase, 2020)
• In the same year, Hispanics had a 25.4% share in ownership of all small businesses in the US and 30.9% share ownership of new small businesses. Meanwhile, Blacks had a 12.8% share of ownership in all small businesses and 13.4% share in ownership of new small businesses. (JP Morgan Chase, 2020)
• White small business owners had the dominant share in ownership of small businesses in the US across all industries in 2019. For instance, 74% of high-tech manufacturing firms were owned by White Americans. The industry with the largest share of business ownership by Hispanics was construction at 32%. For Blacks, the highest share in business ownership was in the personal services industry at 18%. (JP Morgan Chase, 2020)
• The number of African-American business owners decreased from 1.1 million in February 2020 to 640,000 in April 2020. This represents 440,000 black business owners or 41% of total businesses. (National Bureau of Economic Research, 2020)
• In the same vein, the number of Latinx business owners dropped by 32% from February to March 2020. Meanwhile, the number of Asian business owners dropped by 26%. In contrast, white business owners only experienced 17% of major losses. (National Bureau of Economic Research, 2020)
• During the same period, the number of businesses owned by immigrants decreased by 36%. In contrast, the number of businesses owned by US-born entrepreneurs dropped by 18%. (National Bureau of Economic Research, 2020)
• A survey found that 54% of black entrepreneurs were male while 46% were female. (Guidant Financial, 2021)

Business Ownership by Age

• In 2019, 50% of small business owners in the US were aged 55 or over. On the other hand, 44% were aged between 35 and 54 years old. Only 6% were aged under 35. (JP Morgan Chase, 2020)
• Small businesses with Black owners under the age of 35 were most likely to exit within the first three years of business. (JP Morgan Chase, 2020)
• With the fourth year of opening a small business, 13% of Black owners under the age of 35 exited the business. On the other hand, 10.8% of Hispanics under the age of 35 exited the business. Exit rates were lowest for White owners at 9.3%. (JP Morgan Chase, 2020)
• For Black owners that are 55 or over, the exit rate at the fourth year of opening a small business was 7.1%. In contrast, the exit rate for Hispanic owners of the same age was 8.8% while White owners was at 8.4%. (JP Morgan Chase, 2020)
• As of 2019, the established business ownership rate in the US was 10.6% while in Canada, it was 7.4%. Established business ownership rate means the percentage of adults aged 18 to 64 who are presently owner-manager of an established business. (GEM, 2020)
• 46% of small business owners in the US belong to Gen X. On the other hand, 41% are Boomers, 13% are millennials, and only 1% belong to Gen Z. (Guidant Financial, 2021)

Challenges of Business Ownership Statistics

Running a business is no easy feat, so business owners understandably have a lot on their minds. However, the pressing concern for US business owners is the political climate. Next to this is the lingering effects of the pandemic. They likewise struggle with marketing their business online and having a defined exit plan for their business.

• 69% of small business owners in the US recognized the need for an online presence, especially during a pandemic. However, only 61% say they have a website. (Bluehost, 2020)
• 30% of small business owners in the US say that getting relevant or high-quality traffic to their website is their biggest challenge. (Bluehost, 2020)
• 42% of entrepreneurs in the US applied for at least one loan to mitigate the impact of the pandemic on their business. 34% applied for a Paycheck Protection Program loan while 16% applied for an SBA Economic Injury Disaster Loan. (Bank of America, 2020)
• 78% of entrepreneurs in the US cited the political environment as their top concern. Meanwhile, 75% cited the impact of the COVID-19 pandemic. (Bank of America, 2020)
• 79% of business owners do not have a written plan for exiting their business. In contrast, only 20% have a written plan for transferring business ownership. (Business Enterprise Institute, 2019)
• 60% of business owners use an informal method for arriving at the valuation of their business. (Business Enterprise Institute, 2019)
• 33% of business owners said that improving their business is their biggest obstacle to leaving their business. (Business Enterprise Institute, 2019)
• 28% of small and medium businesses (SMBs) say that having cash flow for the next few months is their biggest challenge. (Facebook, 2020)
• 47% of SMB owners felt burnout from balancing business and household responsibilities at the same time. (Facebook, 2020)

Business Ownership During the Pandemic

The pandemic has upended the lives of everyone, including business owners. Luckily, a small percentage of business owners saw the pandemic as an opportunity to open a venture borne out of the things they love. Still, the undeniable reality is that businesses must quickly adapt to a crisis, which is one of the key trends in small business that entrepreneurs must be mindful of.

