86 Key Entrepreneur Statistics for 2020 and Beyond by LegalZoom Staff

86 Key Entrepreneur Statistics for 2020 and Beyond

Entrepreneurs are a gutsy bunch. They think big and work hard. They also take risks, and that's certainly proved to be true in 2020. Here is what's behind the rise in new business formations during the pandemic.

by LegalZoom Staff
updated November 12, 2020 ·  min read

 

Entrepreneurs are a gutsy bunch. They think big and work hard. They also take risks, and that's certainly proved to be true in 2020.

Even as hundreds of thousands of businesses have struggled amid the COVID-19 pandemic, many entrepreneurs have pushed on, and in record numbers. Heading into 2021—as the U.S. remains in the thick of the pandemic—hopeful entrepreneurs are applying for new business applications at the fastest clip since 2007, according to the U.S. Census Bureau.

At the same time, Americans' confidence in small businesses has reached record highs, even exceeding confidence in the military, the medical system, public schools, the U.S. Supreme Court, and many other major American institutions, according to Gallup data.

Whether you're thinking of starting a new business or you're interested in learning about the landscape of innovation and entrepreneurship, check out these 86 entrepreneur statistics. Or skip to the infographic for a look at the rise of COVID-preneurs.

man-talking-on-phone-in-front-of-laptop

Entrepreneurship Statistics: Overview

There's no one type of entrepreneur. However, entrepreneurs in the U.S. tend to be between the ages of 25 and 44 and are motivated most often by a desire to pursue their passions, exit corporate America, and take advantage of new opportunities.

  • There are more than 31 million entrepreneurs in the U.S. (Global Entrepreneurship Monitor)
  • 55% of adults in the U.S. have started at least one business in their lifetime. (Global Entrepreneurship Monitor)
  • 26% of adults in the U.S. have started two or more businesses in their lifetime. (Global Entrepreneurship Monitor)
  • The average entrepreneur in the U.S. starts their business when they are 42, but that age varies by industry. In the software industry, the average age is 40. In the oil and gas industry, it's closer to 47. (National Bureau of Economic Research)
  • Among high-performing startups (in the top 0.1% of growth in the first five years), the average entrepreneur in the U.S. starts their company when they are 45. (National Bureau of Economic Research)
  • 16% of Americans between the ages of 18 and 24 started new businesses in 2019. (Global Entrepreneurship Monitor)
  • 22% of Americans between the ages of 25 and 34 started new businesses in 2019. (Global Entrepreneurship Monitor)
  • 22% of Americans between the ages of 35 and 44 started new businesses in 2019. (Global Entrepreneurship Monitor)
  • 13% of Americans between the ages of 45 and 54 started new businesses in 2019. (Global Entrepreneurship Monitor)
  • 13% of Americans between the ages of 55 and 64 started new businesses in 2019. (Global Entrepreneurship Monitor)
  • 6% of Americans between the ages of 65 and 74 started new businesses in 2019. (Global Entrepreneurship Monitor)
  • A college education is becoming less common among entrepreneurs in the U.S. Roughly 56% of those who were self-employed in 2019 had a college degree, down from 60% in 2018 and 64% in 2017. (FreshBooks)
  • Only 2% of small business owners have a doctorate degree, while 7% have a professional degree and 13% have a master's degree. (Fundera)
  • Entrepreneurs in the U.S. cite wanting to be their own boss as the top motivation for starting a business. (Guidant Financial)
  • Other top motivations for becoming an entrepreneur include pursuing a passion (39%), wanting to exit corporate America (25%), taking advantage of a new opportunity (25%) and finding new work after being laid off (11%). (Guidant Financial)
  • 10% of entrepreneurs in the U.S. start a business because they're not yet ready to retire. (Guidant Financial)
  • 63% of Americans believe that entrepreneurship is a good career choice. (Global Entrepreneurship Monitor)

55% of adults in the U.S. have started at least one business in their lifetime.

