25+ Important Entrepreneur Statistics [2023] : What To Know Before You Start A Business - Zippia (2024)

Research Summary. Entrepreneurs are vital to the U.S. economy. Although the going is often tough and many startups don’t make it, the ones that do, add to their communities by creating jobs and solving a problem for customers. Here are some statistics about entrepreneurship in the U.S.:

• there are over 31 million entrepreneurs in the U.S. as of 2022.

• 58% of small business owners started their companies themselves.

• 20% of startups fail within their first two years of operating.

• The survival rate of new companies has been largely unchanged over the past 25 years.

• 63% of Americans believe entrepreneurship is a good career choice.

For further analysis, we broke down the data in the following ways:
Funding | Demographics | Benefits | Challenges | Trends and Predictions

General Entrepreneurship Statistics

• 15.6% of U.S. adults between the ages of 18 and 64 are entrepreneurs.

  This is one of the highest rates in the world, and out of 31 high-income countries studied, Canada and Chile are the only ones to beat it. (Uruguay tied with the U.S.)

  Other countries with economies that are less developed often have higher rates than the U.S.

  It’s estimated that there are over 31 million entrepreneurs in the U.S. as of 2018.

• Only 8.4% of entrepreneurs in the U.S. started a business out of necessity in 2018.

  This low rate likely goes hand in hand with the low unemployment rates of 2018 since there were few people who couldn’t find a job.

  Instead of necessity, U.S. entrepreneurs are typically motivated by opportunities to work in a field they care about, to be their own bosses, and to fulfill a need in their communities.

• Finance, real estate, and business services made up 27% of the U.S.’s startups in 2018.

  This is the highest rate of any industry, but it’s followed closely by the wholesale and retail category, which 26% of startups fell into.

  Health, education, government, and social and consumer services made up 20%, manufacturing, and logistics 11%, agriculture, extractive, and construction 9%, and information and communication technologies 7%.

Entrepreneur Funding Statistics

• 66% of surveyed entrepreneurs said they used personal funds to start their businesses.

  Very few of even the remaining entrepreneurs got funding from financial institutions:

  • 27.6% said they used income they earned from another job

  • 17.7% said they borrowed or received donations from friends and family

  • 11.2% took out a bank loan

  • 9% used cash advances from credit cards

  • 3.4% received money from investors

  • 2.1% got grants

  • 1.7% used crowdfunding

• Nearly 78% of survey respondents said they didn’t seek outside financing when starting their businesses.

  Instead, they used their own income or savings or received the funds they needed through grants or donations.

  The majority of those who successfully received financing received it from a bank or similar institution, and many others borrowed from friends and family or received SBA loans.

• It typically costs just over $100,000 to start a business.

  This will vary based on the type of startup an entrepreneur is launching and where it’s located, but this number is a good reference point as far as planning how much capital you’ll need.

  It may sound like an unreasonable amount of cash for the average person, but in the grand scheme of things, this is a small amount of money, especially if the business takes off.

Entrepreneur Demographics

• As of 2018, 69% of entrepreneurs are white or Caucasian.

  10% of entrepreneurs are Black, and 8% are Hispanic/Latino. The remaining 13% of entrepreneurs are made up of a variety of groups of races and ethnicities that are too small to measure accurately.

• 26.4% of people who identify themselves as Black started businesses in 2018.

  This is the highest rate of any racial demographic. The Hispanic and Latino demographic had the next-highest rate of 17.5%, and the white demographic came in last with a rate of 13.5%.

• 34% of entrepreneurs start family-owned or family-managed businesses.

  In comparison, 65% of established businesses are owned or managed by families. This includes both companies that began as family operations and those whose founders brought on family members as they grew.

• In 2018, 20% of 35- to 44-year-olds were in the process of starting the business or were running a business that was less than 42 months old.

