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45+ Crucial Small Business Statistics for 2019

Category: B2B News

Small and medium-sized businesses are considered the foundation of economies worldwide. If you’re a small business or you deal with small businesses, what influences them, impact on the way they do business and statistics that will set the course of their future are critical information you can’t ignore.

We’ll be looking at the very important small business sector and examine the latest developments. We’ll explore significant small business projections for 2019, compile small business statistics that matter, and see how the sector is faring in the areas of finance, the modern workplace, and technology especially with the widespread availability of cloud-hosted and web-based apps.

The figures gathered from studies and surveys can also serve as benchmarks upon which businesses can compare their performance. Most of all, statistics provide crucial insights into the sector or industry and its critical components. Use the information here as a guide to further improve your business and prepare it for the future.

small business statistics

Small Business Sector Statistics

Our research on the small business developments of 2019 starts with a general look at the sector – from the global perspective to the U.S. scene, which has one of the most robust small business sectors in the world. From these profiles and demographics, we’ll be able to better understand this most important engine of economic growth.

  • Small and medium enterprises represent more than 90% of the business population, account for up to 70% of global employment, and responsible for over half of the GDP in developed countries. (IFAC)
  • It is estimated that there are up to 445 million micro and small and medium enterprises in emerging markets around the world. (World Bank)
  • 99% of all businesses in the European Union are classified as SMEs. (EU Entrepreneurship & SMEs)
  • 96.4% of manufacturing exporters in the U.S. are SMEs. (SBE Council)
  • There are currently 30.2 million small businesses in the U.S., representing 99.9% of the total businesses in the country. (U.S. SBA)
  • 58.9 million workers are employed by small businesses, representing 47.5% of the total U.S. workforce. (U.S. SBA)
  • 75.3% of private sector employers are micro-businesses or those with less than 10 employees. (Digital Blog)
  • 69% of American entrepreneurs start their businesses at home and 59% of businesses continue to be home-based even after 3 years of operation. (Small Business Trends)
  • The fastest growing small business industries in 2018 (with the most number of startups) were business services and food/restaurant tied at 11%, health/beauty/fitness at 10%, general retail 7%, and home services 6%. (Guidant Financial)
  • 33.4% of all small businesses or around 9.9 million small businesses in the U.S. are owned by women while 14.8 million are owned by men. (Startblox)
  • Majority of small business owners are over the age of 50, a fourth is in the 40-49 age range, and the rest are between 18 to 39 years old. (Guidant Financial)

Small & Medium Businesses Are Foundation of World Economy

Together they constitute:

90%

of business population

70%

of global employment

55%

of the GDP of developed countries

Source: International Federation of Accountants (IFAC)

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The statistics presented are of the current situation. However, the small business sector is a dynamic one and things are changing fast. For instance, if the Middle Age group is lording it now, soon enough the Generation Z will take over. And before long, Millennials will be the majority of small business owners. What this means is that, if you deal with small businesses, you should be ready to deal with a generation that is tech-savvy and highly mobile. Another thing is the explosion in the number of startups across a variety of industries, not just in popular ones like retail and professional services but also in manufacturing and production, robotics, consultancy, media, and publishing. Startups in the IT sector will be as popular as ever with most going into app development and IT services.

Small Business & Finance Statistics

Financial and tax management is a challenge for small businesses. Owners of startups and small businesses, operating with limited resources and staff, often have to do the accounting and tax preparation themselves aside from personally handling all other operational and administrative tasks. Financial struggle is real – 5 out of the top 10 reasons for small business failure involve money matters. Here are some of the reasons and requirements of small businesses when it comes to finances.

