- Within their first two years, 20% of businesses fail, within five years, 45%, and within 10 years, 65% fail.
- Yet, small businesses comprise 99.9% of businesses in the United States.
- There are 31 million entrepreneurs in the United States, or 16% of the adult workforce.
- There are reportedly 582 million entrepreneurs, worldwide.
- The overwhelming majority of current entrepreneurs said they intend to stay self-employed (95%), even during the COVID-19 pandemic.
- Entrepreneurship actually increased by 29% during the pandemic.
- Entrepreneurs tend to be college educated (95.1%) and also are often high-achievers in school.
- Women now make up 40% of entrepreneurs, while men account for approximately 60%.
- Florida, California, and Texas had the most business applications in March, 2022, in that order.
- Maine, South Dakota, and Idaho ranked highest (in that order) for the number of businesses that made their 1st payroll within 8 quarters.
- A top motivation for becoming an entrepreneur is the desire to be one’s own boss.
- In the United States, 55% of adults have been entrepreneurs at some point, and 26% have started at least two businesses.
What Percentage of Entrepreneurs are Successful?
Being an entrepreneur has many risks, and unfortunately, the majority of businesses do fail.
- About 20% of business fail within their first two years, according to the U.S. Bureau of Labor Statistics (BLS).
- Also, according to the BLS, 45% of business fail within their first five years.
- Within their first 10 years, 65% of businesses fail, according to the BLS.
- So 35% of businesses are still in business after 10 years.
- According to the same source, just 25% of businesses survive 15 or more years.
- In order to succeed, 38% of entrepreneurs stat that being self-disciplined is the most important factor.
- Another 37% identified communication skills as a key factor for being successful as an entrepreneur.
What Percentage of Millionaires are Entrepreneurs?
- An oft-quoted report by a 2017 Fidelity Investment Research study reported that 88% of millionaires considered their wealth to be “self-made.”
- The 2018 version of the study shows that 81% of millionaires considered themselves to be “self-made.”
What Percentage of the Population are Entrepreneurs?
- Entrepreneurs make up 16% of the adult workforce in the United States.
- In other words, 31 million people in the United States are entrepreneurs.
- Worldwide, there are reported to be 582 million entrepreneurs.
- Approximately 55% of adults in the United States have started their own business at some time.
- About 26% of adults in the United States have started at least two businesses.
- Small businesses make up 99.9% of businesses in the United States, with 31.7 million small businesses compare to 20,139 big businesses.
Top Industries for Entrepreneurship
- In the United States, Food and Restaurant is the top industry for entrepreneurship, with 12% of new small businesses.
- Retail and Business Services are tied for 2nd, each with 11%.
- Health, Beauty, and Fitness ranks 3rd with 9%, while Residential and Commercial Services rank 4th with 7% of new businesses.
What Challenges do Entrepreneurs Face?
Business owners face a variety of challenges, including financial, managerial, economical, and even political or public-health related.
- Not enough demand is cited as the Number 1 cause for a business to fail.
- In fact, 42% of entrepreneurs cited “no market for their products or services” as the primary reason a business fails.
- The 2nd most common reason (29%) for a business to fail is because of problems with cash flow or capital.
- Poor teamwork ranked as the 3rd most likely reason for a business to fail, cited by 23% of entrepreneurs.
Additional Challenges Faced by Modern Entrepreneurs
- Approximately 1 in 4 women agree that they have faced gender-based discrimination and bias as entrepreneurs. (This includes having to work harder for the same work, and/or being taken less seriously than men.)
- According to Freshbooks’ 2021 Report, 60% of entrepreneurs found adopting new technologies in response to COVID was “at least somewhat challenging.”
- Access to healthcare and benefits was cited as a challenge by 39% of prospective entrepreneurs over the age of 55.
- It was also cited as a challenge by 21% of prospective entrepreneurs younger than 55.
- Overall, 28% of women and 20% of men said that access to benefits was a barrier to entrepreneurship.
- Concerns about irregular income and cash flow was a challenge identified by 32% of respondents to Freshbooks’ 2021 Report.
- A significant percentage (28%) of prospective business owners also reported worrying about lower income as a challenge.
- Absence of a business plan was a challenge identified by ¼ of prospective business owners in the study, as well.
- Paying down debt was identified as a barrier to entrepreneurship more often by people who identify as a visible minority (30%).
Effects of COVID-19 Pandemic on Entrepreneurship
- Amazingly, the pandemic did not deter the vast majority of currently self-employed people, with 95% stating they intend to stay self-employed.
- There was actually a 29% increase in interest in self-employment during the pandemic.
- This equaled 40% of traditionally-employed people asserting that self-employment within two years is “at least somewhat likely.”
- Of these people, 84% said that the COVID-19 pandemic is at least partly responsible for their decision.
- Career satisfaction among entrepreneurs is surprisingly high even during the pandemic, with 70% stating they are satisfied with their career.
- A large majority (63%) of entrepreneurs who started their business during the pandemic era still agree that, “self-employment is the best career choice in uncertain times such as a pandemic.”
Motivation for Becoming an Entrepreneur
Many factors motivate people toward becoming entrepreneurs, including overcoming discrimination in their traditional work environment, work-life balance, and opportunity.
