There’s no denying the power of big companies and household name brands. But if you really want to get to the heart of business ownership in the United States, what you really need to explore? Small business ownership.
Small businesses play a huge role in creating new jobs and supporting the economy. But how many small businesses are there in the US? What are their business demographics—or, in other words, what kinds of businesses are they? And how are those small businesses responsible for moving our economy forward?
Let’s take a look at the state of small businesses in the United States—how many there are, what industries they’re in, and how small business ownership contributes to the economy in the US:
What Does “Small Business” Mean?
First things first—before we jump into how many small businesses there are in the United States, let’s quickly cover how the term “small business” is defined.
The U.S. Small Business Administration Office of Advocacy generally defines a small business as “an independent business with fewer than 500 employees.” The SBA, however, does have larger small business size standards for certain industries, including government contracting.
How Many Small Businesses Are There In The United States?
Now that you understand how small businesses are defined, let’s jump into the facts—starting with how many small businesses there are in the US.
According to the SBA Office of Advocacy’s most recent Small Business FAQs (which uses data from the US Census Bureau’s Statistics of U.S. Businesses, Nonemployer Statistics, and Small Business Pulse Survey, which collected data on how COVID impacted the small business community), as of 2020, there are 31.7 million small businesses in the United States—a solid one million increase from the 30.7 million reported in the 2019 report.
The most common number of employees of those small businesses? Interestingly, none. Of those 31.7 million businesses, 25.7 million—or 81 percent—have no employees (self-employed individuals known as “nonemployers”). The other 9 percent—or 6 million—are employer firms with paid employees. Of the small businesses that employ paid workers, an employee count of between 24 and 99 is the most common.
How Does The Number Of Small Businesses Compare To The Total Number Of Businesses In The US?
31.7 million is a lot of businesses—but how, exactly, does that number compare to the total number of businesses in the country?
According to the SBA Office of Advocacy, there are currently 21,139 large businesses in the United States—which means that small businesses make up a whopping 99.9% of all firms in the US.
Small firms also make up:
- 99.7 percent of businesses with paid employees
- 97.5 percent of exporters
- 32 percent of known export value
How Many Americans Are Employed By Small Businesses In The United States?
Clearly, small businesses make up a huge part of the total businesses in this country. But how many people do those small businesses employ—and how many new jobs are those businesses creating?
Today, small businesses employ 60.6 million people in the US. That’s nearly half (47.1 percent) of the private sector workforce (those small businesses are also responsible for 40.3 percent of private sector payroll).
Small business owners are also responsible for creating a huge percentage of the new jobs in America, directly contributing to the health and growth of the US economy. According to the Office of Advocacy’s 2020 Small Business Profile, small businesses created 1.6 million new jobs in 2019—and between 2000 to 2019, small companies created 10.5 million new jobs (65.1 percent of all jobs created during that period).
What Industries Have The Largest Share Of Small Business Employment?
While you can find businesses with a smaller firm size in virtually every industry, there are certain industries that tend to attract more startups, emerging small business owners, and people interested in starting their own business.
According to the Office of Advocacy, the industries that have the highest levels of small business employment in 2019 include:
- Health Care and Social Assistance: 8,984,159 workers
- Accommodation and Food Services: 8,542,661 workers
- Retail Trade: 5,526,296 workers
- Construction: 5,373,702 workers
- Professional, Scientific, and Technical Services: 5,190,980 workers
- Manufacturing: 5,039,772 workers
- Other Services (except Public Administration): 4,697,878 workers
- Administrative, Support, and Waste Management: 3,754,463 workers
- Wholesale Trade: 3,413,157 workers
- Finance and Insurance: 1,909,993 workers
- Transportation and Warehousing: 1,685,388 workers
- Educational Services: 1,645,96 workers
- Real Estate and Rental and Leasing: 1,451,546 workers
- Arts, Entertainment, and Recreation: 1,428,531 workers
Get Out There and Start A New Business of Your Own
Clearly, small businesses make up a huge part of the economy in the United States—and even as we continue to navigate the challenges of COVID, that’s not going to change. So, if you feel the call to entrepreneurship, get out there and start a small business of your own!
1. Introducing Yourself
Your introductory email needs to pack a lot of information into a small package. Try something like this:
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Hello Jane,
My name is John Doe and I work for ABC Agency, where we provide business insurance policies to many of Dallas' rockstar small businesses.
