Entrepreneurs are unique.
They are passionate about what they do and put in the hours to get it done. Successful entrepreneurs have the grit to stick to their goals and work hard until they achieve them.
But let’s be real:
The entrepreneurial journey is not without challenges. It comes with a unique set of risks and difficulties to overcome.
Your average entrepreneur goes through:
- Mental battles
- Communication struggles
- Leadership obstacles, etc…
Especially if they start out on their own.
These entrepreneurial statistics will give you a full picture of the entrepreneur landscape and what it looks like today.
What Will I Learn?
- Entrepreneurial Statistics Overview
- What Pushes People To Become Entrepreneurs?
- What Qualifications Do Entrepreneurs Have?
- What Are The Most Popular Professions For Entrepreneurs?
- What Are The Best Countries For Entrepreneurs?
- How Do Entrepreneurs Finance Their Small Business?
- What Are The Chances Of Success & Failure For Small Businesses?
- What Are The Main Reasons Why Small Businesses Fail?
- What Are The Biggest Challenges For Entrepreneurs?
- What Do The Demographic Statistics Say About Entrepreneurs & Small Business Owners?
Entrepreneurial Statistics Overview
Global entrepreneurship has exploded in the last 15 years.
Entrepreneurship has almost become a popular trendy thing to pursue. This is due to many factors, including how easy it is to start your own business.
The opportunity to start a business around a passion is a big driver for entrepreneurs globally.
There are 582 million entrepreneurs worldwide.
The chance to improve or completely change a niche or industry with a unique perspective is what entrepreneurs jump at.
Entrepreneurs In The United States
There are more than 31 million entrepreneurs in the US alone. This represents:
- 9.29% of the entire population
- 18.86% of the whole US workforce
That’s a lot of entrepreneurs for a single country!
This is expected to grow significantly over the next 5 years.
Working in a high-level corporate position is a dream of the past.
97% of self-employed professionals say they would never go back to “traditional” employment.
The lifestyle you can achieve as an entrepreneur is just too attractive, especially when you can be your own boss.
Corporate To Entrepreneurship
While entrepreneurs don’t ever want to go back to corporate work, most did experience work in the corporate world first.
In fact- 58% of entrepreneurs worked in a corporate job before starting their own business.
Starting A Business
In business there are two popular options to get started:
- Buy a franchise or existing business
- Build your business from scratch
There are pros and cons to both choices. With the first option – you’ll usually inherit a business that’s already established and has everything you need to be successful.
But 83.1% of US business owners started their own small businesses from scratch. While it might be riskier, it is often the preferred choice for most new business owners.
Family Run Business
About ⅕ of entrepreneurs own or manage a business with their family members.
Family-run businesses are still a popular thing today. Many parents look to pass the business they built onto their kids and so forth.
What Pushes People To Become Entrepreneurs?
There are loads of reasons entrepreneurs start their own small businesses. It can be anything from a lifestyle choice to naturally just naturally into it.
Here are the top 3 reasons people become entrepreneurs today.
1 – Being Their Own Boss
Who doesn’t love to be in charge?
55% of entrepreneurs say the biggest motivation for starting their own business was the idea of being their own boss.
Most entrepreneurs want to be the ones calling the shots when it comes to their work.
2 – Pursue Their Passions
If you don’t love the work you do – quit.
Entrepreneurs get to choose what they do and that is a pretty big factor for a lot of entrepreneurs just starting out.
39% of entrepreneurs say that they became business owners because they wanted to pursue their passions.
3 – Taking Advantage Of An Opportunity
In successful entrepreneurship – opportunity is everything.
25% of entrepreneurs say that they made the leap because the opportunity presented itself.
Having the guts to take hold of the right opportunities as they present themselves is an essential quality in an entrepreneur.
Entrepreneurs are sometimes thrown into their businesses because of other circumstances outside of their control:
- 25% of people become entrepreneurs to get away from the corporate world.
- 11% started their own business after being laid off from their current job.
In the US there has been a significant increase of people who are unhappy about working in corporate America.
10% of entrepreneurs started their own businesses because they just weren’t ready to retire yet while 4% did it because they were inspired by life events.
As you can see there are so many reasons entrepreneurs start their businesses.
Here’s what you need to understand:
ALL entrepreneurs are driven by something important to them.
What Qualifications Do Entrepreneurs Have?
Who gets to be an entrepreneur?
In this next set of entrepreneurial statistics, you’ll see that anyone can become an entrepreneur.
I’ll let you in on a secret – you don’t need an entrepreneurship degree from a fancy business school.
High School & College Degrees
30% of entrepreneurs only have a high school degree. That means almost ⅓ of all entrepreneurs never pursued further education at college.
So, if college education wasn’t your thing, you are most certainly not alone in the entrepreneur world.
Even fewer entrepreneurs went on to do their masters with only 18% of small business owners holding a master’s degree.
In the entrepreneurship world, higher education qualifications are becoming less and less valuable. Masters degrees are expensive and do not have a direct correlation to success.
Good experience, persistence and commitment are the real keys.
