Entrepreneurs are innovators, and hundreds of thousands of Americans are looking to start businesses each year despite the risks. Whether you’re wondering about success rates, how to fund your venture, or what type of degrees or experience you’ll need as an entrepreneur, these 15 current entrepreneurship statistics will help set the record straight.
1. The U.S. offers the best environment to cultivate entrepreneurs
The United States ranks number one out of 137 companies listed on the Global Entrepreneurship and Development Index (GEDI) as of 2018. The GEDI collects date on various different entrepreneurial factors in several different countries and weighs them against the social and economic infrastructure.
2. 15 million Americans are self-employed full-time
This entrepreneurship statistic is likely to rise according to a 2018 FreshBooks report. It’s estimated that 27 million Americans will leave the traditional workforce in favor of full-time self-employment by 2020.
3. 452,835 companies were founded in 2014, but this is less than 30 years ago
While one might assume the number of small businesses launched each year is increasing, it’s been decreasing during the past few years due to reasons like industrialization, the Great Recession, and increased regulatory requirements.
4. Despite fewer businesses being started each year, business failure rates are on a long-term decline
The rate at which American entrepreneurs closed shops has fallen by 30% since 1977.
5. There are various reasons why most businesses fail
According to CB Insights, a surprising 42% of businesses fail because there is no market need. Around 29% fail because they ran out of cash, 23% don’t have the right team to help them succeed, and 17% fail because they don’t have a strong enough business model.
6. Roughly 80% of small businesses survive the first year
The Small Business Administration (SBA) states that while nearly 80% of small businesses survive their first year, only 50% have survived five years or longer during the past decade. About one-third of small businesses survive 10 years or longer.
7. Entrepreneurs fund their business with their savings, profit, and business loans
About 21.9% of small firms have used personal and family savings to finance their business while 5.7% have used business profits and assets, and 8% have used business loans and credit cards from banks.
8. The average short-term business loan amount is $20,000
These are more accessible loans for smaller business endeavors. The average SBA loan amount is $417,316, and the average business line of credit is $22,000. Most small businesses are still applying for loans through traditional banks. The average loan amount from a traditional bank is around $150,000.
9. Most business owners start their own business from scratch
Approximately 83.1% founded their own business, 11.3% purchased, 2.8% inherited, and 4.4% transfer of ownership or gift.
10. Most small business owners don’t have a college degree
A degree is not a requirement to start your own business. In fact, most business owners either never went to college or dropped out before they could obtain a degree. According to a CNBC/Survey Monkey survey, only 26% of small business owners said they had a bachelor’s degree. Only 17% went to college, 20% graduated high school but did not go to college, and 5% didn’t graduate high school.
11. More than 50% of companies started in a garage or basement
If you’re starting a business out of your home and not in an office, don’t get discouraged. World-renowned companies like Google, Apple, Amazon, Microsoft, and Disney all started in a garage or basement. Currently, 51.6% of companies are started in someone’s garage or basement.
According to the SBA, 60.1% of firms without paid employees are home-based.
12. More than 35% of entrepreneurs work 40 hours per week
This includes weekends as 17.7% say they work every weekend. About 31% of entrepreneurs work 50 hours per week and 11.8% work 60 hours per week. Working longer hours means that some business owners have to miss important lifestyle events, celebrations, and other experiences. About 37.9% say they missed a family or social occasion at least a few times per year due to work.
13. Entrepreneurs are 125% more successful if they’ve worked previous jobs in the industry they’re currently doing business in
While education may not be a huge factor, experience sure is when it comes to being a successful entrepreneur. Research shows that entrepreneurs are much more likely to be successful if they’ve held a previous job in the field their new business is in. This can be true for a variety of reasons, the most obvious one being experiences and connections. A more experienced candidate can charge more when they go into business for themselves, and they also have a better chance of providing more value to customer and clients.
14. Most entrepreneurs are not millennials
According to research from Massachusetts Institute of Technology, the stereotype of the 22-year old millennial entrepreneur dominating the small business world is a myth. The average entrepreneur who’s started a business and went on to hire at least one employee is 42 years old.
15. 62% of U.S. billionaires are self-made
After surveying 585 billionaires in 2016, Wealth X determined that 362 or 62% were self-made, 18% reached billionaire status through a combination of inheritance and making their own wealth. The remaining 20% inherited their wealth.
The future of entrepreneurship in the U.S. seems pretty promising. Entrepreneurs work hard, but they also get results. What did you think of these 15 entrepreneurship statistics? Let us know in the comment section below.