Congratulations on your new business, Jane's Bakery. Are you wondering if you have all the insurance you need? Or if your policies will really cover you in a pinch?
At ABC Agency, we pride ourselves on providing robust, comprehensive coverage options to companies like yours with flexible, pay-as-you-go plans.
Are you available this week to talk more about how we can help? I can help you find the most affordable rates and the best policies out there.
I look forward to speaking with you soon.
Cheers,
John Doe
2. Presenting a Quote
Once you've met with your potential client, a quick reply with their quote will get the ball rolling.
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Hi Jane,
Thanks so much for meeting with me this morning. I loved touring Jane's Bakery–I can still smell those delicious chocolate chip cookies baking! You have a great location, and I'm sure you're going to do great on Front St.
After reviewing my notes, I've pulled together an insurance quote for you (attached). I recommend a business owner's policy. A BOP includes several insurance products in one: liability, property insurance, and business interruption insurance. It offers robust coverage at a competitive price.
I'll call you in a few days to see what you think about this insurance plan. In the meantime, if you have any questions, don't hesitate to email me or call me at [phone number].
Again, thank you for your time today. I look forward to working with you in the future.
Cheers,
John Doe
3. Thanks for Purchasing a Policy
Gratitude is important! It's never a bad idea to thank your clients for their business.
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Hi Jane,
Thank you for choosing a business owner's policy with ABC Agency. We know it's so important to get the right coverage for your business, and we are honoured you've placed your trust in us.
We're excited to work closely with you, and our no. 1 goal is to make sure you're business is always protected.
Do you have any questions? We are here to help. Reach out whenever something comes to mind.
Thank you again for choosing ABC Agency to insure Jane's Bakery.
Cheers,
John Doe
4. Welcome Email
A welcome email helps clients feel like you're there to help–and can softly pitch other insurance products you offer.
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Dear Jane,
Welcome to the ABC family! We are thrilled to have you as a new customer and can't wait to meet all of your insurance needs.
As an independent insurance agency, we work with multiple insurance providers to find the best coverage options for all our customers. If you need any other type of insurance–like [include additional offerings unique to your agency, like life insurance, health insurance, home insurance or anything else]–we can help you too.
Do you want to discuss any of these policies?
Cheers,
John Doe
5. Introducing a New Product
A happy client may want to expand their business with you.
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Hello Jane,
I hope all is well with you and Jane's Bakery. I stopped in yesterday for a blueberry muffin and coffee, and they were delicious. I loved the hint of cinnamon in the muffin! Was that your idea?
I wanted you to be the first to know we are now offering commercial vehicle insurance to our policyholders. Auto insurance for your catering vans is super important since your personal car insurance won't cover them.
We're offering this insurance coverage solely to our current business clients at the moment and have some very competitive rates.
Would you like me to work up a quote for you?
As always, thanks so much for being a part of the ABC family.
Cheers,
John Doe
6. Asking For Referrals
Once your relationship is established and comfortable, let your clients help you grow.
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Hi Jane,
You've been a valuable member of the ABC family for two years now, and we so appreciate your business–not to mention the muffins you supply for our monthly meetings!
Because you are a valued policyholder, I wanted to ask a quick favour. I know you are active in the local Chamber of Commerce, and I'm hoping you might know some colleagues who would benefit from working with our insurance company.
Referrals are one of the most effective ways to connect with our community since people really trust their friends, family and colleagues. Is there anyone you'd recommend I speak with?
Remember that in addition to business insurance products, we offer everything from life insurance policies to pet insurance.
As a thank you for your help, we will send you an Amazon gift card of $100 when your referrals buy insurance from us.
Thanks so much for your help!
Cheers,
John Doe
7. Policy Renewal
If your client needs to renew their policy with you, send an email like this:
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Hi Jane,
I hope you're doing well! What a year it's been—from being listed as one of the top 5 bakeries in Dallas to being an official vendor for the city—you have so much to be proud of.
Just a heads up that your business owner's policy is up for renewal soon and will expire on June 15, 2023.
If you're still happy with the coverage, we can easily renew it for you.
Do you have some time to chat this week?
Looking forward to serving you again!
Cheers,
John Doe