Doctorate degrees are very rare amongst entrepreneurs. This is most likely due to the:
…Required to obtain one vs the amount of value they actually offer an entrepreneur.
Just 4% of all entrepreneurs have a doctorate.
It would make sense for those entrepreneurs who did get an undergraduate degree to choose business right?
That’s not the case.
Only 9% of entrepreneurs have a Bachelor’s Degree in Business.
What Are The Most Popular Professions For Entrepreneurs?
Entrepreneurs are known for starting businesses in almost any industry.
But these next entrepreneur statistics highlight which industries are the most popular.
1 – Construction
Construction is a very popular industry for self-employed entrepreneurs. This is because construction creates a lot of different jobs and opportunities.
19.6% of self-employed professionals work in the construction industry. That’s almost double the next most popular industry.
2 – Retail
In second place is the retail industry.
10.9% of self-employed professionals work in retail.
This can include anything from retail consulting all the way through to owning a retail store.
3 – Real Estate
Closely behind in the third place is real estate.
10.7% of self-employed professionals work in the real estate industry. The real estate industry requires a particular type of person, which entrepreneurs seem to fit very well.
What Are The Best Countries For Entrepreneurs?
It’s no secret that some countries are better at inspiring entrepreneurship than others.
How do you measure entrepreneurship in different countries?
Through the Global Entrepreneurship Index (GEI). The GEI is an index that measures the overall health of entrepreneurship ecosystems in 137 countries.
Put simply – It ranks each country against each other and determines which countries are best for entrepreneurs.
Each country receives a GEI score between 0 – 100. The higher the number represents a better country to be an entrepreneur in.
These are the 5 best countries for entrepreneurs ranked on the Global Entrepreneurship Index.
#1 – United States of America
The US has long been known for their continuous innovation and entrepreneurship.
It’s no surprise then that they hold the top spot. The US has a GEI of 83.6 making it the best country in the world for entrepreneurs.
#2 – Switzerland
Switzerland might not have been the most obvious number 2.
They have a GEI of 80.4 making it the second-best country in the world to be an entrepreneur.
Small business ownership in Switzerland has been growing at a rapid rate more recently.
They have a strong economy and excellent infrastructure that provides lots of opportunities for entrepreneurs.
#3 – Canada
With a GEI of 79.2 Canada comes in at third spot.
The Canadian government is very small business focussed and even offers an entrepreneurship visa as a pathway into the country for non-citizens.
That’s certainly one way to attract talented entrepreneurs from overseas.
#4 – The United Kingdom
We brits can make money out of anything.
The UK has a GEI of 77.8 which gives it a comfortable fourth position. The UK has a very skilled workforce and favourable business laws which helps promote startups and innovation.
#5 – Australia
Australia has a GEI of 75.5.
The general Australian population is very skilled and past governments have provided very favourable small business regulations.
Australia also has a very strong economy for business owners to operate in.
How Do Entrepreneurs Finance Their Small Business?
Regardless of what business you start, you will need some capital to finance it.
Thankfully the amount of technology available today means you can start businesses with a relatively small investment.
Here are some small business statistics on how they are generally financed.
Their Own Cash
39% of business owners use their own cash to start their small businesses. This is the most popular way for entrepreneurs to finance their new startups.
The second most popular way for entrepreneurs to fund their new businesses is with saved retirement money.
20% of entrepreneurs use some or all of their retirement funds to start the business.
Friends & Family
Friends and family are the go-to if you don’t have the money or require a bigger investment.
10% of entrepreneurs ask friends and family for startup capital.
Loans & Credit
24% of small business owners and entrepreneurs rely on business loans and credit. Most of these loans come from traditional banks, private small business lenders and/or family and friends. In some cases, loans are provided by investment funds.
Crowdfunding sites like Kickstarter have been growing in popularity.
But just 1% of entrepreneurs use crowdfunding as a way to generate initial startup capital for their business.
Crowdfunding is typically more successful for businesses that bring entirely new and innovative ideas to market.
What Are The Chances Of Success & Failure For Small Businesses?
Business can be risky.
Especially when you are just getting started. 2 out of 3 business owners said their first year in business was the most difficult.
So if you are planning to put it all on the line to start your own business, pay attention to these success and failure entrepreneurial statistics.
After 1 Year
80% of small businesses are still in operation after 1 year. That means that only 20% of small businesses fail within their first year.
The statistics look good for the average first-year small business owner.
After 5 Years
But what about after 5 years?
Only half (50%) of the small businesses are estimated to survive 5+ years.
You can interpret this by saying the average business has a 1 in 2 chance of making it past the 5-year mark.
Historical Small Business Failure
The good news is that small businesses are far more likely to be successful today than they were 50 years ago.
Small Business failure has declined by over 30% since 1977.
With new technology and cost-efficient ways to do business today, you have a lot more tools and resources around you to help you succeed.
What Are The Main Reasons Why Small Businesses Fail?
Small business owners face a lot of challenges – particularly when they are just getting started.
Here are the 3 reasons most small businesses and entrepreneurs fail.