  This is the highest percentage of any age group between 18 and 74 years old. The next-highest rate of entrepreneurship was found in 25- to 34-year-olds, of which about 18% were about to start or had recently started their own businesses. The rate then steadily declined in adults between 44 and 74 years of age.

• In 2018, 13.6% of women were starting or had recently started their own businesses, and 17.7% of men were doing the same.

  However, women own more startups than men do: Women own 47.9%, and men own 45.9%.

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Entrepreneurship Benefits

• 66% of those surveyed said they became entrepreneurs because they wanted to be their own bosses and/or build something from scratch.

• In 2020, startups less than one-year-old accounted for 3.114 million jobs.

• 43% of small business owners say they are generally happy.

Entrepreneurship Challenges

• 45% of new businesses fail during their first five years.

  It’s estimated that 20% fail within two years, 65% fail within ten years, and 75% within 15 years.

  This may sound discouraging, but these statistics are much better than the often-quoted (and misleading) mantra that says 50% of new businesses fail within the first year.

• In one study, 38% of startups failed due to a lack of funds.

  There is rarely just one reason for a startup’s failure, but this is one of the most common ones. In comparison, 35% failed because there was no market need for their product or service, 20% lost to a competitor, and 19% blamed a flawed business model.

  Other reasons for failure in the study included regulatory and legal challenges, pricing or cost issues, a poorly selected team, bad timing, a substandard product, disagreements between the team and investors, a pivot that didn’t turn out, and simple burnout.

• 49% of entrepreneurs deal with mental health concerns.

  In contrast, 32% of the rest of the population deals with poor mental health.

  23% of entrepreneurs report that their family members struggle with mental health as well, while just 16% of the remaining population can say the same.

Entrepreneurship Trends and Predictions

• The one-year survival rate of companies opened in 1994 was 79.6%.

  For those who opened in 2019, it was 78.1%.

  This demonstrates how one-year failure rates of entrepreneurs have been generally the same over the past 25 years.

• Companies founded in 2008 had the lowest one-year survival rate at 75.2%.

  Startups that opened in 2001 weren’t far behind, however, with a survival rate of 75.7% in their first year in business.

  This statistic takes into account all companies that were founded between 1994 and 2019.

• The Bureau of Labor Statistics predicts that there will be 10.3 million self-employed Americans by 2026.

  This is a growth rate of 7.9% from 2016, which saw 9.6 million self-employed workers. The 7.9% growth rate is higher than the projected growth rate of 7.4% for all U.S. workers during this same time frame.

Entrepreneurship FAQ

1. What percentage of startups are successful?

   Only 10% of startups are successful. However, the chances of success over one year are much higher, with 78.1% remaining successful within that timeframe. The key struggle is to keep a startup going after the first year.

2. What percentage of the population are entrepreneurs?

   15.6% of the population are entrepreneurs. This accounts for adults between the ages of 18 and 64, and can be explained by the cultural popularity of startups in the U.S. After all, 63% of Americans believe entrepreneurship is a good career choice.

3. What is the average salary of an entrepreneur?

   The average salary of an entrepreneur is $74,000. This is higher than the average salary of all workers across the U.S., which is about $51,000.

4. How many new startups were there in 2021?

   There were 839,978 in 2021. This number includes all businesses that were less than one year old during that year, and shows a 4.4% growth in the number of startups, up from 804,398 in 2020.

5. What percent of entrepreneurs went to college?

   44% of entrepreneurs went to college. This means that over half of those who have started their own companies don’t have a bachelor’s degree – including Mark Zuckerberg, Bill Gates, and Steve Jobs.

   56% of entrepreneurs have an associate’s degree or have at least taken some college courses, while about 20% only have a high school diploma. 18% have a postgraduate degree such as a master’s or doctorate.

   Many entrepreneurs started college but dropped out when they had their business idea, either because they just wanted to pursue it right away or because they needed the money.

