Month: March 2019

Small businesses are the lifeblood of the US economy and below are the small business statistics every business owner needs to know. The overwhelming majority of businesses in the United States are classified as small businesses, and almost half of the employees in the United States are working at these kinds of operations as well.

The face of small business in the US is changing, however – and it’s changing faster than ever before. A lot of these small businesses are moving online or at the very least taking full advantage of everything technology has to offer. Here are some pretty interesting, exciting, and insightful small business statistics which include things from how many businesses are going to be started this year to how the economy will change and even how many businesses have to face challenges to get an unsecured business loan and much more which will help you better understand the lay of the land in 2019 and beyond.

Interesting Business Statistics in 2019

How many small businesses are there in the US?

According to the US SBA, there are 30.2 million small businesses in the United States. This is 99.9% of ALL US businesses.

Source: SBA Report

How many people work for small businesses?

The SBA also tells us that there are 58.9 million people in the US working for a small business, representing 47.5% of everyone working in the United States as of 2018.

Source: SBA Report

Will there be more small businesses in 2019 and beyond?

Almost certainly. The US economy is growing faster than ever before, the employment rate is lower than ever before, and the growth of small businesses in the US continues to explode.

Source: SBA BEA 2018 Information

How old are small business owners in general?

33% of small business owners are in their 50s, with another 21% at least 60 years old or older. That represents more than 50% of all small business entrepreneurs in the United States today. Young people are getting into the swing of things frequently though, with nearly 20% of small business entrepreneurs younger than the age of 39.

Source: Guidant Financial

What kinds of small businesses are being opened?

Service businesses lead the way, with 11% of all new small businesses being related to the business service industry. Food and restaurant businesses are next in line at 10%, with help, beauty, and fitness businesses and general retail just behind at 7% apiece.

Source: Guidant Financial

How much money does it take to start a small business today?

Most small businesses in the US will need anywhere between $2000 and $50,000 to get started.

Source: Business News Daily

Where are small business owners finding employees?

56% of small business owners report difficulty finding the right employee, and 57% report that they still depend on word-of-mouth and referrals to staff their businesses. 31% post on social media, 28% post on online job sites, and 12% still use newspapers.

Source: Indeed.com

How many women and minorities are opening up small businesses?

There are 8 million minority owned businesses in the United States (a 38% increase since 2007), with 11.6 million small businesses owned by women.

Source: MBDA.GOV and NAWBO.Org

Online Business Statsistics

Are all small businesses online?

Almost 60% of all small businesses have yet to build an online presence or even set up a website. Almost 20% of small business owners without a website have no plans to go online anytime soon.

Source: GoDaddy Annual Report

Do small businesses see the internet as an advantage?

75% of all small business owners online see internet marketing as an effective or very effective tool to win new business.

Source: MediaPost Research

Has the online/e-commerce market been tapped out?

Internet traffic around the world in 2020 is anticipated to be 95 times higher than it was in 2015, with more people – and customers – jumping online than ever before.

Source: Cisco Research

Are small businesses handling their own marketing or leaving it to professionals?

71% of all small business owners are taking care of their own marketing (online and off) rather than outsourcing the work to freelancers or agencies.

Source: Linchpin Research

Small Business Financial Stats

How often are banks approving loans for small businesses?

Major banks are approving small business loans at a 25.9% rate, with local banks and credit unions approving loans at a 49.4% rate – higher than any other point in decades.

Source: Forbes

How much money (on average) are small businesses asking for from lenders?

The average small business owner is only looking for between $60,000 and $80,000 from traditional lenders.

Source: Fundera

How much money do small businesses in the US make annually (on average)?

On the average, small business owners in the US make between $34,000 a year and $75,000 a year. 86.3% of small business owners report making less than $100,000 a year, and 30% say that they don’t pay themselves a salary at all.

Source: SmallBizTrends.com

How many small businesses in the US are “bootstrapped” or self financed?

Fully 75% of all small businesses in the United States are self financed or “bootstrapped”, using existing cash flow to build and grow operations in the early stages. This is the number one form of financing used by most small businesses and startups.

Source: Entrepreneur.com

How many small businesses fail every year?

Fully 1/5 of all small businesses fail in the first year and nearly 50% of small businesses fail within five years. Only about a third of small businesses survived 10 years or longer.

Source: BusinessKnowHow

Why do most small business fail?

