Small Business Shops

Profile of Small Business in 2020

Small Business ShopsThe SBA’s Office of Advocacy has profiles of each state’s small businesses. The profiles report on the number of small businesses in each state, the number of jobs they create, which industries they dominate, how many have opened and closed, how many export, and the counties with the most small businesses. Be sure to check your state’s small business profile. The following are highlights for 2020 of all small businesses in the U.S.

Number of small businesses

There are 31.7 million small businesses, accounting for 99.9% of all businesses in the U.S. The number of sole proprietors increased by 3.1% in 2018. In almost every demographic (e.g., African American, Asian, Hispanic, Veteran, Minority), the number of self-employed men greatly exceeded the number of self-employed women.

In the fourth quarter of 2018, 249,000 establishments started up, generating 863,000 new jobs in the United States. Startups of all types are counted when business establishments hire at least one employee for the first time.

In the same period, 222,000 establishments exited, resulting in 762,000 jobs lost. Exits occur when establishments go from having at least one employee to having none, and then remain closed for at least one year.

Employment

Small businesses employ 60.6 million workers, accounting for 47.1% of the U.S. workforce. However, private-sector employment decreased by 14.6% during the 12-month period ending April 2020 (which reflects somewhat the impact of COVID-19).

Income

The median income for self–employed individuals at their own incorporated businesses was $51,816 in 2018. For self–employed individuals at their own unincorporated firms, median income was $26,084. Small firms exports were 32% of the U.S.’ $1.5 trillion total exports.

Final thought

While some of the stats reflect the impact of COVID-19, the profiles are too early to show the full impact of the pandemic on small businesses in terms of numbers, employment, and income for all of 2020. What’s more, there are a number of favorable countervailing aspects that could make for even better numbers next year. For example, the USMCA, which replaced NAFTA effective July 1, 2020, contains a special chapter on small businesses that could help with exporting and growth for those firms that take advantage of the new rules (see SBA resources for more information). Looking forward to seeing the profiles for 2021.

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