- Consistently, the Number 1 reason that people cite as their motivation for becoming an entrepreneur is to be their own boss.
- Almost one-third (29%) of people, overall, who become entrepreneurs identified this as their main motivation.
- Being dissatisfied with their traditional, corporate job was the 2nd most cited reason for becoming an entrepreneur.
- This reason was cited by 17% of entrepreneurs, overall.
- The third most common motivation for becoming a business owner was described as “passion,” and cited by 16% of entrepreneurs.
- People who identify as visible minorities (36%) said that self-employment was their primary life goal.
- This is compared to 28% of respondents who were white who stated self-employment as their primary life goal.
- Women who are visible minorities (42%) were more likely than white women (33%) to see entrepreneurship as a path to advance their career.
- Entrepreneurs are extremely likely to have earned at least a bachelor’s degree, with 95.1% having done so.
- Nearly half of entrepreneurs (47%) have also earned graduate degrees.
- They tended to have done well in high school, with 75% stating that they graduated in the top 30% of their class.
- A surprising 52% of entrepreneurs claim to have graduated in the top 10% of their high school class.
- In college, 67% of entrepreneurs surveyed said they graduated in the top 30% of their cohort.
- An impressive 37% of entrepreneurs stated that they were in the top 10% of their college cohort, as well.
Gender, Age, and Race/Ethnicity
- Women make up 40% of new entrepreneurs in the United States.
- This is the highest rate of female entrepreneurship since 1996.
- Rates of female entrepreneurship across the United States grew an average of 10%, versus 5% for males.
- Men make up approximately 60% of new entrepreneurs in the United States.
- Black-Americans own 7% of all U.S. businesses.
- Hispanic-Americans own 10.6% of U.S. businesses.
- Asian-Americans represent 4.3% of U.S. business ownership.
Entrepreneur Statistics by State
There are many ways to evaluate the health of businesses or the entrepreneurial environment.
One measure is the number of business applications. Another is the percent of new businesses that successfully make payroll within their first eight quarters.
Best States for Entrepreneurs
- Florida had the most business applications as of March 2022, with 46,832.
- California had the 2nd most business applications for that time period, with 38,690.
- They are closely followed by Texas with 38,317 business applications, ranking 3rd highest.
- New York ranked 4th highest, with 25,364.
- Georgia had the 5th most business applications in the country in March, 2022, with 21,797.
- Maine had the highest percentage of new businesses make their first payroll within their first 8 quarters, with 1.4% doing so.
- With 14.7% of its new businesses making their first payroll within 8 quarters, South Dakota ranked 2nd for this measure.
- Idaho ranked 3rd for new businesses making their first payroll within this period, with 14% of its new businesses.
- The 4th best state by this measure was Washington, with 13.9% of new businesses doing so.
- Nebraska, with 13.6% of its new businesses making their first payroll within 8 weeks was the 5th best state.
Worst States for Entrepreneurs
- The state with the least business applications for March 2022 was Vermont, with 605 applications.
- The 2nd least business applications (700) were filed in the State of North Dakota.
- Alaska, state with the 3rd lowest number of business applications, was close behind with only 702 business applications filed.
- South Dakota, with 862 applications, was the 4th lowest by number of business applications.
- Finally, Rhode Island had the 5th least business applications, with 914.
- The District of Columbia had the lowest percentage of new businesses that made their first payroll within 8 quarters.
- Louisiana was the second lowest by this measure, with only 5.8% of its new businesses achieving this milestone.
- The 3rd lowest ranking state for percent of new businesses to make their first payroll within 8 quarters was Mississippi, with 6.1% doing so.
- Georgia, one of the top states for business applications, didn’t fare as well with making payroll, ranking 4th lowest with only 6.3%.
- Delaware was the 5th lowest ranking for this measure, with only 6.5% of its new businesses making payroll within 8 quarters.
Entrepreneurship Statistics by State (Table)
|State||Business Applications (March 2022)||Rank by # of Business Applications||Change Year-over-Year (%)
|Percent of New Businesses that make payroll within 1st 8 quarters (%)||Rank by % of New Business that make payroll in 8 quarters|
|District of Columbia||1,243||43||-14.4||5.7||40|
|New Mexico||2,228||39||15.3||9.8||19 (tied)|
|New York||25,364||4||-1.9||10.3||16 (tied)|
|North Carolina||14,395||6||0.2||10.0||18 (tied)|
|North Dakota||700||50||3.7||13.3||7 (tied)|
|Rhode Island||914||47||-2.7||13.3||7 (tied)|
Source: See Reference 5, 6. For illustration purposes only
- Bureau of Labor Statistics, Entrepreneurship
- Fidelity Investments 2018 Report
- US News and World Reports 7 Myths About Millionaires
- Global Entrepreneurship Monitor and Consortium Latest Global Report
- US Census Bureau Business Formation Statistics by State
- Kaufman Indicators of Entrepreneurship 2020
- U.S. Small Business Administration 2020 Small Business Profile
- Statista, Rate of New Entrepreneurs
- Freshbooks 2021 Annual Self-Employment Report
- Apollo Technical