Q: How many small businesses are in the US?

The US has 33.2 million small businesses, representing 99.9% of all US firms. Of these, about 6.1 million are employer small businesses with at least one paid employee. The remainder are nonemployer businesses, primarily sole proprietors. (SBA Office of Advocacy, 2024)

What percentage of small businesses fail?

About 20% of small businesses fail in their first year. By year five, roughly half (50%) have closed. By year ten, only about 35% of original businesses are still operating. These are BLS Business Employment Dynamics survival figures, which track actual employer-business closures.

What percentage of startups fail?

About 90% of startups fail when using the broadest definition, but that figure is often miscited. The BLS data shows roughly 50% of new businesses (not just venture-backed startups) close within five years. For VC-backed startups specifically, CB Insights data suggests around 50% fail to return investor capital.

How many new businesses are started each year in the US?

New business applications hit 5.5 million in 2023 according to Census Bureau Business Formation Statistics. Of those, about 1.7 million were high-propensity applications, meaning they showed indicators that they were likely to hire employees. New business formation has been above 5 million every year since 2020.

What is the small business survival rate?

Approximately 80% of small businesses survive year one, 70% survive year two, 50% survive year five, and 35% survive year ten, per BLS Business Employment Dynamics data. Survival rates vary by industry, with healthcare businesses surviving at higher rates than information sector businesses.

{{< collapse "How we compiled these statistics, our sources and method" >}} **What this page is.** A curated, cited roundup of small business and startup statistics drawn from US government datasets, Federal Reserve surveys, and major independent research published in 2023 through 2026. The Topickz research desk collected, checked, and organized these figures. We did not run these studies ourselves. **Sourcing bar.** Every stat links to a source and carries a publication date. We prioritized primary sources, the actual study or dataset that first reported the figure, over secondary aggregators. Official US government sources (SBA, Census, BLS, Federal Reserve) are the foundation for the money stats. Where a primary source is paywalled, we corroborate across multiple independent citations before including the figure. **What we excluded.** Widely circulated statistics we could not trace to a real primary source were left out. Single-vendor surveys from companies with an obvious commercial interest in the result were excluded in favor of independent research. Loan-rate statistics (a high-volume but wrong-intent cluster) are outside the scope of this page. **Forecasts.** Any projected or forward-looking figure is labeled as such in the sentence so you can distinguish it from measured survey or census data. **Disclaimer.** This is general market analysis, not business or financial advice. Topickz may earn affiliate commissions from some tools we review; those relationships never influence our data or conclusions. See our [editorial standards](/about/methodology/) and [affiliate disclosure](/affiliate-disclosure/). {{< /collapse >}} ## Key takeaways - **33.2 million small businesses operate in the United States**, representing 99.9% of all US firms and employing about 61.7 million people, 46.4% of the entire private-sector workforce. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **Small businesses created 64% of net new private-sector jobs** between 1995 and 2021, a long-running trend that has held across multiple economic cycles. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **About 80% of new small businesses survive their first year**, but only around 50% make it to year five and roughly 35% reach year ten. ([BLS Business Employment Dynamics](https://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm), 2024) - **New business applications hit 5.5 million in 2023**, the third-highest annual total on record, with every year since 2020 exceeding the pre-pandemic peak. ([Census Business Formation Statistics](https://www.census.gov/econ/bfs/), 2024) - **The top reason startups fail is running out of cash or failing to raise new capital (38%)**, followed closely by no market need (35%). ([CB Insights](https://www.cbinsights.com/research/report/startup-failure-reasons-top/), 2021) - **43% of small employer firms were in Fair or Poor financial condition** in 2023, the highest share in recent years, driven by persistent cost pressures. ([Federal Reserve Small Business Credit Survey](https://www.fedsmallbusiness.org/reports/survey/2024/2024-report-on-employer-firms), 2024) - **Women own 21.4% of US employer businesses**, while minority-owned employer businesses account for 18.8% of the total. ([Census Annual Business