46% of small businesses report their operation failed because they weren’t sure of what they were getting into. 30% report a lack of experience and managerial support. 13% report catastrophic failure related to neglect, fraud, and outright disaster, and 11% report losing passion in the project.

Separately, 82% of small businesses report failing because of cash flow problems that stem from many of the issues we highlighted above.

Source: ISBDC.org

How many entrepreneurs have started another business before?

47.1% of all entrepreneurs that succeed for at least five years in their first business go on to start a second business. Of these serial entrepreneurs, the average amount of companies that these repeat business owners create sits at three.

41.4% of all small businesses are started by entrepreneurs that are building their first company.

Source: StartUpBros.com

Small Business Marketing Stats

How are small businesses finding customers?

68.8% of small business owners use online and off-line marketing to find new customers. 28.9% reported that they do not market online and off-line, but market with one approach or the other.

Source: Micro Business Marketing Mix Report

How important is online advertising?

51% of small businesses today use social media to grow their business, and 65% consider social media advertising to be effective. $45.4 billion will be spent on search engine advertising and pay per click advertising, almost doubling the amount of money spent in 2014. Google is still the king of the ring when it comes to online advertising, with 88.56% of all online searches conducted on that platform.

Source: Iron Paper and Statista

How important is mobile advertising and marketing?

Mobile device internet usage overtook traditional laptop/desktop usage in 2018 for the first time, with mobile devices being used 51.3% of the time to go online. 80% of internet users around the world have a smart phone, and 56% of all internet traffic is generated by mobile devices.

Source: StatCounter and Smart Insights and Similar Web

Is email marketing still effective?

By the beginning of 2019, 54% of the world’s population will be using email. Google passed the 1 billion monthly active users on Gmail in 2017, and anticipates that number to hit 2 billion users by the time 2020 rolls around.

Email marketing also has a return on investment of 122% – four times the return on investment of social media marketing, paid online advertising, and traditional direct mail marketing campaigns.

Source: Lifewire and MediaPost

What about social media marketing?

A million brand-new social media accounts are created by people every day. Two thirds of the world’s population (with internet access) has an active Facebook account. More than $40 billion are expected to be spent on social media marketing campaigns by the end of 2018.

On top of that, 64% of all small business owners use social media for business purposes. Social media marketing from small businesses has doubled over the last year, and is expected to double again in 2019.

Source: Social Media Today and Business Insider and Adobe

Are mobile applications critical for small business success?

47% of all small businesses are likely to have a mobile application developed for them by the end of 2018. Smart phone conversion rates are up to 64% compared to traditional online advertising, and 78% of mobile searches for local businesses resulted in a sale.

Source: Clutch and KISSMetrics

The Internet and the resulting Fintech revolution has brought many advancements to the lending and investment space across the globe.

Crowdsourced alternatives to both lending and investing have connected the global population on a scale, and in a way, that’s never really been seen.

Sure, crowdfunding isn’t exactly a new concept. Some suggest the Statue of Liberty was crowdfunded.

And the same can be said for peer-to-peer lending, which has been done for ages (if you’ve ever let a friend borrow money, that’s essentially peer-to-peer lending).

However, sites like Kickstarter for crowdfunding and Prosper for P2P lending have revolutionized the old concept in a big new way.

Crowdfunding in the U.S. alone for 2017 has grown to $17.2 billion and is estimated to have grown to nearly $34 billion for 2018:

And U.K. P2P platform Orca says that “In the first half of 2017 the market experienced a 59% market growth rate when compared to the same period in 2016,” with the industry itself surpassing $13 billion in cumulative lending.

So, what exactly are these popular crowdsourced lending methods, how do they differ, and how might they help you get the funding you need for that new business or product idea?

What is crowdfunding?

Crowdfunding is often used for the collection of new crowdsourcing funding methods now available to entrepreneurs and business owners. However, it’s really just one method of doing so.

At its simplest form, crowdfunding is the act of eliciting contributions for the creation or completion of a project.

Most notably, this has been used by entrepreneurs on sites like IndieGoGo and Kickstarter to acquire the funding necessary to create an innovative new product:

However, it’s also been used to acquire funding to self-publish a book, create a comic or game, or fund a film.

The benefit here is that the entrepreneur gets the capital they need without having to pay back investors.

Typically, this rewards-based form of crowdfunding offers an incentive like early access or one of the first beta models of the product in exchange for a contribution of varying size, with larger rewards available the larger the contribution:

In addition, platforms tend to require a funding “goal”: the target amount you need to fully fund your project.

