15 Entrepreneurship Statistics You Should Know

Cody Cromwell
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The U.S. offers the best environment to cultivate entrepreneurs

Although the economic impact of entrepreneurship is highly debated, there’s no denying that entrepreneurs have a large impact on a nation’s prosperity. Entrepreneurs provide valuable, innovative products and services that make our lives better and stronger.

According to several studies, the United States is the first and number one choice of entrepreneurs who want to break into business. Many of them are largely driven by the promise of the American dream, which is also why the U.S. represents the most popular destination for expats from around the globe. In addition to the landscape and culture, the policies and government systems that help entrepreneurs thrive and advance have also contributed to the high rankings.

When looking for a great environment for entrepreneurship, a country that has a government and regulatory system that supports open markets and encourages innovation is an important indicator of potential. The U.S. tends to score well when it comes to entrepreneurship.

Challenges of Entrepreneurship

Entrepreneurship is a complex beast. There’s no better way to learn than to do and take risks. However, undertaking all the actions involved in starting a business is not for the faint of heart. Entrepreneurship has its own set of challenges that entrepreneurs must be comfortable with. Some options for overcoming the challenges are being creative and taking calculated risks.

15 million Americans are self-employed full-time

Self-employed Americans make up 12.8% of our nation’s workforce. There are a lot of self-employed workers in the US and they have a lot of expenses. When self-employed, entrepreneurs are commonly spending a lot of money on advertising, meeting with potential clients, and supplies such as equipment and office supplies.

This involves more work, but entrepreneurs define self-employment differently than what others have done in the past. They see themselves as entrepreneurs not because they are trying to break the law but rather because they are trying to innovate, improve and take control of their business and income. Being a sole proprietor is common amongst large businesses and is also a way for individuals to build and grow their own business.

452,835 companies were founded in 2014, but this is less than 30 years ago

When more than 100,000 companies were founded each year.

Despite fewer businesses being started each year, business failure rates are on a long-term decline

It’s no secret that entrepreneurship is a risky endeavor. Entrepreneurs face the constant threat of failure, and there are many reasons why they fail to achieve their goals. What’s true, however, is that fewer businesses are being started each year, and the failure rate among start-ups is increasing. One 2016 study by the National Foundation for Entrepreneurship (NFTE) and the Small Business Administration (SBA)® found that the failure rate among start-ups is around 50%, nearly double the rate in 2005.

Another study from the National Center for the Middle Market (NCMM) reported that only two out of five business model innovations survive the launch. Although the number of entrepreneurs in the United States has declined by about 12% over the past decade, many would argue that the recent wave of entrepreneurship is a downside symptom of a healthy economy.

In a time where fewer people are taking the entrepreneurial plunge, it’s more important than ever to use entrepreneurship statistics to learn what it takes to function in this quickly changing environment. To help you understand the current state of entrepreneurship in the United States, here’s a list of 15 key entrepreneurship statistics you should know.

There are various reasons why most businesses fail

Some of the main reasons are the business can be too small, too new, and too young to get the balance right between quality product and sales. That’s why it is important to know which entrepreneur / business trends are adopting, and which are dying.

The following Entrepreneurship statistics is a compilation from various sources and may not be validated for accuracy. But the information has been gathered to give you an overview:

According to Science Daily, about half of all start-up businesses fail within the first five years.

95% of all new businesses fail.

According to the National Small Business Association, the average age of a business to fail is 7 years.

The average business lives 15 years before it fails.

None of the businesses created by Thomas Edison lasted more than 6 months.

More businesses are being created today–3.3 million businesses– than there have ever been.

According to the Small Business Administration, the number of new businesses created each year can be cut in half with better entrepreneurial education.

In 2014, more than 2.8 million companies were formed.

According to the Bureau of Labor Statistics, in 2014, there were 15.9 million people actively employed in the United States.

As of June 2015, there had been 8.7 million business starts since December 2014.

Roughly 80% of small businesses survive the first year

About 60% of businesses fail in the first three years.

68% of businesses run by one person fail within the first five years.

97% of businesses don’t pay themselves.

90% of small businesses don’t reinvest profits.