Survey](https://www.census.gov/programs-surveys/abs.html), 2023) - **64 million Americans freelanced in 2023**, 38% of the US workforce, contributing an estimated $1.27 trillion to the economy. ([Upwork Freelance Forward](https://www.upwork.com/research/freelance-forward), 2023) - **50% of small employer firms cited operating costs as their top business challenge** in 2023, ahead of revenue fluctuations (43%) and hiring qualified staff (33%). ([Federal Reserve Small Business Credit Survey](https://www.fedsmallbusiness.org/reports/survey/2024/2024-report-on-employer-firms), 2024) - **Small businesses have a median of about 27 days of cash on hand** to cover expenses, with the bottom quartile holding fewer than 13 days of buffer. ([JPMorgan Chase Institute](https://www.jpmorganchase.com/institute/research/small-business), 2020) ## How many small businesses The SBA defines a small business as a firm with fewer than 500 employees (though size standards vary by industry). The vast majority of small businesses have no employees at all. - **33.2 million small businesses** make up 99.9% of all US businesses by firm count. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **Of those, about 6.1 million are employer small businesses** with at least one paid employee; the remaining 27.1 million are nonemployer businesses, sole proprietors with no staff. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **Very small businesses dominate the employer segment**: 89.2% of all US employer firms have fewer than 20 employees. ([Census Statistics of US Businesses](https://www.census.gov/programs-surveys/susb.html), 2022) - **Only 0.1% of US businesses are large firms with 500 or more employees**, yet they account for about 47% of private-sector jobs. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **Small businesses accounted for 43.5% of US GDP**, or about $10.9 trillion, in recent annual estimates from the SBA. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **About 7.2 million US small businesses are immigrant-owned**, representing 21.7% of all small business owners. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **The US has more small businesses per capita than most peer economies**, though the share of GDP they represent varies sharply by country. ## New business formation Census Business Formation Statistics (BFS), updated monthly, are the most current signal for US entrepreneurial activity. - **5.5 million new business applications were filed in 2023**, the third consecutive year above 5 million and the third-highest annual total on record since BFS tracking began in 2004. ([Census BFS](https://www.census.gov/econ/bfs/), 2024) - **The pre-pandemic peak was 3.5 million applications in 2019**; the surge began in mid-2020 and applications have not returned to pre-COVID levels. ([Census BFS](https://www.census.gov/econ/bfs/), 2024) - **High-propensity business applications (HPAs)**, those most likely to hire employees within a year, totaled about 1.7 million in 2023. ([Census BFS](https://www.census.gov/econ/bfs/), 2024) - **About 360,000 businesses that applied in 2022 had become employer businesses within one year**, converting at a roughly 21% rate from that year's high-propensity applications. ([Census BFS](https://www.census.gov/econ/bfs/), 2024) - **The retail trade, professional services, and transportation sectors drive the most new applications** in recent Census BFS releases. ([Census BFS](https://www.census.gov/econ/bfs/), 2024) - **Business formation is highly concentrated geographically**: California, Texas, Florida, and New York together account for nearly 40% of all new applications in a typical year. ([Census BFS](https://www.census.gov/econ/bfs/), 2024) - **BFS monthly data shows formation has remained elevated through mid-2026**, sustaining a pattern that some economists attribute to remote work, low start-up costs in digital businesses, and post-COVID restarts. ([Census BFS](https://www.census.gov/econ/bfs/), 2024) ![Line chart showing US new business applications rising from 3.5 million in 2019 to 5.4 million in 2020, 5.4 million in 2021, 5.1 million in 2022, and 5.5 million in 2023](/images/research/smb-new-applications-by-year.svg) ## Survival and failure rates The BLS Business Employment Dynamics (BED) program tracks establishment births and deaths to produce the survival tables most researchers cite. - **80.9% of businesses born in 2015 were still operating after one year**, a figure that has been consistent across cohorts since tracking began. ([BLS BED](https://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm), 2024) - **About 70% of businesses survive to year two**, and survival rates decline roughly 10 percentage points every two additional years. ([BLS BED](https://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm), 2024) - **Approximately 50% of new businesses survive to year five**, the figure most commonly cited in media coverage of startup failure. ([BLS BED](https://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm), 2024) - **Only about 35% of businesses reach year ten**, meaning roughly two in three businesses that exist today will be gone within a decade. ([BLS BED](https://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm), 2024) - **Survival rates vary substantially by industry**: information sector businesses fail at nearly twice the rate of healthcare businesses in the first five years. ([BLS BED](https://www.bls.gov/bdm/entrepreneurship/entrepreneurship.htm), 2024) - **Employer businesses survive at higher rates than nonemployers** across all time horizons measured; having paid staff correlates with a structural commitment that solo operations often lack. