Starting out small is getting bigger in America. Close to 5.5 million new business applications were filed in the U.S. in 2023, according to U.S. Census Bureau data — a notable uptick from 5.1 million in 2022. Wyoming, Delaware, and Florida took the top spots for the highest rates of applications per 1,000 residents.¹

Small businesses — those with 500 or fewer employees — account for 99.9% of U.S. companies, and their impact is felt across the economy. Close to half (46%) of private-sector employment happens at small businesses.²

Small but mighty

Here’s a closer look at the country’s small-business landscape, by the numbers:³

• There are over 33 million small business owners across America
• 61.6 million people are employed by a small business
• Small businesses pay employees an average of $30.42 an hour, which amounts to a $63,000 annual income
• Since the late 1990s, between 43.5% and 50.7% of the U.S. gross domestic output (GDP) has been driven by small businesses
• 33% of small businesses launched with less than $5,000 in capital, while 58% launched with less than $25,000

Access to capital and cash flow can be sticking points for small businesses, and owners received good news this winter. In late November 2024, the U.S. Small Business Administration (SBA) raised the maximum amount for loans backed by its network of Community Advantage Small Business Lending Companies (CA SBLCs) — now up to $500,000 from $350,000.⁴ That follows on the October 2024 announcement from the SBA that it delivered $56 billion to small businesses in fiscal year 2024, a funding increase of over 7% from the prior 12-month period.⁵ 

In addition to having more funding available for their operations, owners could see more inbound requests, as the government intends to give more opportunities to small businesses directly. In 2023, small businesses received a record $86 billion in federal government subcontracting awards, and the U.S. Office of Management and Budget plans to continue offer more openings.⁶

Small businesses also stand out in the retail sector: Since 2010, the industry has had its own shopping holiday during the red hot spending weekend after Thanksgiving. In 2023, Small Business Saturday drove $17 billion in spending at small businesses.⁷

Shopping at small businesses can be a standout experience for consumers, according to Empower research:

• People appreciate the personalized customer service (36%), high quality and craftsmanship (34%), and locally made products (56%) found at stores in their neighborhood
• 3 in 5 shoppers (61%) prefer to buy gifts from small businesses because they offer unique and personal options
• More than a third of Americans (35%) are willing to pay extra at a local store for a product they could also buy at a big chain

Owner outlook

Small business owners see the overall economy as more promising in 2025. The National Federation of Independent Businesses’ Small Business Optimism Index rose by eight points in November 2024 to 101.7 — the highest since June 2021. Some owners may also be looking to grow: 14% of those surveyed believe it’s a good time to expand their business.⁸

Getting started could be another story. A third (32%) of Americans want to start their own business, but they don’t have the time, according to Empower research. However, recent population trends could ease the transition.

About half of small businesses, worth a total of $10 trillion, are owned by people over 50. As those people look to sell and retire, around 64% of people buying businesses are Millennials or younger. It could help that this slice of the population may have more capital to tap: Empower Personal Dashboard^TM data found that Millennials grew their wealth more than any other generation in 2024 (13.7% vs. 7.7% for all Americans).

Charting the course

Whether people are looking to turn an entrepreneurial hobby into a new venture or to join a small business as an employee, keeping retirement top of mind is a wise move. Considering how a SIMPLE IRA or a SEP IRA works could pay off for those getting started and anyone wanting to keep their retirement savings growing as the business does, too.