• 44% of small business owners in the US say that their top concern for 2021 was securing new customers. Meanwhile, 44% are concerned about the lasting impact of the COVID-19 pandemic. (Bluehost, 2020)
• Only 16% of small business owners in the US have added a new revenue source since the pandemic began. (Bluehost, 2020)
• Three in four (72%) small business owners in the US feel optimistic about their operations. Only 9% feel pessimistic. (Bluehost, 2020)
• 27% of small business owners in the US turned their hobby or passion project into a full-time job. (Bluehost, 2020)
• 92% of small business owners in the US say it’s crucial for them to be able to sell their products or services through a website. (Bluehost, 2020)
• 61% of small brick-and-mortar stores in the US saw a decrease in sales during the pandemic. (Bluehost, 2020)
• 38% of small businesses in the US remained open as essential businesses. On the other hand, 37% stayed open and made their operations compliant with social distancing guidelines. (Bank of America, 2020)
• 61% of small businesses in the US developed new products and services during the pandemic. (Bank of America, 2020)
• The number of active business owners in the US dropped from 15 million to 11.7 million from February to April 2020. This represents a loss of 3.3 million business owners. (National Bureau of Economic Research, 2020)

Business Ownership and Wealth Creation

Business ownership is one of the most powerful ways to build wealth for individual owners and their communities. Here’s how owning a business contributes to wealth creation:

• Equity Building: As a business owner, you accumulate equity in the company. Over time, if the business grows and becomes more profitable, its value increases. Business owners who successfully scale their operations can sell their companies for substantial sums, turning their efforts into a large financial gain. Even if the business doesn’t sell, it can generate significant revenue streams.
• Income Generation: Owning a business enables owners to earn income directly from their operations. Instead of relying on a fixed salary, business owners have the potential to earn a profit based on their company’s performance. This provides more flexibility regarding financial growth, as they can reinvest profits to further grow the business, pay themselves a higher salary, or distribute dividends.
• Asset Accumulation: Business ownership allows entrepreneurs to build assets like real estate, equipment, and intellectual property. These assets can appreciate in value, providing additional opportunities for wealth creation. For example, a tech startup may accumulate valuable patents, or a retail business might own its storefront, both contributing to the owner’s net worth.
• Tax Benefits: Business owners often benefit from tax advantages unavailable to employees. Deductions for business expenses, health insurance, retirement plans, and other perks can help reduce taxable income and increase wealth retention. This means that business owners can reinvest savings into the growth of their business.
• Legacy Wealth: Business ownership can be a source of generational wealth. Family-owned businesses, in particular, have the potential to provide income and assets for multiple generations. Business owners who build a successful company can pass it down to their children, providing them an ongoing income stream and wealth beyond their lifetime.

On the Road to Business Recovery

Being a business owner is in itself challenging. Keeping up to date with the latest entrepreneurship trends and managing the impact of the pandemic only add to their long list of concerns. For one, it negatively impacts the diversity of business ownership in terms of age, gender, and race. Industry studies show that women- and minority-owned businesses were more heavily impacted by the pandemic.

Still, that has not stopped entrepreneurs from showing resilience by readjusting their business models or their operations. This year, entrepreneurs have a more positive outlook. With this, it is anticipated that this year will be a time to recover from pandemic-related losses.

Key Insights

• Prevalence of Small Businesses: In 2020, small businesses in the U.S. numbered 31.7 million, comprising 99.9% of all businesses. California leads with 4.1 million small businesses, followed by Texas, Florida, New York, and Illinois.
• Digital Shift: The COVID-19 pandemic accelerated the shift to online business models. Many small businesses expanded their online presence, with 26% of Canadian small businesses offering online products or services.
• Demographics: Business ownership in the U.S. is predominantly by White Americans (61.8%), with significant shares held by Hispanic (25.4%) and Black (12.8%) entrepreneurs. Female ownership was at 39% in 2019 but saw a decline during the pandemic.
• Gender Disparity: Women own 31% of small businesses in the U.S., with many transitioning from traditional jobs to entrepreneurship. The pandemic significantly impacted women-owned businesses, reducing their number from 5.4 million to 4 million between February and April 2020.
• Age Distribution: Small business owners are primarily aged 55 or older (50%), followed by those aged 35-54 (44%), and a small fraction under 35 (6%).
• Challenges: Key challenges for business owners include navigating the political climate, recovering from the pandemic, and maintaining an online presence. Many lack a formal exit plan or valuation method for their business.
• Pandemic Impact: The pandemic caused a significant reduction in the number of active business owners, from 15 million to 11.7 million. However, it also spurred innovation, with 61% of businesses developing new products and services during this period.
• Resilience and Recovery: Despite the pandemic’s impact, many business owners remain optimistic, adapting their business models and maintaining a positive outlook for recovery in the coming year.

