What the current small business landscape looks like

January 27, 2014

According to the Small Business Administration, a small business is defined as one with fewer than 500 employees. There are millions of such entities in the country — 28 million to be precise, and of those, 22 million are run as sole proprietorships. That means that their owners haven’t hired anybody else, and are simply a company unto themselves.

These businesses may be small, but they play a large role in the economy. Over half of the 120 million Americans that comprise the workforce were hired by a small business.

And that percentage is only growing. In the past 18 years, companies with fewer than 500 employees have been responsible for creating 65 percent of the new jobs. Each month, over half a million new businesses are started. This means two things: one, that company name availability is shrinking rapidly. Two, many people are understanding the inherent benefits of incorporating their own companies and working for themselves.

While success is never guaranteed, it certainly is possible. Of the new businesses that employ people (which excludes the one-person shops), over 70 percent make it at least two years. Half reach the half-decade mark, and 25 percent are still going strong 15 years later.

As the numbers bear out, you don’t need a huge staff or a corporate office to get started. Of all small businesses, 52 percent are run out of somebody’s home. The total revenue from sole proprietorships is in the neighborhood of $1 trillion yearly. You don’t even have to incorporate in your home state. You can set up your business in whichever location makes the most sense and, for a small registered agent fee, you will still be able to receive important correspondence.