Women Entrepreneur Statistics

There are fewer female entrepreneurs in the U.S. than male ones. However, the growth of women-owned businesses in the U.S. over the past several years has outpaced growth in all businesses.

  • There were nearly 13 million women-owned businesses in the U.S. as of 2019. (American Express)
  • 27% of small business owners in the U.S. are women. (Guidant Financial)
  • Globally, there are 252 million women entrepreneurs. (Global Entrepreneurship Monitor)
  • Women in the U.S. have historically started new businesses at a slower rate than men. In 2019, 16.6% of adult women under 65 started a new business, compared with 18.3% of men in the same age group. (Global Entrepreneurship Monitor)
  • However, women in the U.S. between the ages of 45 and 64 start new businesses at about the same rate as men in this age group. (Global Entrepreneurship Monitor)
  • Generally, women business owners in the U.S. are younger than the average business owner. 63% of women business owners are Millennials or members of Generation X, compared with 56% for all business owners. (Guidant Financial)
  • 36% of women business owners in the U.S. are Baby Boomers, and 1% belong to the Silent Generation. (Guidant Financial)
  • Between 2014 and 2019, there was a 21% increase in the number of women-owned businesses in the U.S., compared with a 9% increase in the number of all businesses. (American Express)
  • Between 2014 and 2019, women-owned businesses in the U.S. increased their total number of employees by 8%, compared with a 1.8% increase among all businesses. (American Express)
  • The most popular industries for women-led and women-owned businesses in the U.S. include retail (16%); health, beauty, and fitness services (13%); business services (11%); food and restaurant (10%); and residential and commercial services (7%). (Guidant Financial)
  • 71% of women entrepreneurs start a business to make a difference in the world, compared to 63% of men. (Global Entrepreneurship Monitor)
  • 65% of women entrepreneurs start a business to build wealth or earn a high income, compared to 73% of men. (Global Entrepreneurship Monitor)
  • 45% of women entrepreneurs start a business to earn a living because jobs are scarce, compared to 38% of men. (Global Entrepreneurship Monitor)
  • 29% of women entrepreneurs start a business to continue a family tradition, compared to 32% of men. (Global Entrepreneurship Monitor)

Between 2014 and 2019, there was a 21% increase in the number of women-owned businesses in the U.S., compared with a 9% increase in the number of all businesses.

Black, Hispanic, and Asian Entrepreneur Statistics

According to the Global Entrepreneurship Monitor, roughly 70% of entrepreneurs in the U.S. are White or Caucasian. However, Black, Hispanic, and Asian entrepreneurs continue to form new businesses at increasing rates.

  • 35% of Black business owners in the U.S. are women, compared with 27% for all business owners. (Guidant Financial)
  • African American or Black women own 2.7 million businesses in the U.S. (American Express)
  • Latina or Hispanic women own 2.3 million businesses in the U.S. (American Express)
  • There are about 6.4 million businesses in the U.S. owned by women of color, as of 2019. (American Express)
  • Women of color run 50% of all women-owned businesses in the U.S. (American Express)
  • Generally, Black business owners in the U.S. are younger than the average business owner. 67% of Black business owners are Millennials or members of Generation X, compared with 56% for all business owners. (Guidant Financial)
  • 31% of Black entrepreneurs in the U.S. are Baby Boomers, and 2% belong to the Silent Generation. (Guidant Financial)
  • Latino-owned businesses in the U.S. employ more than 3 million people and grow the economy by almost $500 billion each year. (Stanford Graduate School of Business)
  • Between June 2009 and June 2019, the number of Latino business owners in the U.S. grew 34%, outpacing the 1% growth among all business owners and the 6% decline among White business owners. (Stanford Graduate School of Business)
  • Between 2009 and 2018, the percentage of Latinos who were self-employed in the U.S. grew more quickly than all other demographic groups. (Stanford Graduate School of Business)
  • Latinos have the highest rate of new entrepreneurship of any other demographic group in the U.S. On average, 440 out of every 100,000 Latino adults became entrepreneurs each month in 2019. (Kauffman Indicators of Entrepreneurship)
  • For comparison, 240 Black adults, 290 White adults, and 310 Asian adults out of every 100,000 became entrepreneurs each month in 2019. (Kauffman Indicators of Entrepreneurship)
  • Asian entrepreneurs run 10% of all businesses in the U.S. (Pew Research Center via U.S. Census Bureau)
  • 92% of Asian entrepreneurs in the U.S. started new businesses out of opportunity, rather than necessity in 2018. (Kauffman Indicators of Entrepreneurship)
  • 86% of White entrepreneurs in the U.S. started new businesses out of opportunity, rather than necessity in 2018. (Kauffman Indicators of Entrepreneurship)
  • 85% of Latino entrepreneurs in the U.S. started new businesses out of opportunity, rather than necessity in 2018. (Kauffman Indicators of Entrepreneurship)
  • 81% of Black entrepreneurs in the U.S. started new businesses out of opportunity, rather than necessity in 2018. (Kauffman Indicators of Entrepreneurship)