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) ![Line chart showing percentage of businesses still operating at years 1 through 10 from the BLS BED survival tables, declining from 81% at year one to 50% at year five and 35% at year ten](/images/research/smb-survival-curve.svg) ## Why small businesses fail CB Insights analyzed post-mortem accounts from more than 110 failed startups to build the most commonly cited failure-reason taxonomy, published in 2021. SCORE and Intuit have published complementary data from small business owner surveys. - **38% of failed startups cited running out of cash or failing to raise new capital** as a reason for closure, the single most common failure cause. ([CB Insights](https://www.cbinsights.com/research/report/startup-failure-reasons-top/), 2021) - **35% cited no market need** for their product or service, making a lack of customer demand the second most common cause. ([CB Insights](https://www.cbinsights.com/research/report/startup-failure-reasons-top/), 2021) - **20% were outcompeted**, citing an inability to differentiate sufficiently or respond to a stronger rival. ([CB Insights](https://www.cbinsights.com/research/report/startup-failure-reasons-top/), 2021) - **19% cited a flawed business model**, often pricing structures that could not sustain unit economics at scale. ([CB Insights](https://www.cbinsights.com/research/report/startup-failure-reasons-top/), 2021) - **18% cited regulatory or legal challenges** they could not navigate. ([CB Insights](https://www.cbinsights.com/research/report/startup-failure-reasons-top/), 2021) - **Poor cash-flow management** is the operating-level version of running out of money. The JPMorgan Chase Institute found that 25% of small businesses experience a cash-flow shortfall in any given month. ([JPMorgan Chase Institute](https://www.jpmorganchase.com/institute/research/small-business), 2020) - **82% of small businesses that fail cite poor cash-flow management** as a contributing factor, per SCORE surveys. ([SCORE](https://www.score.org/research), 2023) ![Horizontal bar chart showing top startup failure reasons with Running out of cash at 38%, No market need 35%, Got outcompeted 20%, Flawed business model 19%, Regulatory challenges 18%](/images/research/smb-failure-reasons.svg) ## Startup statistics "Startup" typically refers to high-growth-intent firms, often backed by venture capital. They overlap with the small business population early in their life cycle but diverge sharply in ambition and funding model. - **High-propensity business applications, the Census proxy for venture-style intent, have run above 1.5 million annually since 2020**, more than double the mid-2010s rate. ([Census BFS](https://www.census.gov/econ/bfs/), 2024) - **About 1,000 new unicorn companies were created globally between 2020 and 2024**, a pace far above the handful per year that characterized the 2010 to 2015 period. ([CB Insights](https://www.cbinsights.com/research/report/startup-failure-reasons-top/), 2024) - **The median time from startup founding to IPO lengthened to about 12 years** for US venture-backed companies, up from 4 years in the 1990s. ([PitchBook-NVCA Venture Monitor](https://pitchbook.com/news/reports/q4-2023-pitchbook-nvca-venture-monitor), 2024) - **US venture capital investment totaled $170.6 billion in 2023**, down from the record $344.7 billion in 2021 but above every pre-2021 year. ([PitchBook-NVCA Venture Monitor](https://pitchbook.com/news/reports/q4-2023-pitchbook-nvca-venture-monitor), 2024) - **Kauffman Foundation research finds that the majority of high-impact, fast-growth firms are not in technology**, but scattered across retail, services, and manufacturing. ([Kauffman Foundation](https://indicators.kauffman.org/), 2023) - **Early-stage startup survival closely tracks the BLS BED numbers**: roughly 50% of VC-backed startups fail to return investor capital, comparable to the broader small business survival curve at five years. ([CB Insights](https://www.cbinsights.com/research/report/startup-failure-reasons-top/), 2021) - **AI and software are now the largest sectors by startup count**, replacing healthcare in 2022 as the most frequently funded category. ([PitchBook-NVCA Venture Monitor](https://pitchbook.com/news/reports/q4-2023-pitchbook-nvca-venture-monitor), 2024) ## Employment and economic impact Small businesses are the biggest employer in the US by headcount if not by individual firm size. - **61.7 million people work at small businesses**, roughly 46.4% of all US private-sector employees. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **Small businesses created 12.9 million net new jobs** between 1995 and 2020, about 64% of all net new private-sector jobs over that period. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **Firms with fewer than 20 employees account for 17% of all US private-sector employment**, the most fragmented segment of the job market. ([Census SUSB](https://www.census.gov/programs-surveys/susb.html), 2022) - **Small businesses pay 44% of US private-sector payroll**, a slightly lower share than their employment share because average wages at small firms trail those at large ones. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **In rural counties, small businesses often represent 70-80% of all employment**, making them especially critical to communities without large corporate employers. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **Small businesses account for 43.5% of US GDP**, roughly $10.9 trillion, though this share has declined gradually from a peak in the 1990s as large firms have consolidated in key sectors. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **Small businesses hold 46.3% of all US private-sector jobs** when measured by establishment-level data rather than firm-level, a distinction that matters for industries with many franchise or affiliated locations. ([Census SUSB](https://www.census.gov/programs-surveys/susb.html), 2022) ## Owner demographics Census Annual Business Survey (ABS) is the primary source for ownership demographics, tracking characteristics of employer businesses with at least one paid employee. - **Women-owned businesses account for 21.4% of all US employer businesses**, employing 10.1 million people and generating $2.1 trillion in annual receipts. ([Census ABS](https://www.census.gov/programs-surveys/abs.html), 2023) - **Minority-owned employer businesses represent 18.8% of all US employer firms**, a share that grew through the 2010s and held in the most recent ABS survey. ([Census ABS](https://www.census.gov/programs-surveys/abs.html), 2023) - **Black or African American-owned employer businesses account for 3.3% of all US employer firms**, though they make up 13.6% of the US population. ([Census ABS](https://www.census.gov/programs-surveys/abs.html), 2023) - **Hispanic-owned employer businesses make up 6.4% of the total**, compared to 18.9% of the US population. ([Census ABS](https://www.census.gov/programs-surveys/abs.html), 2023) - **Asian-owned employer businesses represent 11.2% of US employer firms**, nearly in proportion to the Asian share of the US population. ([Census ABS](https://www.census.gov/programs-surveys/abs.html), 2023) - **Veteran-owned employer businesses make up 9.1% of the total**, with the highest concentrations in construction, professional services, and healthcare. ([Census ABS](https://www.census.gov/programs-surveys/abs.html), 2023) - **About 7.2 million US small business owners are immigrants**, representing 21.7% of all self-employed workers. Immigrant entrepreneurs tend to over-index in retail, food services, and professional services. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **The median age of small business owners is 50 years old**, and the fastest-growing segment by owner age is 35 to 44-year-olds. ([Kauffman Foundation](https://indicators.kauffman.org/), 2023) ![Horizontal bar chart showing share of US employer businesses by owner group: Women 21.4%, Veteran 9.1%, Asian 11.2%, Hispanic 6.4%, Black or African American 3.3%](/images/research/smb-owner-demographics.svg) ## Funding and lending The Federal Reserve Small Business Credit Survey (SBCS) is the most comprehensive annual picture of how small businesses experience credit markets. - **79% of small employer firms applied for financing or chose not to apply** in the prior 12 months as of the 2024 SBCS, with 21% having no financing need. ([Federal Reserve SBCS](https://www.fedsmallbusiness.org/reports/survey/2024/2024-report-on-employer-firms), 2024) - **Of those that applied, 77% received at least some of the financing they sought**, though only 43% received the full amount. ([Federal Reserve SBCS](https://www.fedsmallbusiness.org/reports/survey/2024/2024-report-on-employer-firms), 2024) - **43% of applicants received less financing than they needed**, the gap most commonly attributed to insufficient collateral and credit score requirements. ([Federal Reserve SBCS](https://www.fedsmallbusiness.org/reports/survey/2024/2024-report-on-employer-firms), 2024) - **Black-owned employer businesses were approved for financing at substantially lower rates** than White-owned firms across all lender types, a gap that the SBCS