60+ New Business Formation Statistics By LLC States (2024)

Do you know that 2024 will hit 6 million business formation applications?

Yes, that’s right!

You know, in recent years, the landscape of entrepreneurship has transformed dramatically.

The U.S. has over 33.3 million small businesses, which account for 99% of all businesses. This is largely due to the ease of starting a business in the country, which has a score of 91% by the World Bank.

The number of new small business applications filed in 2023 was 5,494,616. This marks an 8.1% annual increase and the most significant number of applications ever recorded in a calendar year. Crazy!

Understanding business formation statistics is crucial for grasping economic trends and opportunities in your industry.

1. The US has a 91% score in ease of starting a business.

(Source: World Bank)

This score reflects various factors that make it simpler for entrepreneurs to launch their ventures.

Key Factors:

• Business Environment: A supportive regulatory environment promotes entrepreneurship.
• Access to Resources: Easily accessible financial, legal, and advisory resources.
• Technology: Advances in technology streamline startup processes.

Different business structures can impact how you form your business:

• Limited Liability Companies (LLCs): 35% of small businesses.
• Sole Proprietorships: 12% engage in this straightforward formation.
• Corporations: 33% opt for this format, allowing for more extensive growth.

While the ease score is high, 50% of small businesses fail within the first five years. Awareness of potential obstacles is crucial for your success.

The high score in ease of starting a business signifies a conducive environment for entrepreneurs. Understanding the landscape can better prepare you for your entrepreneurial journey.

2. The US has 33.3 million small businesses, making up nearly all US businesses.

(Source: USA Today)

This statistic highlights the crucial role small businesses play in the U.S. economy.

Small businesses are defined as enterprises with fewer than 500 employees. These businesses contribute significantly to job creation and innovation.

In addition to their economic contributions, small businesses are foundational to many communities. They provide personalized services and foster personal relationships with customers.

Despite their prevalence, the employment share of small businesses has decreased slightly. Larger businesses are growing at a faster rate in recent years.

Understanding the landscape of small business formation is vital. It lets you grasp their impact on the economy and their ongoing evolution in the marketplace.

3. The number of new small business applications filed in 2023 was 5,494,616. This marks an 8.1% annual increase and the most significant number of applications ever recorded in a calendar year.

(Source: US Business Formation Statistics)

This is the highest number of applications recorded in a calendar year. The increase spans multiple industries, with notable growth in accommodation, food services, retail trade, and healthcare.

Economic recovery, available funding, and support programs have contributed to this rise.

Entrepreneurs are increasingly motivated to pursue new opportunities. The data reflects a positive trend in business formation that supports economic growth.

4. Apart from a decline in 2022, new small business application filings have generally risen over the past decade.

(Source: US Business Formation Statistics)

The trend in small business application filings has been predominantly upward in recent years. Since 2012, there has been significant growth, despite a notable drop in 2022.

Here are some key statistics:

• 2012: 2.58 million applications
• 2017: 3.2 million applications (an increase of 24.1%)
• 2023: A record 5.5 million applications filed

This growth indicates a strong interest in entrepreneurship. Factors contributing to this trend include improved access to funding and resources for new businesses.

Additionally, the Biden-Harris administration has announced that over 18 million new business applications have been filed since taking office. This reflects ongoing support for small businesses in the U.S. economy.

The 2023 filings marked the strongest year to date, showcasing resilience in economic challenges.

Monitoring these trends provides valuable insights into the health and direction of the economy. It can also help policymakers tailor resources to support new entrepreneurs effectively.

5. The most significant growth over the past decade came in 2020, when the total number of applications grew by 24.5% to 4.38 million.

(Source: Oberlo)

In 2020, the landscape for new business applications shifted dramatically. You will find that this year marked a significant peak in business formations.

The data underscores a pivotal moment in entrepreneurship: individuals sought new opportunities amid uncertainty.

This surge stands out in the context of the past decade. Such trends demonstrate resilience among entrepreneurs. You can see how the market dynamics influenced business formation in a challenging year.

6. 1.28 million new small business applications were filed in the second quarter of 2024, a 5.6% annual decrease from the same period in 2023.

(Source: Oberlo)

This decline follows a trend of business applications reaching record highs. For reference, 5.5 million applications were filed in 2023 alone, marking the strongest year on record.

Economic fluctuations and changing market conditions may contribute to the decrease. As businesses adapt, potential entrepreneurs could face increased uncertainty.

It’s essential to monitor these quarterly statistics closely. They provide insights into entrepreneurial activity and the overall health of the economy.

7. About 20.6% of new businesses shut in their first year, 31.3% after two years, 37.9% after three years, 42.7% after four years and 48% after five years.

(Source: US Bureau of Labor Statistics)

This highlights the challenges you face in establishing a stable foundation. Consider these statistics when planning your business strategy.

Proper planning, market research, and financial management can help mitigate these risks. Understanding these statistics is crucial to making informed decisions about your business journey.

8. Of the 33.3 million small businesses in the US, 27.2 million (81.6%) have no employees, Just under 5.5 million between one and 19 employees, and the remaining 648,000 have between 20 and 499 employees.