Latinos have the highest rate of new entrepreneurship of any other demographic group in the U.S.

Entrepreneur Funding and Income Statistics

Entrepreneurs in the U.S. typically rely on a mix of cash, gifts and loans from friends and family members, and other loans to get their businesses off the ground. Additionally, the average entrepreneur tends to make more than the average non-entrepreneur.

  • 58% of small businesses in the U.S. start with less than $25,000, and one-third start with less than $5,000. (Kabbage)
  • Cash is the most popular small business financing method in the U.S., with 37% of owners using it to start their businesses. (Guidant Financial)
  • 13% of small business owners in the U.S. use rollovers as business startups (ROBS) to start their businesses. (Guidant Financial)
  • 10% of small business owners in the U.S. rely on family or friends to finance their businesses. (Guidant Financial)
  • 9% of small business owners in the U.S. use unsecured loans, and 6% use U.S. Small Business Administration loans to start their businesses. (Guidant Financial)
  • Accounting, online retail, and construction and landscaping businesses in the U.S. typically require the least amount of startup capital while restaurants, medical offices, and manufacturing businesses typically require the most. (Kabbage)
  • The average entrepreneur makes around $61,000 per year. (U.S. Census Bureau)
  • The average White entrepreneur makes around $64,000 per year, compared to $50,000 for the average White non-entrepreneur. (U.S. Census Bureau)
  • The average Asian entrepreneur makes around $63,000 per year, compared to $58,000 for the average Asian non-entrepreneur. (U.S. Census Bureau)
  • The average Black entrepreneur makes around $38,000 per year, compared to $35,000 for the average Black non-entrepreneur. (U.S. Census Bureau)
  • The average Latino entrepreneur makes around $36,000 per year, compared to $33,000 for the average Latino non-entrepreneur. (U.S. Census Bureau)

58% of small businesses in the U.S. start with less than $25,000, and one-third start with less than $5,000.

Small Business Statistics

Small businesses make up the overwhelming majority of businesses in the U.S. and employ tens of millions of Americans.

  • There's no single definition of a small business. Depending on the industry, small businesses can have a maximum of 100 employees all the way up to a maximum of 1,500 employees. In general, they can't have more than $41.5 million in annual receipts. (U.S. Small Business Administration)
  • There are 31.7 million small businesses in the U.S. (U.S. Small Business Administration)
  • 99.9% of all businesses in the U.S. are small businesses. (U.S. Small Business Administration)
  • Small businesses in the U.S. employed 60.6 million people, as of 2017. (U.S. Small Business Administration)
  • Small business employees made up 47.1% of all employees in the U.S, as of 2017. (U.S. Small Business Administration)
  • Health care and social assistance, accommodation and food service, retail, and construction companies are the top small business employers in the U.S. (U.S. Small Business Administration)
  • Small businesses in the U.S. created 1.6 million net jobs in 2019, with the smallest firms (fewer than 20 employees) creating 1.1 million of those jobs. (U.S. Small Business Administration)
  • 71% of adults in America believe that it is easy to start a business. (Global Entrepreneurship Monitor)
  • 70% of small business owners in the U.S. report working more than 40 hours per week, and 19% report working more than 60 hours per week. (Fundera)
  • 76% of small business owners in the U.S. say they are somewhat or very happy while only 13% report being somewhat or very unhappy. (Guidant Financial)
  • 92% of small business owners in the U.S. say they don't regret starting a business. (Fundera)