has consistently documented since 2016. ([Federal Reserve SBCS](https://www.fedsmallbusiness.org/reports/survey/2024/2024-report-on-employer-firms), 2024) - **Large banks were used by 44% of applicants**, followed by small banks (37%) and online lenders (21%). Online lenders have grown their share significantly from under 10% in 2016. ([Federal Reserve SBCS](https://www.fedsmallbusiness.org/reports/survey/2024/2024-report-on-employer-firms), 2024) - **SBA 7(a) loan approvals totaled $27.5 billion in fiscal year 2023**, across 57,362 loans, the highest dollar volume in program history at that point. ([SBA 7(a) Loan Data](https://www.sba.gov/funding-programs/loans/7a-loans), 2024) - **The average SBA 7(a) loan size was $479,685 in fiscal year 2023**, up from $417,316 a year earlier, reflecting inflationary pressures on the business costs that loans typically fund. ([SBA 7(a) Loan Data](https://www.sba.gov/funding-programs/loans/7a-loans), 2024) - **Small businesses received $170.6 billion in VC funding in 2023** if all VC-backed companies (pre-Series B) are included, though the majority of this went to high-growth tech startups, not traditional small businesses. ([PitchBook-NVCA Venture Monitor](https://pitchbook.com/news/reports/q4-2023-pitchbook-nvca-venture-monitor), 2024) - **43% of small employer firms operated in Fair or Poor financial condition** in 2023, citing higher operating costs, interest rate increases, and slower revenue growth as the primary drivers. ([Federal Reserve SBCS](https://www.fedsmallbusiness.org/reports/survey/2024/2024-report-on-employer-firms), 2024) ## Self-employment and freelance Freelance, independent, and self-employed workers overlap with the small business population. Solo operators represent the majority of all US small businesses by count. - **64 million Americans freelanced in 2023**, 38% of the US workforce. That figure is up from 59 million in 2020 and is the highest since Upwork began tracking annual freelance participation. ([Upwork Freelance Forward](https://www.upwork.com/research/freelance-forward), 2023) - **Freelancers contributed $1.27 trillion to the US economy in 2023**, up from $1.21 trillion the year prior. ([Upwork Freelance Forward](https://www.upwork.com/research/freelance-forward), 2023) - **21.3 million Americans are full-time independent workers** who rely on independent work as their primary income source, per MBO Partners' 2024 State of Independence survey. ([MBO Partners](https://www.mbopartners.com/state-of-independence/), 2024) - **An additional 49.8 million are part-time independent workers**, supplementing income from a primary job. ([MBO Partners](https://www.mbopartners.com/state-of-independence/), 2024) - **Independent worker income has risen steadily**: the median full-time independent worker earned $68,000 in 2023, above the median traditional US employee wage. ([MBO Partners](https://www.mbopartners.com/state-of-independence/), 2024) - **BLS counts 9.6 million self-employed workers on an unincorporated basis** in 2023, a narrower definition that excludes incorporated self-employed individuals and those who use platform-based gig arrangements. ([BLS](https://www.bls.gov/news.release/empsit.t09.htm), 2024) - **Freelancers who work independently by choice (not out of necessity) now outnumber those who freelance out of necessity** by a widening margin, per Upwork's annual survey. ([Upwork Freelance Forward](https://www.upwork.com/research/freelance-forward), 2023) ## Finances and cash flow Cash flow stress is the operating reality for most small businesses. The JPMorgan Chase Institute and Federal Reserve SBCS have the most rigorous ongoing data. - **Small businesses hold a median of 27 days of cash on hand**, meaning half of all small businesses could cover less than a month of expenses if inflows stopped. ([JPMorgan Chase Institute](https://www.jpmorganchase.com/institute/research/small-business), 2020) - **The bottom quartile of small businesses holds fewer than 13 days of cash buffer**, a level most financial advisors consider dangerously low. ([JPMorgan Chase Institute](https://www.jpmorganchase.com/institute/research/small-business), 2020) - **25% of small businesses experience a cash-flow shortfall in any given month**, according to JPMorgan Chase Institute analysis of checking account data from 470,000 small businesses. ([JPMorgan Chase Institute](https://www.jpmorganchase.com/institute/research/small-business), 2020) - **82% of small businesses that fail cite poor cash-flow management** as a contributing factor, per SCORE surveys, separate from the headline reason of running out of money entirely. ([SCORE](https://www.score.org/research), 2023) - **50% of small employer firms cited operating costs as their top business challenge** in 2023, a share that rose from 38% in 2022 as inflation affected input costs, rent, and labor. ([Federal Reserve SBCS](https://www.fedsmallbusiness.org/reports/survey/2024/2024-report-on-employer-firms), 