Reason #1 – No Market Need
Entrepreneurs are notorious for getting over-excited about their ideas.
Often too excited…
42% of small businesses fail because they didn’t have a market for their products or services. If there is no want for your idea from your target audience…
Simply: No one will buy.
It might seem too obvious to be true but this is the number 1 reason small businesses fail.
Market research can easily be an afterthought but it’s important to put it first and make sure people actually want what you are selling.
Reason #2 – Lack Of Funds
If Rome couldn’t be built in a day – businesses can’t either.
Most businesses don’t make money from day one and they can take months to years before they see any real profit.
That’s what makes getting enough funding and staying on top of your businesses finances so important.
29% of businesses fail because of the lack of funds.
This has been the main issue during covid-19.
Reason #3 – Employees Issues
23% of businesses fail because of the lack of chemistry and teamwork between employees. Hiring the right team members and setting up a business culture they can get behind is a great way to increase your success in business.
Otherwise, a bad team culture could lead to failure.
What Are The Biggest Challenges For Entrepreneurs?
One of the biggest things that entrepreneurs do is solve problems for their market with the product or service they offer.
But when it comes to running the business itself, these are the 3 big challenges that entrepreneurs face.
1 – Finding Staff
Having skilled employees that enjoy their work is an essential part of scaling and growing your business.
27% of entrepreneurs say finding talented staff and contractors is their biggest challenge.
2 – Acquiring New Customers
For 23% of entrepreneurs acquiring new customers is their biggest challenge.
Marketing and sales are skills that not all entrepreneurs have. But they are essential for running a thriving business and growing revenue.
3 – Finding Money To Invest In Their Company
A lot of entrepreneurs have great ideas.
But to get those ideas off the ground you need funding. 22% of entrepreneurs struggle to find financing for their companies and ideas.
What Do The Demographic Statistics Say About Entrepreneurs & Small Business Owners?
One of the great things about entrepreneurship is the diversity of business owners all over the world. Regardless of where you come from or how old you are, anyone can be an entrepreneur.
Age Breakdown Of New Entrepreneurs
Entrepreneurs seem to be getting younger and younger.
But that isn’t necessarily the case. Here are the entrepreneur statistics on age:
|Age||Started Business 2019/2020 (%)|
|18 to 24||16%|
|25 to 34||22%|
|35 to 44||22%|
|45 to 54||13%|
|55 to 64||13%|
|65 to 74||6%|
The 18 to 24 age bracket is the third biggest for US entrepreneurs starting new businesses.
The most popular age to start a business in the US is between ages 25 to 44. A total of 44% of all businesses started in 2019/2020 were in this age group.
Interestingly enough – younger people are more likely to start a business from scratch while older people are more likely to buy an established business instead.
Just 6% of Americans who started a business in 2019/2020 were in the 65 to 74 age group.
Men In Entrepreneurship
In the US there are more male entrepreneurs than female entrepreneurs. For every 10 male entrepreneurs, there are just 7 female entrepreneurs.
Of high-performing startups in the top 0.1% in terms of growth in the first five years, the average entrepreneur started their company when they were 45 years old.
Most business owners who are successful usually start their businesses later in life.
A 50-year-old male startup founder is 2.8 times more likely to have a successful startup than a 25-year-old male founder.
Simply: The more experience small business owners have before starting their businesses, the more likely they will be successful.
Women In Entrepreneurship
Women-owned businesses have been growing significantly over the last 10 years.
Globally there are 252 million women owned businesses and entrepreneurs today.
As of 2019, there were 13 million women-owned businesses in the US alone. And over 5.5 million of those 13 million businesses are owned by women from minority groups…
…That’s almost 50%!
In the US African-American women make up 19% of the total women-owned businesses. Latinas own 15% and Asian-American women own 9%. Impressive!
16.6% of adult women under the age of 65 in the US started a new business in 2019. This is compared directly with 18.3% of men in the US within the same age group.
Female entrepreneurship is growing just as strongly as male entrepreneurship. The most popular industry for women-owned small businesses is retail.
The earnings gap between men and women entrepreneurs in the US is still significant. On average female entrepreneurs earn 28% less than male entrepreneurs.
Minorities In Entrepreneurship
Let’s take a look at some minority entrepreneurship statistics.
Currently, there are over 8 million minority-owned small businesses in the United States:
- 64% of all entrepreneurs in the US are white males and females.
- 14% of entrepreneurs are African Americans.
- 8% of entrepreneurs are Latino or Hispanics.
Asian-American entrepreneurs run about 10% of all US businesses.
The US entrepreneurship landscape is diverse with men and women from many different backgrounds starting and running successful businesses. No wonder it’s the #1 country for people to be entrepreneurs!
Wrapping It Up
If there is one thing that all these entrepreneurship statistics tell you it’s that…
Anyone can do it!
Regardless of your background, upbringing and current circumstances – You can do it. But that doesn’t mean it will be an easy road to success. You will have to deal with:
Every entrepreneur faces problems that force them to adapt.
But that’s what makes a great entrepreneur. They work through each situation, solve the problems as they come and get back up again.