99.9% of all businesses in the U.S. are small businesses.

Small Business Success Rate Statistics

Running a business is challenging, but many more new businesses survive than fail in their first few years of business. Research shows that age (and also experience) plays an important role in entrepreneurs' success.

Small Businesses During COVID-19

Hundreds of thousands of small businesses have struggled greatly during the pandemic. At the same time, public confidence in small businesses has soared to record highs, and hopeful business owners are applying for new business applications at the fastest rate in more than a decade.

  • As of September 2020, roughly 164,000 U.S. businesses have closed since the beginning of March 2020. That includes about 98,000 permanent closures and 66,000 temporary closures. (Yelp)
  • Lawyers, real estate agents, architects, accountants, health professionals, plumbers, and contractors have seen relatively low business closure rates because of the pandemic. Meanwhile, restaurants and retailers have been affected particularly strongly. (Yelp)
  • 52% of small business owners in the U.S. say their businesses won't go back to normal until sometime in 2021. 20% believe it will be sometime in 2022. (National Federation of Independent Business)
  • Roughly 20% of businesses in the U.S. said that as of August 2020, their sales remained at 50% or less of their pre-pandemic levels. (National Federation of Independent Business)
  • 28% of businesses in the U.S. said their sales were 50–74% of their pre-pandemic levels, as of August 2020. (National Federation of Independent Business)
  • 50% of businesses in the U.S. said their sales were back to their pre-pandemic levels, as of August 2020. (National Federation of Independent Business)
  • Americans submitted an average of 111,000 applications for new businesses per week between the end of June 2020 and the beginning of September 2020, the most applications submitted per week since 2007. (U.S. Census Bureau)
  • 75% of adults in the U.S. had a great deal or quite a lot of confidence in small businesses, as of June 2020. That exceeds confidence in the military (72%), the medical system (51%), the police (48%), organized religion (42%), public schools (41%), the U.S. Supreme Court (40%), the presidency (39%), banks (38%), large technology companies (32%), organized labor (31%), newspapers (24%), the criminal justice system (24%), big businesses (19%), television news (18%), and Congress (13%). (Gallup)
  • Americans' confidence in small businesses is at its highest level since 2007. (Gallup)
  • 87% of Republicans, 74% of Democrats, and 68% of Independents had a great deal or quite a lot of confidence in small businesses, as of June 2020. (Gallup)

Let's take a closer look at these COVID-19 entrepreneurs. Who are the brave Americans starting online businesses or setting up physical shops in their local communities, even when so many businesses have shuttered during the pandemic, and why are they doing it?

rise of the COVID-19 entrepreneurs

Entrepreneurship has gradually become more of a popular calling among people of all ages, ethnic and demographic backgrounds, and experience levels. And the COVID-19 pandemic—though destructive and tragic—has accelerated that trend and opened up the path for new, creative ideas.

Did you come up with a good business idea while you were on a quarantine hike? Or while you were running out of shows to stream? Now's the time to give a new business a go. Why not? Let us help.

We'll guide you through all of the paperwork—whether you want to form an LLC, sole proprietorship, nonprofit, or anything in between—so that you can focus on the more enjoyable aspects of bringing your business to life.

Sources: U.S. Census Bureau | Bureau of Labor Statistics

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