Entrepreneurship Statistics: Current Success and Looking Ahead

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One unexpected — and positive — impact of the COVID-19 pandemic is a steep rise in the number of people choosing to start a business.

Entrepreneurship is one of the major factors driving economic growth and spurring innovation. A rise in new businesses can be a major contributor to economic stability and increased productivity. It also promises to make the U.S. economy more resilient when downturns occur.

While the trend is too new to signal an impending surge in economic activity, analysts note that new businesses have been concentrated in the industries that suffered the most during the pandemic, including retail, food services, and logistics. Entrepreneurial activity has also increased among manufacturing, finance, construction, and other major sectors of the economy, according to The New York Times.

Succeeding as an entrepreneur begins with an idea, but turning a brilliant concept into a thriving business requires a diverse range of skills, experience, and characteristics. Abundant opportunities await entrepreneurs with the determination and willingness to strike out on their own. Consider the outlook for burgeoning entrepreneurs who are ready to convert their million-dollar idea into a physical or digital reality.

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Entrepreneurs convert a creative idea about how to fulfill a commercial need in the community and make a profit doing so. Many small business owners succeed without education beyond high school, but an advanced degree increases an entrepreneur’s earning potential, as data from the employment site Zippia indicates.

The site reports that postgraduate education translates into higher income:

Being an entrepreneur requires knowing how to multitask and play many roles, including marketing, finance, personnel management, and professional networking. The job site Indeed identifies 10 roles that entrepreneurs typically fill while getting a new enterprise off the ground and making it profitable.

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A Hiscox survey of business owners who became entrepreneurs as an “encore” career identified the skills and knowledge that these first-time entrepreneurs wish they had more of. Marketing techniques: 35%. E-commerce fundamentals: 33%. Personal and business networking: 33%. Work-life balance: 32%. Sales tactics: 30%. Financial management: 28%. Leadership: 25%. People management: 22%.

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Just as every business is unique, every business starter brings a unique mix of characteristics, experience, and skills. While no single entrepreneur template exists that describes the ideal businessperson, entrepreneurs frequently share a handful of attributes. Forbes notes several traits that successful entrepreneurs share.

Entrepreneurs need to inspire others: customers, employees, partners, and community members. Inspiring others requires that entrepreneurs be inspired themselves, whether by the potential of their business idea or the opportunity to gain knowledge, grow, and be creative with a purpose. That inspiration translates into the drive that keeps the business moving toward its goals.

Entrepreneurs understand that even the most exhaustive research can’t prepare a business for unstable market conditions, changes in customer preferences, and other unpleasant surprises. They remain steadfast when unforeseen circumstances necessitate that the business adapt, realign, or reinvent itself in the face of challenges and setbacks.

Starting a business often requires creative approaches to overcoming obstacles, whether they involve products, business processes, marketing, or finance. Often, new technologies, such as mobile apps, wireless devices, and social media, can be applied in ways that broaden the reach of marketing efforts and allow a business to operate more efficiently.

Businesses are built on solid personal and business relationships. Entrepreneurs work hard to meet other business leaders in their industry and connect with professionals and community members from a range of backgrounds to learn and discover opportunities. They also appreciate the importance of making the effort to maintain those vital business connections.

An entrepreneur’s workday is filled with details that need to be addressed to keep the business running, but business owners also have to maintain a broader perspective. Taking a macro view of the operation lets entrepreneurs see how the pieces fit together and motivate people to help realize the company’s vision.

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The 2021 survey of small business trends from Guidant Financial and the Small Business Trends Alliance (SBTA) highlights a significant trend among people starting a business: more small business owners are now members of Generation X (46%) than the baby boom generation (41%). In addition, 13% of small businesses were started by millennials, and 1% by Gen Z, or “Zoomers.”

These are the primary reasons small business owners choose to become an entrepreneur, according to the survey:

While 31% of the businesses surveyed have been open for 10 years or more, 19% have been in business for one year or less, and an additional 19% for two or three years.

Entrepreneurship in the U.S. is getting a boost from the “Great Resignation” that has seen more people quit their jobs in 2021 than ever before:

A Digital.com survey indicates that 32% of people who quit their job in 2021 did so to start their own business, and 60% of these people spent time during the COVID lockdown to learn about starting and running a business. The reasons that the survey respondents gave for wanting to start a business were to be their own boss (62%), pursue their passion (60%), fill a need in their community (52%), build wealth (51%), and create jobs (42%).

Fit Small Business reports on the five industries that have the most small businesses:

The National Women’s Law Center reports that since the start of the COVID-19 pandemic, more than 2.3 million women have left the labor force, causing women’s participation to decline to 57% in February 2021 from 59.2% before the pandemic. (By comparison, some 1.8 million men left the labor force and the participation rate for men fell to 69.6% in February 2021 from 71.6% one year earlier.) This marks the lowest rate of labor force participation by women since 1988.

However, declining employment rates for women have led to more women striking out on their own as entrepreneurs, as Forbes reports. As companies redeploy their workforces in response to COVID-19 restrictions, they rely more on contingent workers, such as contractors, freelancers, and other gig workers. This creates an opportunity for female entrepreneurs to gain a foothold with firms by taking over roles that employees previously filled.

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While most new business endeavors are started by men, the percentage of female entrepreneurs continues to rise, increasing to 31% in 2020 from 27% in 2019. Here are other statistics about female entrepreneurs from Guidant Financial: 51% of female business owners are members of Gen X; 31% are baby boomers; 17% are millennials; 34% hold bachelor’s degrees; 27% have master’s degrees; 30% have owned their businesses for 10 or more years; 20% have owned their businesses for two to three years; and 17% launched their businesses in the past year.

