Insights Into Small Business Loans In 2023 – Starting a business requires a lot of effort, time and money. Fortunately, it also allows you to quit your full-time job and gain financial independence.
Before entering the small business world, research the most profitable online business ideas and understand the current market situation.
Insights Into Small Business Loans In 2023
This article will cover the latest small business statistics that every aspiring entrepreneur should know in 2023. These valuable insights will help you build a successful small business.
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This section focuses on small business statistics in the United States. Therefore, the data should be aimed at those who live in the US or plan to target this particular market.
However, only about 6 million (18%) of the small companies paid their employees. 27 million of them (82%) are unemployed companies.
The US Small Business Administration (SBA) defines the self-employed as freelancers and independent contractors. In addition to having more autonomy and equity, this business model also requires less start-up capital.
According to the US Bureau of Labor Statistics, small businesses have created 12.9 million new jobs over the past 25 years. In comparison, large companies created 6.7 million new jobs in the same period.
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By providing a variety of products and employment opportunities, small businesses contribute significantly to the economic growth of the United States.
46% of small business owners purchased a franchise, while 35% purchased an existing business. Only 21% started a business from scratch.
Franchising has gained enormous popularity in recent years. It offers a proven business model, established brand identity and a loyal customer base.
Production of non-industrial goods and related services has the second highest share among small employer businesses at 18%. Business support and customer service comes in third with 15%.
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On the other hand, industry has the lowest proportion of small businesses, which is 4 percent.
Because the manufacturing industry has the lowest number of small firms, it is less competitive than saturated sectors. In other words, you will have a greater chance of success.
An S corporation has a regular corporate structure with a special tax status that includes business profits in the shareholders’ income tax. It is designed to avoid double taxation of C corporations and protect the owners’ assets from business liabilities.
On the other hand, 86.6% of companies adopt the sole proprietorship legal structure popular among non-business companies. The simple structure makes it easy for anyone to start a business, since only one person owns and operates it.
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There are approximately 4.76 billion social media users. Because of its large user base, many small businesses rely on social media to promote their brand.
Facebook has almost 3 billion monthly users, while YouTube brings in around 2.5 billion advertising potential. WhatsApp and Instagram lead with 2 billion active users each.
94% of small businesses post monthly, 79% weekly and 52% daily on social networking sites. Only 6% of small businesses post less than once a month.
While there is no set standard for posting frequency, 74% of social media users prefer brands to post once or twice a day.
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71% of Gen Z users regularly use social networking sites to discover new products. In contrast, only 17% of baby boomers surf social platforms to discover new brands.
After finding the desired product, 28% of Gen Z and millennials purchased it directly in the social media app, followed by 18% of Gen X and 4% of baby boomers.
54% of small businesses plan to increase spending on social media, while 30% aim to spend less on print advertising.
Social media is one of the most cost-effective and profitable digital marketing channels due to its huge user base. However, being active on social networking platforms without practicing SEO can lead to non-standard results or losses.
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Almost half (48%) of social media users like entertaining content, 42% prefer relevant, and 36% find product-driven campaigns interesting. Other popular content types include expert interviews, news stories, polls and informational posts.
Also, young viewers prefer to watch short videos. New businesses targeting Gen Z and millennials should invest in relevant social media platforms such as Instagram and TikTok.
Learning how other small businesses manage their financial affairs will give you a plan to follow. Here are five small business statistics to help new companies make better financial decisions.
In the fourth quarter of 2021, the average small business loan amount was $52,158. In terms of interest type, the average size of fixed rate loans was $73,072.
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The average annual income for a self-employed person is $44,000/year. Meanwhile, a corporate employer can earn around $4.9 million per year.
In 2020, only 63% of small businesses were profitable. 23% of small businesses experienced a loss of income, and 11% stopped working.
Fortunately, 73% of small businesses received financial assistance from the Paycheck Protection Program (PPP). It provides cash to pay operating expenses and helps small businesses maintain a healthy cash flow.
