Building a successful small business is far from easy, yet millions of Americans have risen to the occasion and brought their visions to life. In doing so, they’ve gone far beyond offering goods and services, helping to fuel the U.S. economy and enrich local communities. In celebration of National Small Business Week, we’re shining a light on their immense impact, along with current trends in entrepreneurship.
Key Takeaways:
- Small businesses make up 99.9% of all U.S. businesses and generate nearly half of the U.S. GDP.
- They employ nearly half of the private-sector workforce through an estimated 59 million jobs.
- Many small business owners give back to their local communities through donations of time and money.
- Entrepreneurship surged post-2020, and business applications have remained elevated.
- Women and minority ownership of small businesses is growing, but disparities still remain.
What Role Do Small Businesses Play in the Economy?
Small businesses continue to play a key role in the U.S. economy. According to the United States Small Business Administration (SBA), there are more than 34 million active small businesses, which account for 99.9% of all U.S. businesses.
But how does that translate into financial impact? Collectively, small businesses are a powerful economic engine, generating 43.5% of our country’s GDP. They also pay 39% of all private sector payroll, generate 38.9% of private sector receipts, and account for 34.9% of known export value.
How Many Jobs Do Small Businesses Generate?
Although most small businesses (82%) don’t have employees, the remaining 18% still pack a punch—employing 45.9% of private sector employees, or about 59 million workers. Historically, they’ve been a major engine of job growth, driving 62.7% of net new job creation from 1995 to 2021. That impact has only grown since the pandemic, rising to 71%, thanks largely to hiring from startups and companies with fewer than 50 employees.
How Do Small Businesses Impact Local Communities?
Small business owners are often a powerful force for good in their local communities. Beyond creating jobs and contributing to the local culture, they frequently give back.
According to a recent survey by the NFIB Research Center, 76% of small business owners had volunteered their time to work on behalf of organizations like local charities, schools, and youth sports programs in the last 12 months. Further, 90% had provided those organizations with financial support.
As community members themselves, small business owners tend to invest in making their local areas better places to live.
Recent Trends in Entrepreneurship
Entrepreneurship saw a major shift at the end of 2020. As the pandemic triggered mass layoffs, record unemployment, and a rapid shift to online everything, monthly business applications nearly doubled. They’ve since declined to some degree, but remain elevated well above pre-pandemic levels.
The U.S. Treasury doesn’t think the increase is a temporary rebound from the pandemic. Instead, it proposes that it may be due to deeper changes, such as the rise in household wealth during the pandemic, a broader shift in cultural attitudes toward risk-taking, or the prevalence of the gig economy reducing the cost and risk of entrepreneurship.
Source: U.S. Census Bureau, Business Formation Statistics.
Who Owns Small Businesses in the U.S.?
U.S. small businesses are owned and operated by entrepreneurs of various genders, backgrounds, ethnicities, and races. Here’s a look at the current owner demographics.
Business Count By Owner Demographic Group
| Gender | |
| Women | 39% |
| Men | 58% |
| Both equally | 2% |
| Veteran Status | |
| Veteran | 5% |
| Non-veteran | 94% |
| Both equally | 0% |
| Ethnicity | |
| Hispanic | 15% |
| Not Hispanic | 84% |
| Both equally | 0% |
| Race | |
| American Indian and Alaska Native | 1% |
| Asian | 9% |
| Black or African American | 11% |
| Native Hawaiian or Pacific Islander | 0% |
| White | 79% |
Source: U.S. Small Business Administration, Office of Advocacy, Frequently Asked Questions
Underrepresented groups—notably women and Black entrepreneurs—have been gaining ground on the entrepreneurship front in recent years. Women are trending toward equal representation, while Black entrepreneurship grew more between 2019 and 2022 than it did in the previous 30 years combined.
What Challenges Are Small Business Owners Facing?
Building a small business is no easy feat. Many entrepreneurs start out wearing many hats, from strategic planner and operations manager to marketer, salesperson, accountant, and bookkeeper. It’s often an uphill battle that requires a solid business plan, the right tools, and an extremely dedicated founder.
Beyond the integral challenges, external factors can make it even more difficult. For example, the pandemic led to supply chain disruptions and runaway inflation that small business owners have had to navigate and absorb. On top of that, the current tariff wars are driving up import costs and causing economic uncertainty, while tight credit standards make it difficult for entrepreneurs to access funding.
Celebrating and Supporting Small Business Owners
Starting a small business is unquestionably challenging, but not impossible. The over 34 million small businesses that currently exist are a testament to that. National Small Business Week serves as a way to recognize the hard-earned success of entrepreneurs and provide them with resources and support. It’s a well-deserved week of celebration for those who are not only contributing to the economy but shaping it. If you’re one of them, thank you for all you do!
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