If you hit your funding goal within a specified amount of time, you’re given the full amount of the funds you’ve generated and pay that platform a small fee in exchange.

It’s then your job to follow through on delivering those rewards and keeping your new backers informed of your progress.

Are there other types of crowdfunding?

There are six types of crowdfunding:

1. Rewards-based (see above)
2. Equity-based
3. Software value token
4. Debt-based
5. Litigation
6. Donation-based

However, despite all these kinds of crowdfunding, rewards-based, which we just covered, and equity-based are by far the most common.

As opposed to the rewards-based crowdfunding which most people think about when they think of crowdfunding, equity-based crowdfunding involves a large pool of investors contributing to a person or organization in exchange for equity.

Ultimately, it’s up to what you want to give in exchange for the crowdsourced capital: rewards, which cost time and money, or equity in your company.

What is peer-to-peer lending?

Peer-to-peer lending (or simply P2P), is similar to equity-based crowdfunding in that a group of people invest money in an individual or business.

However, where they differ is that with P2P that collective pool of money, comprised of small investments from many investors, is offered as a loan and investors receive a return with interest instead of equity:

As with rewards-based crowdfunding vs. equity-based crowdfunding, the decision between the three comes down to what you want vs. what you’re comfortable giving up.

Peer-to-peer lending vs. Crowdfunding: What’s the difference?

We’ve touched on the difference between P2P lending and crowdfunding a bit so far, but here’s a clearer breakdown based on the pros and cons of each and from the individual or organization’s perspective:

While some of these crowdsourcing methods differ in their difficulty to obtain funds, each is subject to the same structure: you must have a sound business, product, or project idea and be able to present it effectively in order to attract backers or investors who are willing to invest in you and your idea.

Is peer-to-peer lending possible with bad credit?

If peer-to-peer lending looks attractive, you might be wondering if it’s possible to acquire a peer-to-peer loan with bad credit.

Peer-to-peer loans don’t always have a minimum credit requirement because they take into account many other factors than just credit score and history.

However, every platform is different and many do require a minimum credit score of 600, which is low by comparison of most lending vehicles, especially bank loans which often require 700+.

The best crowdfunding sites

There are now countless crowdfunding sites available online that promise to offer a platform to fund your big idea or next entrepreneurial project.

However, when picking a crowdfunding platform it’s important to go with a site that has a history of successfully funding lots of projects.

These are some of the best:

1. Kickstarter

The original platform that made crowdfunding so popular, since its launch in 2009, Kickstarter has now funded nearly 160,000 projects for 16 million people with $4.2 billion pledged, more than any other crowdfunding platform.

While there are a wide variety of categories, the site has become most well known for funding artists, filmmakers, musicians, designers, and inventors.

Check out Kickstarter.

2. Indiegogo

Similar to Kickstarter, Indiegogo offers the ability to crowdfund your next big business idea. To date, they’ve raised over $1 billion for nearly 700,000 projects.

Where Indiegogo differs is that they also offer a marketplace with the projects of many of their most popular crowdfunding campaigns.

Where Indiegogo also differs is in the fact that campaigns don’t need to have a set deadline or fundraising target. A project can be open indefinitely until you raise the money you need for your campaign.

Check out Indiegogo.

3. Patreon

Patreon, a platform based on the old-school patronage system which artists as far back as the medieval Renaissance used to support their craft, differs from other crowdfunding platforms in two ways:

• It’s focused on supporting creatives continuously and less on funding individual projects
• Funds are pledged on a recurring basis, either monthly or per-creation (per-video, article, book, collection of illustrations, podcast, etc.)

In exchange for pledging a small amount per month (most supporters give just a few dollars), reward tiers are offered which function similar to Kickstarter and other crowdfunding sites.

To date, $350 million has been paid to creators.

Check out Patreon.

4. WeFunder

WeFunder is centered around funding small business ventures, allowing you to fund any project from $50,000 to $50 million for everything from a restaurant to a tech startup.

Where WeFunder is also unique is that all fees are charged to investors with nothing charged to entrepreneurs.

Check out WeFunder.

The best peer-to-peer lending sites

Similar to crowdfunding, there are several great peer-to-peer lending marketplaces.

Here are some of the best:

1. Prosper

Prosper is to P2P lending what Kickstarter is to crowdfunding. It’s the very first peer-to-peer lending platform in the U.S. and to date says it has organized over $14 billion in P2P loans to nearly 900,000 people.

