Some Recent Small Business Facts From the Census Bureau
Courtesy of Maui Mastermind, David Finkel.
A client asked me about the numbers I shared from the U.S. Census Bureau relating to business owners (I shared some of them with you several weeks ago).
I think that you’ll not only find them interesting, but that you’ll find them helpful in gaining perspective into what we as business owners are trying to do (or at least what we should be trying to do.)
When you hear the media say, “small businesses” they are probably don’t mean what you think they do.
The SBA defines a small business as any business with fewer than 500 employees. That means if you have a 34-person service business doing $8 million per year in sales, or even a 258-person manufacturing company with $47 million a year in sales, the media is still likely looking at you like a “small business”.
Hence why I think the Level Three Business model is more useful. On this model you break down companies into 4 main stages: Level One “Start-Up” businesses; Level Two “Owner Reliant” companies, Level Two “Rapid Growth“ companies, and Level Three “Exit Stage” companies.
Here are a few more stats that impact business owners:
- 66% of business owners are over 45 years old (I’ve found my peers!) and 36.5% are 55 and older.
- 19 million small businesses are sole proprietorship’s – can you believe that! Sole proprietorships are perhaps the worst possible way to structure your small business for tax and liability reasons. (I still cringe, the law firm I rent office space from is a general partnership, the only form of ownership worse than a sole proprietorship.) If you’ve been meaning to form your LLC or corporation, get on it straight away!
- 33.3% of “employer firms” (i.e. businesses with employees on payroll) offer ZERO benefits; 45.3% offer health insurance; 25.1% offer some kind of retirement plan; and just 6.4% offer profit sharing.
- Just 2.1% of businesses are franchises.
- 51.6% of businesses operate out of the home. (But only 7.7% of businesses with sales over $1 million operate out of the home. Hmm… is it time to make the leap?)
- Just 6% of all employer firms enjoy sales over $5 million per year which means 94% of all employer firms have sales under $5 million. (These businesses have an average of 6 employees each.)
- Businesses under $10 million per year in sales had an average annual growth rate of just 4% in 2013 (most current date Sageworks has stats on privately held companies through).
Let WISE help you with a new year business planning session.