Small business loans have an approval rate of 57%. However, any approval will depend on many factors, such as the type of bank and location, race and gender of the applicant.
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For example, small businesses in rural areas have a higher adoption rate (51%) than urban businesses (38%). Businesses in big cities tend to favor big banks, which offer lower approval rates than smaller lenders.
Companies spend 70 percent of their expenses on employee salaries and bonuses. When faced with financial problems, a high percentage of small businesses make mass layoffs or hire freelancers.
Rollovers for Business Startups (ROBS) is the most popular form of financing, with 52% of business owners using it.
19% of small businesses prefer cash, while 13% seek financial assistance from Small Business Administration (SBA) loans. Only 3% of respondents use a line of credit, making it the least popular method of financing.
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Learning about the demographics of small business owners will provide more information about competitors. Additionally, this information can help you learn from their mistakes and create a better business and marketing strategy.
47.2% of small business owners are Gen X, 39.6% are baby boomers, and 12.9% are millennials. The Silent Generation – born between 1928-1946 – make up just 0.25% of all small business owners.
This business trend reflects a shift in small business ownership from Baby Boomers to Gen X. That’s because many Baby Boomers will have retired by 2022, but Gen Xers are still in their productive years.
Growth statistics for small businesses show that the number of women-owned businesses has increased by 114% in the last 20 years.
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Today, women own 22.4% of small businesses or franchises in the United States. 68.9% are Gen X, 19.4% are baby boomers, and 10.7% are millennials.
By sector, 22.3% of female entrepreneurs own a retail company, while 16.1% work in healthcare. Other sectors include business services (12.5%), food and catering (11.6%) and residential services (4.5%).
According to Guidant Financial, 28% of people started a small business because they wanted to be their own boss.
Meanwhile, 23% of employers were dissatisfied with corporate America. And surprisingly, only 13% of respondents have businesses to pursue their passion.
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Additionally, 10% of participants started a company after being fired, another 10% were not ready to quit, and 9% did so because it was an opportunity.
And he gives. The average small business owner in the United States makes about $69,000/year, with an annual base salary between $30,000-$134,000.
On average, small business owners with less than a year of experience earn about $34,000 per year. Those with 1-4 years of experience typically make around $48,000/year.
Meanwhile, small business owners with 5-19 years of experience are estimated to earn $62,000-78,000 per year. Finally, seasoned entrepreneurs with 20 or more years of experience earn an average of around $77,000/year.
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76.2% of American business owners are Caucasian, followed by African Americans (5.2%) and Asians (4.8%). Meanwhile, Hispanic-owned businesses make up 4.7% of the total.
According to a March 2022 survey by the Kauffman Foundation, there were 580 new immigrant entrepreneurs per 100,000 adults, compared to just 320 for the native-born.
As the internet becomes more accessible, many businesses have turned to online and digital channels to expand their market reach. Small businesses can also benefit from this e-commerce trend.
In 2022, the market share of e-commerce in global retail sales will reach 19.7%. This figure is expected to reach 24% by 2026.
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With 28% of the global population already shopping online, consumers expect small businesses to have an e-commerce presence to support online transactions.
This trend may continue in the coming years. That is why it is important for small businesses to have a website.
AI adoption will grow, as many companies believe that this technology can help increase employee productivity and reduce operating costs.
95% of consumers read online reviews before making a purchase. Meanwhile, 58% are willing to spend more on brands with positive social proof.
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Therefore, it is not surprising that 88% of small businesses monitor their brand image on social media, review websites and Google search results.
Of the 1,500 US citizens surveyed, 57% shop small to keep their money local. Meanwhile, 38% wanted to support local and creative communities.
45% of millennial and Gen X consumers are more likely to support local businesses by shopping online. Meanwhile, 56% of people who decide to buy in-store are over 45.
Technology platforms help businesses automate tasks and improve business efficiency. In fact, small businesses use more than six digital devices