Over 90% of businesses have no written financial plan.

Most businesses have no documented personal mission statement.

80% of businesses never have a formal marketing plan.

80% of small businesses accept credit cards.

65% of small businesses need to reinvest profits in order to grow.

52% of small businesses are profitable.

Over 60% of small businesses end up with more than they started with.

70% of small businesses don’t generate any new jobs in 5 years.

57% of small businesses don’t generate any new jobs in 10 years.

41% of small businesses don’t generate any new jobs in 20 years.

53% of small businesses fail within 5 years of being in business.

69% of small businesses fail within 10 years of being in business.

40% of small businesses fail within 15 years of being in business.

Small Businesses lose 60% of their start-up funds.

Entrepreneurs fund their business with their savings, profit, and business loans

The categories of entrepreneurs can be social entrepreneurs, civic entrepreneurs, and corporate entrepreneurs, among others.

Between 1927 and 1946, New York City was plagued with illegal bookmaking, racketeering, and prostitution. With the law enforcement efforts of the Police Department exhausted, the local community took charge to clean up the neighborhoods.

One of the key innovations of this organization was the Shuffleboard League, an after school program for young people to learn about healthy fitness, the psychology of success, and personal development.

The Shuffleboard League was so approved of by the city that it was even granted tax-exempt status by the federal government.

It also hosted competitions and sporting events for its members, held corporate outings, and even hosted a city league.

By the end of the decade, the Shuffleboard League had developed into a successful organization with over 1,100 members serving 20,000 square feet of facility space.

This 1990 article from the New York Times highlights the achievements of the Shuffleboard League and the impact it had on Manhattan.

From the health and fitness benefits to the success of the organization itself, the Shuffleboard League has proven to be an amazing learning experience for the entrepreneurial minds in the city.

Many of the folks who were active in this organization went on to launch their own businesses, including the founder of the organization itself.

The average short-term business loan amount is $20,000

During their first year of running their business, most entrepreneurs earn less than their CFOs.

The average entrepreneur who files bankruptcy will do so within a year of founding their business.

The average seven-year-old who lives in the poorest neighborhoods has the potential to be seven times more likely to become an entrepreneur than a seven-year-old living in the richest neighborhoods.

Over the last ten years, there has been a 100% increase in the number of people who have been competing to sell you products and services.

Only 20% of key account managers report increasing the sales of their key accounts in the year after they do so.

In the last year, less than half of the 20% of key account managers who report increasing their key accounts’ sales were able to sustain the lead in the following year.

44% of entrepreneurs want to sell their business within the next 5 years.

The average entrepreneur that has not started a business within the last three years is 30 years old.

Only 2% of small businesses have a customer base of at least eight in each of the following age groups: 18-25, 26-35, 36-45, 46-55, 56-65, and over 65 years old.

Most business owners start their own business from scratch

Without any business experience. According to the US Small Business Administration (SBA), about 84% of start-up businesses are run by people without biz experience. On the other hand, 26% of businesses started by people with biz experience fail between 1 and 5 years, while only 6% of businesses started from scratch fail in the same time frame (70% of start-ups survive 5 years or more).

Nearly half of the businesses started by successful entrepreneurs are franchises. A franchise is a business model where one business owner licenses a unique brand name and other resources to another business owner who then operates a particular business under the franchise’s name. A franchise operator gives up some rights to establish a successful business that is dependable, efficient and profitable.

According to statistics, small scale businesses generate most of the jobs in the market place and provide most of the employment for Small and Medium Enterprises (SMEs). The Stanford Graduate School of Business states that national economic growth depends to a large extent on how many people are employed by small and medium enterprises. Most businesses are started by very small capital and initially are run by a family or one individual.

This section focuses on entrepreneurship statistics and their relevance. It discusses the various data that you need to inform and guide your decisions, so that you can successfully run a sustainable business.

Most small business owners don’t have a college degree

The U.S. Small Business Administration estimates that 27 percent of companies are owned by someone who hasn’t earned a college degree. Even though the government is encouraging college education for all students, an amazing number of entrepreneurs are not highly educated, and they do just fine. If anything, college can provide the venture capitalist with more reasons to be interested in your business.