Prosper offers loans up to $40,000 with a 3-5-year repayment plan and at a fixed interest rate. They also off no repayment penalties.

Check out Prosper.

2. Lending Club

Lending Club has been around almost as long as Prosper and their options are very similar. They differ in one major area: business loans.

Where $40,000 is the maximum personal loan amount with Prosper, Lending Club also offers business loans up to $300,000.

To date, $44 million has been borrowed through Lending Club with 2.5 billion borrowers.

Check out Lending Club.

3. Upstart

Founded by 3 ex-Googlers, Upstart is unique in that it uses an entirely different system to assess risk and approve borrowers using artificial intelligence.

The result? Upstart claims that borrowers save an average of 24% compared to typical credit card rates.

Loans are from $1,000 – $50,000 on either a 3 or 5-year repayment plan and with no repayment penalty.

Check out Upstart.

4. Kiva (non-profit)

Kiva is unique in that its mission is to alleviate poverty through funding small business ventures (with $1.3 billion given in loans to date across 81 countries and counting).

It does that, in part, by offering P2P loans up to $10,000 at no interest. Yes, absolutely no interest.

When creating a campaign, you’re given the option to invite friends and family to contribute then your story is released to Kiva’s 1.6 million individual lender base until you’re fully funded.

Check out Kiva.

Funding your next big idea will never be the same

The Fintech revolution has brought with it incredible changes to business in the 21st Century.

But perhaps one of the most radical changes has been the rise of crowdsourced funding in the form of crowdfunding and peer-to-peer lending.

While banks were busy closing their doors, the world opened up and became more connected than ever before, allowing for individuals to invest in businesses and creative ideas they believe in or are excited by and for the consumer to become the investor.

Whether you’re an established business with a new product you’re trying to launch or an entrepreneur with a brand new invention you’re trying to generate funding for, crowdfunding and peer-to-peer lending are both great options to consider depending on your resources and goals.

What are the top trending business ideas for 2019?

There are countless developing industries and ripe new business spaces developing throughout the world. However, as the Internet matures, certain industries, skillsets, and spaces stand out above others as unique opportunities based on one or more factors.

As is the overarching trend in the 21st Century, most of the business ideas below can be home-based and many can even be started with little startup capital.

Here are the top 10 trending business ideas for 2019.

1. Skill trade

In an unexpected 21st Century resurgence, many of what were rare and obscure trade skills are now not only profitable but their goods desirable.

Sites like Etsy and Amazon have made it possible to take a trade skill and build a successful business around it:

Here are some examples of skills which are now in demand:

• Carpentry
• Woodworking
• Welding and metalworking
• Construction
• Masonry

What’s better than being able to create a business around a trade you have a passion in while being your own boss at the same time?

2. Software development

According to the U.S. Bureau of Labor Statistics, demand for software development will increase by 17% annually until at least 2023.

Considering it’s one of the most in-demand skills, that makes any business attached to software development and engineering a great choice for the foreseeable future.

Examples include:

• Software development and engineering
• Network engineering
• Hardware or software technician

If you already have experience as a software developer or engineer you can start your own company and begin offering your services on sites like UpWork.com as a freelancer while growing your client base and expanding your team:

With countless skills and services relevant to software development being in high demand for the foreseeable future, and the high rates those services command, software development and related fields are not only one of the safest bets out there but one of the most profitable.

3. Subscription box services

In 2018, subscription box services exploded in popularity. Amazon even began offering subscription boxes and marketing them prominently:

A business model rather than a particular industry, many businesses can make use of the subscription box model, and even be entirely based on a subscription box model, to create a more secure, recurring income that the business might otherwise not have.

Here are some example product categories that make for great subscription boxes:

• Makeup and other beauty products
• Pet
• Toys and collectibles
• Food

4. Amazon FBA

The largest online retailer in the world is growing faster than ever and they’re giving you the chance to get in on a piece of that pie through their Amazon Seller program:

On Amazon, you can sell an original product or inventory of products which Amazon already has listed.

In addition, while you can pack and ship orders yourself, by opting in to Amazon’s Fulfillment-by-Amazon (FBA) program, Amazon will take care of shipping, packing, and returns for you for a small fee. This makes the process of selling on Amazon surprisingly simple and straightforward.