2024) - **43% cited revenue fluctuations as a top challenge**, and 33% cited difficulty hiring qualified staff. These three challenges are the most consistent pain points across every year of SBCS data. ([Federal Reserve SBCS](https://www.fedsmallbusiness.org/reports/survey/2024/2024-report-on-employer-firms), 2024) - **Late invoice payments affect 63% of small businesses** globally, with an average of 13 days beyond terms per invoice in the US, according to Intuit research. ([Intuit QuickBooks](https://quickbooks.intuit.com/r/trends-stats/small-business-statistics/), 2023) - **The average small business in the US is owed $84,000 in outstanding invoices** at any given point, with receivables representing the single largest drag on operating cash. ([Intuit QuickBooks](https://quickbooks.intuit.com/r/trends-stats/small-business-statistics/), 2023) ## Technology and AI adoption Small businesses are adopting software at accelerating rates, though AI adoption lags that of mid-market and enterprise firms significantly. - **73% of small business owners use at least one dedicated software tool for accounting or bookkeeping**, up from 61% in 2021. ([Intuit QuickBooks](https://quickbooks.intuit.com/r/trends-stats/small-business-statistics/), 2023) - **Only 23% of small businesses use a formal CRM system**, compared to 67% of companies with 50 or more employees, a gap that contributes directly to higher customer churn at the small-business level. ([Salesforce SMB Trends](https://www.salesforce.com/blog/small-business-trends/), 2024) - **AI adoption at small businesses reached 39% in 2024**, up from 23% in 2023, according to Salesforce SMB surveys across 2,500 US small businesses. ([Salesforce SMB Trends](https://www.salesforce.com/blog/small-business-trends/), 2024) - **The most common AI use cases among SMBs are content creation (48%), customer communication drafting (37%), and accounting automation (29%)**. ([Salesforce SMB Trends](https://www.salesforce.com/blog/small-business-trends/), 2024) - **57% of small business owners say AI will transform their industry within three years**, yet 41% say they don't know how to get started with AI adoption. ([Salesforce SMB Trends](https://www.salesforce.com/blog/small-business-trends/), 2024) - **The Topickz SaaS review database covers 816 B2B tools across 74 categories.** Of those, 61% offer a free trial or freemium tier, making the software barrier to entry low for SMBs. The median starting price for SMB-appropriate tools in our dataset is $29 per month per user, though actual TCO rises substantially as features and seats are added. (Topickz, 2026) - **Payment processing, payroll, and invoicing are the three software categories with the highest SMB penetration** in real-world usage surveys, ahead of project management and marketing tools. ([Intuit QuickBooks](https://quickbooks.intuit.com/r/trends-stats/small-business-statistics/), 2023) - **SMBs that adopt five or more software tools report 31% higher revenue growth** than those using two or fewer, a correlation that holds across business size and sector but does not prove causation. ([Salesforce SMB Trends](https://www.salesforce.com/blog/small-business-trends/), 2024) ## By state and by industry Geographic and sector variation in small business dynamics is wide. The national averages in other sections can mask very different local realities. - **California has the most small businesses by count (4.2 million)**, followed by Texas (3.2 million), Florida (3.0 million), and New York (2.3 million). ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **The highest share of employment at small businesses is in Montana (63.8%), Wyoming (62.1%), and Vermont (60.4%)**, states where large corporate employers are uncommon. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **Washington DC has the lowest small-business employment share (23.8%)**, reflecting the dominance of federal government and large contractor employment. ([SBA Office of Advocacy](https://advocacy.sba.gov/resources/small-business-faq/), 2024) - **Healthcare and social assistance is the largest small-business employer sector**, ahead of retail trade and accommodation and food services. ([Census SUSB](https://www.census.gov/programs-surveys/susb.html), 2022) - **Construction has the highest share of employer small businesses** relative to total industry employment, at nearly 87% of jobs in the sector. ([Census SUSB](https://www.census.gov/programs-surveys/susb.html), 2022) - **Information technology small businesses have the highest average payroll per employee** across small-business sectors, more than twice the average for food service small businesses. ([Census SUSB](https://www.census.gov/programs-surveys/susb.html), 2022) - **New business applications are growing fastest in Southern states**, with Florida, Texas, and Georgia each posting application growth above 15% between 2019 and 2023. ([Census BFS](https://www.census.gov/econ/bfs/), 2024)