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American Express’s 2019 State of Women-Owned Business Report (the most recent year the survey was conducted) provides a snapshot of the state of female entrepreneurship in the U.S.

The COVID-19 pandemic has also caused a surge in the number of Black business owners, as Bloomberg reports. In August 2021, the number of Black-owned businesses reached 1.5 million, a 38% increase from February 2020. By comparison, the number of Hispanic/Latinx-owned businesses increased by 15%, the number of white-owned businesses by 3%, and the number Asian American-owned businesses by 2%.

Black entrepreneurs are an essential part of the economy, as the 2021 survey of Black entrepreneurs from Guidant Financial and the SBTA indicates. Black small business owners tend to be younger than their white counterparts, for example, and a larger percentage of Black business owners are women (46%), which is 53% higher than the percentage of white women business owners.

A report from SCORE titled Unsung Entrepreneurs notes that first-generation or immigrant entrepreneurs are one of the three groups, along with veteran entrepreneurs and encore entrepreneurs (aged 55 and older), that make the largest contribution to the small business economy.

The percentage of immigrant entrepreneurs has increased from 13.3% of new business owners in 1996 to 25.4% of new businesses in 2019, according to the SCORE report. Immigrant-owned businesses are also more likely to plan for additional hires than their native counterparts, and while they’re more likely to apply for financial support, they’re less likely to receive it.

Numbers released by the U.S. Small Business Administration (SBA) in November 2021 indicated that two key factors for measuring small business success — self-employment and proprietors’ income — declined sharply in 2020 as a result of COVID-19 but have bounced back rapidly in 2021. Similarly, business openings and closures both reached record highs in 2020, but total openings outpaced total closings by the end of the year.

The SBA reports that the total number of small businesses in the U.S. is about 35.2 million, 81% of which have no employees (nonemployer firms).

The average number of employees that a new business hired in 2019 was 3.3, compared with 15.3 employees on average for all existing businesses. The most common source of financing for small businesses was business earnings (77%), although by the end of 2020, 73% of small single-location employer businesses had received financial aid from the Paycheck Protection Program.

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According to Seek Capital, factors that influence a new business venture’s success include growth in the state’s worker-age population, the rate of new entrepreneurs as a percentage of the state’s population, jobs created in a business’s first year, and the venture capital raised per company. Top states for entrepreneurs include: 1. Utah: 9% worker population growth; 0.29% new entrepreneurs; 5.67 jobs created; and $11.54 million venture capital. 2. Florida: 6.9% worker population growth; 0.46% new entrepreneurs; 6.41 jobs created; and $8.18 million venture capital. 3. Texas: 7.7% worker population growth; 0.43% new entrepreneurs; 5.74 jobs created; and $6.75 million venture capital. 4. Colorado: 7.2% worker population growth; 0.35% new entrepreneurs; 6.45 jobs created; and $6.34 million venture capital. 5. California: 1.9% worker population growth; 0.45% new entrepreneurs; 6.47 jobs created; and $26.94 million venture capital.

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The factors that determine how much an entrepreneur makes include the level of experience, the type of business, the amount of revenue the business is generating, and the business’s current cash flow. New business owners typically earn very little to begin with, choosing instead to reinvest in the business as much as possible. However, in almost all cases entrepreneurs receive regular compensation in some way.

The salary site PayScale estimates that a small business owner earned a median annual salary of about $65,000 as of November 2021; those with less than one year of experience earned about $31,000, and those with 20 or more years of experience earned about $76,000. Among the skills that affected a small business owner’s salary are sales management (about 85% higher salary than average), construction estimating (50%), and accounting (35%).

At the other end of the scale, many entrepreneurs serve as CEOs, general managers, or administrators of their business, qualifying them to be paid as top executives. The U.S. Bureau of Labor Statistics (BLS) reports that the median annual salary of chief executives was $185,950 as of May 2020. The BLS notes that the median annual salary of general and operations managers was $103,650.

In addition to the type of business, the amount of work required, and the amount of revenue coming in, an entrepreneur’s salary depends on where the business is located. PayScale reports that a small business owner in Boston earned a salary 90% higher than the median salary as of November 2021, while one in Chicago earned 60% more than the average. By contrast, small business owners in Los Angeles and Seattle earned 60% and 10% lower than the average, respectively.

Zippia lists the 10 states that are best suited to entrepreneurs:

Most entrepreneurs determine their earnings using one of two approaches:

Entrepreneurs must keep business and personal expenses separate, including a distinct bank account. The IRS requires that all employees receive “reasonable” compensation. However, it’s difficult to determine a reasonable salary in the early stages of the business. These are among the factors to consider when calculating a fair entrepreneur salary:

Other factors that affect how much an entrepreneur makes are compensation paid to employees, cash flow, growth rate, and what the company can afford.

New business models make it easy for people to begin their entrepreneurial career as a side business that they run while holding down a full-time job, as CNBC reports.

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Nothing matches the financial, professional, and personal rewards of succeeding as an entrepreneur. Success in starting, growing, and maintaining a business requires the right mix of leadership and management skills combined with creative problem-solving and the ability to communicate your vision. When all the pieces fit together, you can watch your idea become a vibrant enterprise.

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Infographic Sources

Guidant Financial, “Women in Business: 2021”

Hiscox, “2021 Hiscox Encore Entrepreneur Report”

SeekCapital, “Best States to Start a Business (2021 Study)”