  • On average, entrepreneurs need $15,000 to start a business. (Small Business Trends)
  • $3,000 is the average cost for starting a micro business while most home-based franchises have a starting cost between $2,000 and $5,000. (Business News Daily)
  • 82% of seed capital to start a business comes from the business owner/founder or family and friends. (Small Business Trends)
  • Only 1 in 1,000 U.S. entrepreneurs receive venture capital funding. (Small Business Trends)
  • $107K is the average amount of small business loans backed by the U.S. SBA in 2018. (Value Penguin)
  • 27% of small business loans, a record high, were approved by big banks in 2018. (Biz2Credit)
  • Less than $100K is the salary that 86.3% of small business owners reportedly take in yearly. Around 30% don’t pay themselves at all. For comparison, the national annual average salary for CEOs is $163K. (Fundera)
  • 19% is the estimated average effective tax rate paid by small businesses. (The Balance SMB)
  • 63% of small business owners have limited or no general knowledge at all of accounting and finance. (Wasp Barcode Tech)
  • 80% of small businesses make it through their first year, contrary to the popular belief that the majority don’t. However, from there, the numbers go downward – only around half of small businesses survived till the 5th year and only 1 out of 3 make it to the 10th year. (U.S. SBA)

Small Business Capital

Average amount needed to start a small business (in dollars)

USD

Entrepreneurial business

Micro business

Home-based franchises

Sources: Small Business Trends & Business Daily News

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If small business failure is mostly blamed on poor financial management, the business and market situation also has much to do with it. In times of recession, small businesses take the brunt. But in favorable conditions, SMBs do make it. A study on small business optimism showed that the majority were happy because they made profits last year, and hope that they would do well again this year given the positive economic environment.

Small Business & Technology Statistics

As recent as 2017, a study commissioned by Google found out that a high of 80% among small businesses were not digitally engaged. Some small business owners reasoned that digital tools are not effective or relevant to their business. In a span of just two years, that has changed with SMBs now depending on SaaS products and technology tools for business.

  • 93% of small businesses utilize at least one form of technology. (U.S. Chamber of Commerce)
  • 53% of small businesses use cloud services and 51% use mobile apps for productivity and scheduling. (U.S. Chamber of Commerce)
  • 1 out of 3 small businesses uses video conferencing tools and CRM systems. (U.S. Chamber of Commerce)
  • CRM software is the top technology priority of 31% of SMBs, followed by financial software at 31%, and technology services 28%. (Salesforce)

What Goes Into A Small Business Tech Budget

Top tech priorities of SMBs

CRM system (31%) Financial software (31%) Hardware (28%) Others (10%)

Source: Salesforce

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  • When looking for new technology, the top factors SMBs look for are ease of use (69%), trustworthy vendor (63%), and price (61%). (Salesforce)
  • On average, SMBs use 30+ free SaaS apps and 20+ paid SaaS apps, spending more than $20,000 every month for the software solutions. (Cloud Software Association – Blissfully Report)
  • 64% or less than two-thirds of small businesses have a website as of 2018. (Clutch)
  • 47% of small businesses spend less than $10,000 on digital marketing each year. (Clutch)
  • The three most common digital marketing channels for small businesses are – website (62%), social media (61%), and email marketing (39%). (Clutch)
  • 43% of small businesses rely mainly on their in-house employees to plan and implement digital marketing. (Clutch)
  • 84% of small businesses don’t think they are at risk of a data breach, but 73% are not taking any chances and are putting up safeguards against cyber threats. (SmallBizDaily)

SMB SaaS Usage

Small Business & Modern Workplace Statistics

Today’s digital workplace and connected employees have gone beyond the four walls of the office and made it easier to communicate and collaborate. It has been reported that 63% or nearly two-thirds of companies currently have remote workers, aided in no small way by freelance platforms. The distributed workforce is becoming a trend for small businesses. In fact, 900 startups were looking to hire remote employees at the beginning of 2019. How do small businesses fare when it comes to the modern workplace and workforce?