5. Virtual reality

While many industries have yet to feel the effects of virtual reality (VR) technology, experts believe that virtual reality will become a primary form of communication in the near future, making this a potentially highly lucrative business to get a foothold in before it explodes.

In fact, according to a report from Statista, by 2020 the global VR industry will exceed $40 billion.

Because VR is expected to change so many aspects of communication and entertainment, there are a nearly endless amount of businesses which can and likely will spawn from the use of VR tech.

Some of these include:

• Digital tools for social and business communications
• VR workplace training programs
• VR product showcases
• Platforms for VR education
• Theatres for VR films
• VR gaming software and hardware
• Apps which utilize VR tech for a variety of uses including wardrobe fitting, meditation, gaming, communication, sightseeing (VR travel)

The possibilities are nearly endless and not all businesses based on VR tech need to know how it works. As more companies develop their VR tech that tech will be made more readily available and easier to afford for businesses who want to use it (such as in the case of apps).

6. Online education and consulting

Have something you’re great at? Someone else might be interested in learning what you know or paying you for your advice.

Online education has become a hugely profitable space and isn’t slowing down anytime soon. According to Stratistics MRC, the online education market has now grown to over $165 billion and will continue to grow to a projected $275 billion by 2022.

Sites like Udemy and Teachable allow you to take what you know and build a course around it, making money from teaching what you’re good at.

And if that doesn’t interest you, consulting is another booming space that is worth looking into.

For a fee, companies and individuals may pay you for your advice on a variety of topics, assuming you have experience and a track record of results.

Common consulting-related industries include:

• Health and fitness
• Business and marketing
• Branding

7. Senior care services

The first baby boomer hit retirement age in 2011. From then and until the end of the next decade in 2030, the remaining baby boomers will all enter retirement, who make up an astounding ¼ of the entire U.S. population.

According to a survey by the American Association of Retired Persons (AARP), 90% of seniors plan to continue living at home well into retirement as opposed to living in assisted living centers.

That might sound like wishful thinking, but baby boomers are much more well-off financially compared to previous generations. Plus, when you consider the number of seniors who suffer from a variety of health and mobility-related conditions, the opportunity of senior care services becomes clear.

8. Home renovations

If construction is your forte, home renovations and remodeling is a niche that is worth looking into.

Home renovations are slated to boom due to the increasing number of retiring baby boomers. In addition to this, if you’ve ever been in a position where you needed a renovator, you’d know that finding a good one is difficult and they often keep booked schedules, so getting the one you want when you want them is tough. This means the space is always open for new talent to swoop up those extra clients.

The only difficulty with construction-related businesses is the need for startup capital. Fortunately, you don’t need much for home renovations and obtaining a construction business loan to get you off the ground is easier than ever.

9. Food trucks

Food trucks have enjoyed a hot streak for more than a decade now.

What once seemed like a food lover’s fad that was destined the sputter out has now been cemented as a natural development of the food and restaurant industry that is here to stay.

Food trucks are great for a few reasons, the most important being that they allow aspiring restaurateurs the chance to start their own food joint without the heavy investment.

Food trucks, by comparison, typically require $50,000 including supplies, as opposed to the $275,000 which the average restaurant requires, and this cost can quickly rise:

If you’re lucky enough to be able to secure a business loan for your restaurant, congratulations. However, most young chefs and home cooks who have dreams of opening their own restaurant don’t have the resources necessary to generate that amount of capital.

Plus, by building a successful food truck business, you’re far more likely to be able to acquire investors who see what you’re doing and are willing to invest in you venturing from food truck to bonafide restaurant (after all, you now have a customer base and a proven menu), making it the perfect first step towards starting your own restaurant.

10. Social media management

What was once a collection of familiar advertising strategies business owners could use to market their business has now become an entirely foreign landscape which requires different strategies and a new set of skills.

The Internet era has brought a lot of wonderful things to the world. However, it’s also left many businesses in the dust of newer, younger organizations with team members who grew up in the social media era.

Countless businesses aren’t taking full advantage of their social media potential, even a decade after the Facebook era began. This has created an incredible opportunity for anyone looking to learn social media marketing and management and offer those services to small businesses.

The world is changing quickly, but the opportunities are ripe

As new technologies are developed that look to change the way we work and communicate, new opportunities and trends will continue to develop.

Fortunately, while challenges exist, so do opportunities for you as a business owner to take something you’re great at or have a passion for and build a business around it.