   However, many American jobs require candidates to have a degree of some sort, so many entrepreneurs are encouraging young people to finish their degrees so they can have a fall-back plan if their business goes south and so they can go into entrepreneurship with some knowledge of how to run a business.

6. How many millionaires are entrepreneurs?

   88% of millionaires are entrepreneurs. More specifically, 88% of millionaires are self-made, which means they inherited none of their wealth and instead earned it through businesses, investments, and their own salaries. Of those who are worth $30 million or more, about 68% are self-made.

   These numbers can be misleading, though, as plenty of millionaires who did inherit at least some of their wealth are entrepreneurs as well — often, they use their inheritances to start companies.

   At the end of the day, though, in order to earn their money, many millionaires had to work hard and run their own finances, whether that was through a company they started, investments they made, or both. Many also put their millions to work by starting more companies or funding other entrepreneurs’ projects.

   Business News Daily. “How Most Millionaires Got Rich.” Accessed on April 7, 2022.

7. How can I become an entrepreneur?

   You can become an entrepreneur by starting your own business. This can be as simple as selling homemade jewelry, or as complex as creating a tech company. To be a successful entrepreneur, though, you’ll need energy, time, money, and an understanding of who your customer is and what they want.

   Entrepreneurship is not for the faint of heart – even the most low-key side hustles have their fair share of ups and downs. When you start your own company, you’re the one in charge of its success, so you are the one who has to wear all of the hats required to run a business.

   This takes endurance and hard work, and it also takes business savvy. You’ll need to be able to put together a business plan to present to investors, and you’ll need to know that people will buy what you’re selling.

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   This means conducting market research to make sure that your product will actually meet a need for people at a price point they’re willing to pay, and it means marketing it to them so that they can buy it.

Conclusion

Entrepreneurship isn’t for the faint of heart, as the typical business costs about $100,000 to launch, and 20% of startups fail within the first two years. If it goes well, however, entrepreneurship can bring a number of benefits to company founders and their communities.

For example, the average annual salary of an entrepreneur is $74,000, which is higher than the U.S.’s overall average salary of about $51,000. This good money is also often coupled with the opportunity for entrepreneurs to build something from the ground up, to work at something they’re passionate about, and to be their own bosses.

Entrepreneurs’ families can reap these benefits as well, as 34% of entrepreneurs start businesses that are run by their families, and 65% of established small businesses are family-owned or operated. Communities and economies also benefit from entrepreneurs’ efforts, as startups employed 3.114 million people in 2020.

References

1. Babson. “2018/2019 United States Report: Global Entrepreneurship Monitor.” Accessed on October 7, 2021.

2. Score. “How Do Entrepreneurs Finance Their Startups?” Accessed on October 7, 2021.

3. Inc. “How Entrepreneurs Really Fund Their Business.” Accessed on October 7, 2021.

4. Cox Business. “Cox Business #SBWsurvey.” Accessed on October 7, 2021.

5. Statista. “Number of Jobs Created by Start-up Businesses That Were Less Than One Year Old in the United States From 1994 to 2020.” Accessed on October 7, 2021.

6. Guidant. “Small Business Trends: 2021.” Accessed on October 7, 2021.

7. Investopedia. “Top 6 Reasons New Businesses Fail.” Accessed on October 7, 2021.

8. CB Insights. “The Top 12 Reasons Startups Fail.” Accessed on October 7, 2021.

9. Forbes. “Why Entrepreneurs Need To Talk About Their Mental Health.” Accessed on October 7, 2021.

10. U.S. Bureau of Labor Statistics. “Table 7. Survival of Private Sector Establishments by Opening Year.” Accessed on October 7, 2021.

11. U.S. Bureau of Labor Statistics. “Small-Business Options: Occupational Outlook for Self-Employed Workers.” Accessed on October 7, 2021.

12. Zippia. “Average Entrepreneur Salary.” Accessed on October 7, 2021.

13. Zippia. “What is the Average Salary in the U.S.?” Accessed on October 7, 2021.