  • Small business owners personally take on an average of 4.2 roles including that of leader, communicator, marketer, and financial manager. (Salesforce)
  • Small business owners operate on tight budgets and do not outsource that much – only 10% outsource bookkeeping, 17% outsource accounting to a CPA, and 15% outsource payroll. (Guidant Financial)
  • The most common type of small businesses in the U.S. is sole proprietorship with 50% of them categorized as home-based firms. Around 60% of those firms are without paid employees. (Incfile)
  • 41% of small business owners have only 2 to 5 employees. (Guidant Financial)
  • There has been a 15% increase in challenges related to recruiting and retaining employees according to small business owners. (Guidant Financial)
  • The top 3 concerns of small business employees if they were small business owners – trust (45%), productivity/profitability (43%), and communication (40%). (Help Net Security)
  • 70% of small business owners reported that they work more than 40 hours a week, with 19% of them working over 60 hours a week. (Fundera)
  • 53.78% of small business owners have a bachelor’s degree or higher compared to the national average of 33% of the population. (Fundera)
  • 23% of workdays are spent by SMB teams manually inputting data. (Salesforce)

Tasks outsourced by small businesses

SMB owners take on many roles if they can, limiting outsourcing to certain tasks.

outsource accounting to a CPA

%

outsource payroll

%

outsource bookkeeping

%

Source: Guidant Financial

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The workplace isn’t what it used to be. Even the typical office has metamorphosed from cubicles into open working spaces. And even that space for collaboration has gone digital with real-time collaborative platforms that let you discuss projects with teammates halfway across the globe, unhindered by time and location. The 9 to 5 employee has been supplanted by employees who work at their most productive times using devices they are most comfortable with – their own. BYOD is on the rise. That spells savings for small businesses and convenience as well as productivity for employees.

The small business projections for 2019 are concentrated on the increasing use and adoption of technology especially cloud-hosted solutions to streamline business processes. The affordability, scalability, security and automation capabilities provided by SaaS products for the small business make for their compelling use. Also, small businesses are seen to be relying more on business intelligence tools and analytics software to get crucial insights from data generated every day from their operation.

  • Use of online and digital payments will be more prevalent among SMBs because of the advantages – 65% of SMBs agree that customers spend more using cards than cash; 74% agree that accepting digital payments enable more effective business management, and it costs SMBs 57% less in processing digital payments. (Visa)
  • Automation will be further leveraged by small businesses mostly through the use of SaaS tools with artificial intelligence and automation functions. 46% of SMB owners believe that their businesses are ripe and ready to use AI. (Salesforce)
  • 73% of all small businesses will have remote employees by 2028. (Small Business Trends/Upwork)
  • Small businesses will harness smart personalization engines to recognize customer intent which can increase profits by 15%. (Freshcaller)
  • With smaller marketing budgets, small businesses will be focusing on user reviews since studies have found out that 92% of customers hesitate to purchase in the absence of reviews. (Freshcaller)
  • There will be a wider adoption of mobile technology since 25% of SMBs have reported experiencing bigger benefits from mobile including 2X revenue growth and 8x job creation. (Xero)

cashless SMBs

What Can We Glean from Small Business Statistics?

What do the small business statistics for 2019 show us? It’s the clear fact that the small business sector is a force to be reckoned with. This is why B2B companies are tapping into this huge market. The small business sector is now emerging as the leading user of cloud services. And there are many reasons why cloud adoption is essential for the small business. These include the simplicity, security, and scalability that cloud services provide.

Seeing so many SaaS vendors offer products specifically for small businesses is but one indicator of how important and large this sector is. It is expanding phenomenally at a rate of 100 million startups opening each year around the world. Businesses will thus notice and provide services and products geared toward this sector that is a wellspring of opportunities and profits. Likewise, small businesses will look toward these cloud software and services to boost the efficiency and productivity of their operations at the least cost.

SaaS, which is now changing the way entrepreneurs do business online, is the key to small businesses getting that level playing field to compete with larger businesses. You as a small business owner have no reason not to ride the trend of technology and innovation to grow your business. As things stand, it’s the way forward.

By Jenny Chang

Senior writer at FinancesOnline who writes about a wide range of SaaS and B2B products, including trends and issues on e-commerce, accounting and customer service software. She’s also covered a wide range of topics in business, science, and technology for websites in the U.S., Australia and Singapore, keeping tabs on edge tech like 3D printed health monitoring tattoos and SpaceX’s exploration plans.

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