More than half of the nation’s small businesses are started by women.

Women are arguably some of the most successful small business owners in the country. In fact, the number of women-owned small businesses — about 5.5 million — outnumbers the number of male-owned businesses — about 3.5 million. According to the U.S. Census, there were 7.7 million small businesses owned by women in 2005.

If the typical small business has one owner, female business owners are more likely than men to own the business all by themselves. In all, 50.9 percent of all female-owned businesses were owned 100 percent by the owner, compared to 40.9 percent of male-owned businesses.

More than 50% of companies started in a garage or basement

This statistic alone should encourage any entrepreneur to consider starting a company in their spare time. According to a study of Inc. 500 companies, 51.8% of the companies started in a garage or basement.

A lot of younger people, especially recent college graduates, have a vision for running their own business but they are stymied by the time and money required to launch and grow a business. The least expensive way to start and grow a company is to do it on the weekends (and during the evenings) when you have time and money to spare.

Don’t underestimate the quality of your vision and ability to develop a business plan if you have a passion and drive to start one.

Start Small. Don’t Create a Mega-Business from Scratch

Before you set out to plan your company from scratch, think about the time and budget required to create a business that can scale beyond your current life circumstances. Once you have gathered the proper information, research the feasibility of a business idea on the consulting firm’s website that you will be using to vet your business ideas.

More than 35% of entrepreneurs work 40 hours per week

As entrepreneurs, you are the drivers of your business, not just the employees. You determine how long you work to get the job done.

But the people who follow you may not be as committed to their work. Many entrepreneurs report burnout after 20 years of being in business.

Entrepreneurs are 125% more successful if they’ve worked previous jobs in the industry they’re currently doing business in

Most entrepreneurs are not millennials

(Innovation Leaf)

A few months ago, we asked the start and mentor community a simple question: "When it comes to making money as an entrepreneur, do you prefer starting your own business or working for the government?" The question had a very clear result. The vast majority of people (roughly 85 percent or so) preferred to start a business over working for one.

That's interesting, isn't it? Why, just a few weeks ago, the mainstream media was positively crowing about "millennial entrepreneurs." The term has been used to describe everyone from people under the age of 24 starting business on their own to the woman who started a mom and pop froyo shop.

62% of U.S. billionaires are self-made

Entrepreneurs.

When people think of entrepreneurs, many of them think of technology and entertainment, but entrepreneurship is much more. In fact, according to author and entrepreneur Eric Ries, business and entrepreneurship are everywhere.

That’s why you can be an entrepreneur in your career or in your personal life. Entrepreneurship in the United States covers a wide range of industries and many job categories.

In such a diverse country like the United States entrepreneurship can mean many things. Entrepreneurship is the integration of business, science, and the arts. It’s the unending pursuit to better yourself and the people around you. It’s finding a way through many obstacles and challenges to bring people together and find solutions to problems.

Statistics can be helpful when you are starting your own business or trying to maintain your business. Entrepreneurship statistics will help you decide if you can make money in your business or if you are heading in the right direction. Entrepreneurship statistics are important for entrepreneurs and small business owners because they help keep the business on track and allow for people who have been in the industry for a long time to know the current state of entrepreneurship in the United States.

Here are some entrepreneurship statistics for you to chew on.

Bottom Line

These Entrepreneurship Statistics will show you the potential success of a business, online or when on the ground.

Entrepreneurship Statistics show the true potential of a small business. Entrepreneurship is a large part of our economy and the need for entrepreneurs is ever present. The knowledge that an entrepreneur shows are skills that are never out of date. Entrepreneurship Statistics show how the younger generations are stepping up to tackle entrepreneurship.

The below 15 entrepreneurial statistics include the population and the average entrepreneur age by gender in Canada as well as the employment rate in Canada. Plus more entrepreneurship statistics like how many people are in investment and how many people own a business. These statistics give us a clear picture of our economy and show us why and how entrepreneurship is a large part of our economy.

All these entrepreneurship statistics are sourced from the Statistics Canada 2016 publication entitled: Business Ownership in Canada and the Effect of the Recession.