Entrepreneurship is at an All-Time High
Ever thought about starting a small business? Now may be the time to make that dream a reality. Entrepreneurship is at an all-time high as the pandemic has shifted people's focus to the way they want to work and live. In fact, during the third quarter of 2020, new business applications hit a record number with more than 1.46 million new applications filed.1 This represents a 60.9% increase from the second quarter of 2020. Interest in starting a new business hasn't waned. During the first quarter of 2021, more than 1.44 million new business applications were filed.1 Since November is national entrepreneur month, let's look at the state of entrepreneurship and some small business resources to help determine if starting a business is right for you.
Small Business Statistics
There are 31.7 million small businesses in the U.S., and they make up 99.9% of all U.S. businesses in the U.S.2 According to the U.S. Small Business Administration, small businesses employ 60.6 million people — 47.1% of all employees in the U.S.2 During 2020, small businesses added 1.6 million jobs to the U.S. economy.
While young entrepreneurs often make headlines, the average age of someone who starts a business is 41.9.3 For new high-growth ventures, the average age is 45.3 In fact, a 2021 report by Kauffman Indicators of Entrepreneurship4 found that the rate of new entrepreneurs is lowest among those ages 20 to 34 years (0.28%) and highest in those ages of 45 to 54 years (0.49%).
In 2020, there were around 8 women for every 10 men 5 starting or running new businesses in the U.S. But the gender gap is shrinking. In fact, 2019 marked the smallest gender gap in recent history with total entrepreneurial activity for women at 16.6% and men at 18.3%. 5
Approximately 18.3% of all U.S. businesses are owned by minorities. 6 However, the rate of new entrepreneurs increased sharply for all ethnic and racial groups during 2020. The rate of new entrepreneurs was 0.52% among Latinos, 0.38% among African Americans, 0.35% among Asians, and 0.36% among whites.4
Some of today's most successful businesses were started while the founder was a student. But graduating from college is not a requirement. Just 44% of business owners have a bachelor's or postgraduate degree, and 20% only have a high school or GED diploma.7
There are plenty of reasons to start a business,4 but the top two reasons U.S. entrepreneurs report are “to make a difference in the world" and “to build wealth or achieve a high income." Another common reason for entrepreneurship was because jobs were scarce and the founder wanted to make a living, which likely reflects the economic uncertainty and shutdown caused during the pandemic.
When it comes to owning your own business, what you can earn is up to you. While entrepreneurs often dream of achieving a high income, the average small-business owner pays themselves $65,605 per year,8 with the amount ranging between $30,000 and $130,000.
Just 44% of business owners have a bachelor's or post-graduate degree, and 20% only have a high school or GED diploma.
Small Business Resources
When it comes to growing a small business, entrepreneurs have plenty of small business resources that can help.
One way to spread the word is by posting on social media. A survey found that 64% of small businesses 12 leverage social media in their digital marketing strategy. Social media can also be used to increase sales.
Research published in the Journal of Management Studies 13 found that owners that created a business plan had an average growth of 33.4% higher than owners who didn't take the time to plan. It's important to update your business plan every year, as well.
According to a 2020 Small Business Credit Survey from the Federal Reserve, 43% of small businesses applied for a loan14 with a small business lender in 2020. In addition to loans, other options for small business owners include lines of credit and credit cards.
Is entrepreneurship the right path for you? Synovus has resources available to help make your journey more successful. Reach out to your small business banker for more information and learn more about starting a business in our Business Resource Center.
Important disclosure information
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
- Oberlo, "How Many New Businesses Start Each Year?" accessed September 30, 2021. Back
- U.S. Small Business Administration (SBA) Office of Advocacy, " 2020Small Business Profile," accessed September 30, 2021. Back
Pierre Azoulay, Benjamin F. Jones, J. Daniel Kim, and Javier Miranda,
"Age and High-Growth Entrepreneurship," Insights 2020 , published
March 2020, accessed September 30, 2021.Back
Kauffman Indicators of Entrepreneurship, "National Report on Early
Stage Entrepreneurship in the United States: 2020," published February
2021, accessed September 30, 2021.Back
Babson College, "Global Entrepreneurship Monitor (GEM) 2020/2021
U.S. Report," published September 3, 2021, accessed September 30,
U.S. Census Bureau, "Annual Business Survey Release Provides Data
on Minority-Owned, Veteran-Owned and Women-Owned Businesses,"
published January 28, 2021, accessed September 30, 2021.Back
Mike Juang, "A secret many small-business owners share with Mark
Zuckerberg," CNBC, published July 19, 2017, accessed September 30,
Payscale.com, "Average Small Business Owner Salary," accessed
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U.S. Bureau of Labor Statistics, "Survival of private sector
establishments by opening year," accessed September 30, 2021.Back
- SBA Office of Advocacy, "Small Business Facts", accessed September 30, 2021. Back
Gallup, "Amid Pandemic, Confidence in Key U.S. Institutions Surges,"
August 12, 2020, accessed September 30, 2021.Back
Kristen Henhold, "The State of Small Business Advertising in 2019,"
Manifest.com, published February 27, 2019, accessed October 7, 2021.Back
Andrew Burke, Stuart Fraser and Francis J. Greene, "The Multiple
Effects of Business Planning on New Venture Performance," Journal of
Management Studies , published May 2010, accessed October 7, 2021.Back
- Federal Reserve, "2020 Report on Employer Firms Small Business Credit Survey" accessed October 7, 2021. Back
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