Part 3 - More than a Job - Less than a Company: The State of Small Business

Before we zoom in on you and your business, I want to zoom out.

As small business owners, you and I are not operating in a vacuum. We are part of a massive ecosystem of small businesses, most of which look a lot more like owner-operator realities than glossy startup stories.

Small business is the economic engine of our communities. As of 2025, there were about 36.2 million small businesses in the United States, representing a whopping 99.9 percent of all businesses. Small businesses employ 62.3 million people in the U.S., or 45.9 percent of the private-sector workforce, and accounted for 1.2 million net new jobs between March 2023 and March 2024. 

On paper, that sounds like a story of endless opportunity. But the reality is less than rosy.

Many Don’t Make It

Small businesses are face substantial challenges, and many don’t survive. Around 20.4 percent (one in five) fail in their first year, and nearly 50 percent do not make it past year five. In other words, nearly half of the people who decide, “I’m going to turn this thing I do into a business,” will not still be operating that business five years later. 

If you have made it to year six or beyond, give yourself a big pat on the back. The reasons are complex, from cash flow problems and rising costs to labor challenges, inflation, taxes, and competition. But one consistent pattern is that they may never make the transition from “I do the work” to “this is a business with systems, structure, and support.”

They stay stuck in owner-operator mode until the weight becomes too heavy.

Most Stay Small

When we look at the data more closely, we see that a huge share of small businesses never hire employees at all. The U.S. Census Bureau reported that the nation had 29.8 million nonemployer businesses in 2022 - businesses with no paid employees that are subject to federal income tax. Together, they generated $1.7 trillion in receipts, equal to about 6.8% of the 2022 U.S. economy. These figures underscore the scale of entrepreneurs, independent contractors, and business owners who are running their operations themselves.

Even among businesses with employees, most remain quite small. In 2022, the United States had approximately 5.52 million employer firms with 1–499 employees. This figure is dwarfed by the nation’s 29.8 million nonemployer businesses—businesses with no paid employees.

Census Bureau research also found that nonemployer businesses grew faster than employer businesses in nearly every year from 2012 through 2023, contributing to their growing share of U.S. business establishments over that period.

In other words, the owner-operator model isn’t the exception. It’s the norm. Millions of businesses are essentially one person plus a laptop or a tool, a craft, a service,, holding everything  together themselves. Many others add a few people but never build the systems that let the business function without the owner at the center.

This is important to say out loud because it reframes your experience. You are not uniquely behind. You are experiencing a pattern that most small businesses never escape.

The Silent Majority: Businesses That Never Really Become Businesses

If we define a business as a system that can reliably produce value and revenue without the owner doing everything, then a large proportion of small businesses never truly become businesses. They stay in a gray zone - more than a job, less than a company.

That gray zone is where the burnout, the ceiling, and the “almost” you’ve been feeling live.

So when you look around and see that many small businesses are struggling, closing, or constantly fighting fires, it’s not a personal failing. It is because the way we teach entrepreneurship - especially skill-based entrepreneurship - is incomplete.

We focus on how to start. We don’t know how to maintain and build beyond ourselves.

You are reading this series because you want to do more than just survive those statistics. 

You want to understand the bigger picture, and then decide intentionally what kind of business you are going to create inside it.

Sources:

• U.S. Small Business Administration, Office of Advocacy, “New Advocacy Report Shows the Number of Small Businesses in the U.S. Exceeds 36 Million,” June 30, 2025.

• U.S. Small Business Administration, Office of Advocacy, “Frequently Asked Questions About Small Business 2026,” February 3, 2026

• U.S. Bureau of Labor Statistics, Business Employment Dynamics, “1-year survival rates for new business establishments by year and location,” March 4, 2024; and “34.7 percent of business establishments born in 2013 were still operating in 2023,” January 12, 2024.

• U.S. Census Bureau, “Telling the Story of the Nation’s Smallest Businesses,” May 6, 2025; U.S. Census Bureau, “Census Bureau Releases Demographic Characteristics of Nonemployer Businesses,” May 8, 2025.

• U.S. Census Bureau, “Number of U.S. Nonemployers Grew Faster Than Employer Businesses Nearly Every Year From 2012 to 2023,” July 30, 2025.
  U.S. Census Bureau, “Census Bureau Releases Demographic Characteristics of Nonemployer Businesses,” May 8, 2025