FAQ

1. What is the current state of small businesses in the U.S.? Small businesses make up 99.9% of all businesses in the U.S., with a total of 31.7 million as of 2020. States like California, Texas, and Florida have the highest concentration of small businesses.
2. How has the COVID-19 pandemic affected small businesses? The pandemic has caused significant challenges, including a drop in the number of active business owners and reduced sales for brick-and-mortar stores. However, it has also accelerated the shift to online business models and spurred innovation.
3. What are the main challenges faced by small business owners? Major challenges include the political climate, the lingering effects of the pandemic, maintaining an online presence, and lacking formal exit plans or business valuations.
4. How do business ownership demographics break down by race and gender? In 2019, White Americans owned 61.8% of small businesses, followed by Hispanics at 25.4% and Blacks at 12.8%. Women owned 31% of small businesses in the U.S., with a significant number transitioning from traditional jobs to entrepreneurship.
5. What impact has the pandemic had on minority and women-owned businesses? Minority and women-owned businesses were heavily impacted, with a notable decrease in the number of female business owners. The pandemic exacerbated existing disparities and led to higher exit rates among minority-owned businesses.
6. What are the key statistics for online business ownership? Approximately 26% of small business owners in Canada offer online products or services, with many seeing increased online sales during the pandemic. Digital brands have also been expanding into physical retail spaces to provide an omnichannel experience.
7. What is the age distribution of small business owners in the U.S.? Most small business owners are aged 55 or older (50%), followed by those aged 35-54 (44%), and a smaller percentage under 35 (6%). Exit rates are higher among younger business owners, particularly those under 35.

References:

1. Association of Convenience Stores. (2020). The Local Shop Report 2020. Retrieved from the Association of Convenience Stores.
2. Bank of America. (2020, November 19). Bank of America Small Business Advantage: 2020 Small Owner Business Report. Retrieved from Bank of America.
3. Business Enterprise Institute. (2019). Business Owner Survey Report. Retrieved from Business Enterprise Institute.
4. Canadian Imperial Bank of Commerce. (2020, May 4). COVID-19 impact felt by 81 per cent of Canadian small business owners: CIBC Poll. Retrieved from Canadian Imperial Bank of Commerce.
5. Facebook. (2020 May). State of Small Business Report: Facebook & Small Business Roundtable. Retrieved from Facebook.
6. Fairlie, R. (2020 June). The Impact of COVID-19 on Small Business Owners: Evidence of Early-Stage Losses from the April 2020 Current Population Survey. Retrieved from the National Bureau of Economic Research.
7. Global Entrepreneurship Monitor. (2020, February 25). GEM 2019/2020 Global Report. Retrieved from GEM Consortium.
8. Guidant Financial. (2021). 2021 Small Business Trends: A look at the state of small business in 2021. Retrieved from Guidant Financial.
9. Interactive Advertising Bureau. (2019, Nov. 20). IAB Research Busts Myth That Direct-To-Consumer Brands Are Looking To ‘Sell-Out’ To Incumbents, Finding Overwhelming Majority Are Already Profitable. Retrieved from IAB.
10. JP Morgan Chase. (2020 July). Small Business Owner Race, Liquidity, and Survival. Retrieved from JP Morgan Chase.
11. Mastercard. (2019). Mastercard Index of Women Entrepreneurs 2019. Retrieved from Mastercard.
12. Oberlo (2020). How Many Small Businesses are There in the US in 2020. Retrieved from Oberlo.
13. Thomas, M. (2020, September 20). New Survey Finds Small Businesses Are Resilient and Adaptable, Despite Global Pandemic. Retrieved from Bluehost.
14. U.S. Chamber of Commerce. (n.d.). Considering Opening a Retail Store? The Pros and Cons of Brick-and-Mortar Locations. Retrieved from the U.S. Chamber of Commerce.

By Louie Andre

B2B & SaaS market analyst and senior writer for FinancesOnline. He is most interested in project management solutions, believing all businesses are a work in progress. From pitch deck to exit strategy, he is no stranger to project business hiccups and essentials. He has been involved in a few internet startups including a digital route planner for a triple A affiliate. His advice to vendors and users alike? "Think of benefits, not features."