Small businesses are corporations, partnerships, and sole proprietorships that have less employees along with revenue because they are not the same size as a “regular” corporation that operates on a larger scale. Small businesses offer services such as convenient stores, small grocery stores, restaurants, bakeries, hairdressers, tradespeople such as carpenters and electricians, photographers, and some small-scale manufacturing such as toy manufacturing, being a smart phone accessory maker, or a plastic container manufacturer. Most small businesses are sole-proprietor operations meaning they provide low income for doing things like selling prepared hot food on the street. Small businesses can range from fifteen employees to no more than five thousand.

According to Jason Nazar’s contributed statistics in Forbes, there are almost 28 million small businesses in the United States, with approximately 543,000 of these new businesses starting up each month. United States small businesses employee nearly 60 million people, which is nearly 40 percent of the private workforce, and they have generated over 65 percent of new jobs since 1995. Firms with fewer than one hundred employees actually hold a wide variety of the over all small business employment (see Figure 1 for the ratio between firm size to employment).

Aside from the small businesses that maintain full-time or part-time employees, there are businesses that employ nobody other than the owner themselves. A nonemployer business is one that has no paid employees, annual business receipts of $1,000 or more and must pay federal income taxes. Most nonemployers are self-employed individuals operating very small unincorporated businesses, depending on the owners source of capital (money). Nazar states that around 75 percent of all United States businesses are nonemployer businesses and that around 80 percent of these non-employee businesses reported less than $50,000 in receipts which is considered low income even though over 22 million are self-employed and can take in all revenue made. These statistics show that it can be extremely challenging to invest into your own small business venture, but sometimes the ambition does prove to pay off in the long run.

Even though starting up your own small business may require a lot out of you physically and mentally, the financial cost of starting up is not as large as Americans make it out to be. The annual cost of starting up a small business can be as low as $3,000, however most home-based franchises cost $2,000 to $5,000 to start. If you’re someone who is interested in a career focused on web design or computer programming then you can even start your small business online, which can be most beneficial for networking connections through social media or running a website. According to eMarketer, an online digital marketer, there was a 24.8 percent increase in the annual Online Small Businesses, the global worldwide sales reached $2.304 trillion and online businesses accounted for 58.9 percent of those sales (Pilon). As online business continues to be a larger factor of the retail market around the world, getting your business ideas online can be a convenient way to network with people around you and if you’re lucky all that you really need to get your business started is that first good connection. Online businesses are growing at double digit rates and you need to be able to capture the public’s attention and expose your latest online business ideas to encourage growth within your own business.

If you have started a small business then I’m sure you have struggled with some sort of lack in cash flow which is a very common difficulty that business owners experience. In 2014,  220,000 establishments (small businesses) started in the United States and 205,000 exited the United States due to not having enough revenue (Nazar). Every business has its own financing needs; experts have some tips to help you figure out how much cash you will actually need to start your own small business. Entrepreneur Drew Gerber, who started a technology company, a publicity firm and a financial planning company, estimates that an entrepreneur will need six months’ worth of fixed costs just to start their own small business. Gerber instructs, “Have a plan to cover your expenses in the first month, Identify your customers before you open the door so you can have a way to start covering those expenses”. One of the main reasons most small businesses fail is that they simply run out of cash. Writing a business plan without basing your forecasts on reality often leads to an unfortunate, and often unnecessary, business failure. Without the benefit of experience or actual historical financials, it’s easy to overestimate a new company’s revenue and underestimate costs (McCahon).

Twenty percent of small businesses fail in their first year, thirty percent of small businesses fail in their second year and fifty percent of small businesses fail after five years. Finally, thirty percent of all small businesses fail in their tenth year in business (Georgia McIntyre). There are many reasons why small businesses fail but a few things that tend to do harm are: Capital access (access to money), cash flow, lack of demand, and poor management. One of the major problems with small businesses is capital, as of 2015, seventy-three percent of small business owners weren’t able to access enough capital for their business ( This means that even if the money existed in a business account, a business owner cannot access it when needed for business operations, making it extremely challenging to run your business efficiently.

California governmental agencies, small business organizations and state legislators come together every year to recognize that owning and starting your business is hard work. This annual event honors a few of the millions of small business that serve as “the economic engine of California”. Small businesses are engrained in California’s communities and economy contributing to 75 percent of California’s gross state product and over half of the states private sector jobs. “California Small Business Day” also allows business owners from across the state to connect with other business owners in an effort to learn from or gain insight from fellow entrepreneurs. According to a small-town and successful business owner, John Hackney, “This business can either make or break you, you have to be willing to sacrifice everything you have in order to start your own business.” He claims that the initial starting phase of your business will be one of the hardest periods of growth that you have to overcome through the entire process. Hackney also advises that if you plan your costs, don’t underestimate the expenses, and never forget that they can rise as the business grows, it’s easy to overlook costs when you’re thinking about the big picture, but you should always be very precise and thorough when planning for your fixed expenses. He also strongly believes that when your employees are appreciated and treated with respect, then you are sure to succeed in maintaining a loyal, hardworking staff. Ideals like these reveal why small businesses are so important and even endearing. We can come to the conclusion that even though starting your own business may seem to be one of the hardest things, it can also be equally as rewarding and beneficial.  

Works Cited

California Small Business Association, “California Small Business Day 2018”, Business Wire (English). 06/19/2018, Article Retrieved from

Richard Schwinn: PhD, Research Economist, “2016 State Small Business Profiles Released with Fresh Design”, The Small Business Advocate: Office of Advocacy, Vol. 35, No. 3, March- April 2016 Retrieved from

Jason Nazar, “16 Surprising Statistics About Small Businesses”, Small Business Administration Office of Advocacy, Sep 9, 2013 Retrieved from

“Small Business”, page issues Retrieved from

Georgia McIntyre, “What is the Small Business Failure Rate?”, What Percentage of Small Businesses Fail? (And Other Need-to-Know Stats), August 29, 2018 Retrieved from

Sammi Caramela, Startup Costs: How Much Cash Will You Need? April 12, 2018

Cynthia McCahon, Founder and CEO of Business Plan Software, “One of the Many Reasons Small Businesses Fail is because They Simply Run Out of Cash.”, April 12 2018

Drew Gerber, Entrepreneur, April 12 2018

John Hackney. Business owner, The Lakefront Taproom. (August 2018). Personal reference. (909)336-8443

United States census, Nonemployer Statistics, “Nonemployer Definitions”,

Annie Pilon, Small Business Trends, “50 Online Business Ideas”, July 5 2018,