(Source: Oberlo)

These figures indicate that most small businesses are sole proprietorships or freelancers.

The number of businesses with employees is notably smaller, reflecting a common trend where individuals start businesses independently before hiring staff.

Small businesses with between one and 19 employees also play a crucial role, representing a significant portion of the workforce. They contribute to local economies and provide essential goods and services.

The remaining 648,000 small businesses, which have between 20 and 499 employees, offer a different landscape. These businesses often have a more extensive operational structure and can compete with larger firms in various industries.

9. The average cost to form an LLC in the US is about $132.

Forming an LLC involves several costs that vary by state and individual circumstances. The average cost approximates $132, but let’s break it down further.

Breakdown of Costs:

• Filing Fees: Ranges from $35 to $500. This is typically the most significant expense.
• Operating Agreement: This could cost you $0 to $600, depending on whether you draft it or hire a professional.
• Publication Fees: In some states, you may need to publish your formation in local newspapers, and the fee ranges from $40 to $1,500.
• DBA Fees: If you plan to operate under a different name, the “Doing Business As” (DBA) is around $10 to $100.
• Registered Agent Fees: Hiring a registered agent can cost $0 to $300.

Additional costs may arise, including obtaining a business license or permits.

You should also note that specific states have unique requirements. For instance, Massachusetts has higher filing fees than other states. Always check your local regulations to anticipate all potential expenses accurately.

Understanding these costs helps you prepare financially for your new business venture.

10. Massachusetts is the most expensive state to form an LLC, with a filing fee of $500 and an annual report filing fee of $500.

You will encounter a significant financial commitment when you decide to form an LLC in Massachusetts. The initial filing fee for the Certificate of Organization is $500, making it one of the highest rates in the nation.

In addition to the initial costs, Massachusetts requires all LLCs to file an annual report. This report is due on the anniversary of your LLC’s formation and also carries a $500 fee.

You can file your annual report either online or by mail. If you opt for online filing, there is an additional $20 expedited fee for quicker processing.

These fees can add up quickly, making Massachusetts one of the most expensive states to establish and maintain an LLC. It’s crucial to consider these costs in your business budgeting.

11. The cheapest state to form an LLC is Kentucky, with a filing fee of $40.

When considering where to form your Limited Liability Company (LLC), it’s essential to evaluate costs. Kentucky stands out as the most affordable option, boasting a filing fee of only $40.

In addition to the low initial costs, Kentucky offers competitive annual fees. The annual fee for maintaining your LLC in Kentucky is $15. This combination makes it attractive for new business owners.

Kentucky is not only about low fees. The state has developed programs to support small businesses, making it a conducive environment for entrepreneurs.

By choosing Kentucky, you position yourself in a state that promotes business growth while keeping costs manageable. This is particularly beneficial if you are looking to minimize startup expenses.

12. Mississippi, Arkansas, Colorado, New Mexico, Arizona, Hawaii, Missouri, and Michigan are next, with a $50 filing fee.

In the context of business formation, several states have set their filing fees at $50. This fee is essential for individuals looking to establish a business in these regions.

Each state has specific requirements for business registration, but the uniform $50 fee can make budgeting more manageable for new entrepreneurs.

When planning your business formation, consider the following aspects:

• Processing Time: Review how long it takes for your application to be processed in each state.
• Additional Costs: Look for potential additional fees for services such as expedited processing or name reservations.
• Business Structure: Ensure you understand how the filing fee may vary depending on whether you are forming an LLC, corporation, or other entity.

Choosing the right state for your business can impact operational efficiency and costs. Research thoroughly to ensure your decision aligns with your business goals.

13. New Mexico is the best place to form an anonymous LLC.

New Mexico stands out as a leading choice when considering forming an anonymous LLC. It offers unique advantages not commonly found in other states.

New Mexico is the only state that allows business owners to register LLCs without disclosing their names on official documents. The process to establish an LLC in New Mexico is straightforward. You simply file the Articles of Organization with the state.

To exploit this privacy, you do not need to live or conduct business in New Mexico. New Mexico has competitive filing fees compared to other states that allow anonymous LLCs.

By forming an anonymous LLC, you can protect your personal information from being publicly available.

Choosing New Mexico for your anonymous LLC maximizes your privacy while minimizing administrative burdens. This makes it an attractive option for many business owners focused on confidentiality.

14. Arizona, New Mexico, Missouri, Ohio, and South Carolina are the only states that do not need LLCs to file an Annual Report.

In these states, you can maintain your LLC without the burden of annual report filings. This can save you time and money.

While most states require annual reports to ensure compliance and assess taxes, these five states have opted out. This makes them attractive options for business owners seeking simplicity in maintenance.

Staying updated with your state’s regulations is essential since requirements may change. Always confirm your state’s current rules regarding LLC management and reporting obligations to ensure compliance.

15. Utah is the best place to start a business in 2024, scoring 61.08 out of 100.

(Source: Wallethub)

Several factors contribute to this high score, making it an attractive destination for entrepreneurs.

Utah offers excellent access to business loans, which is crucial for startup viability. This eases the initial financial burden faced by new businesses. The state boasts the highest year-over-year employment growth rate in the U.S., nearing 2.5%.

This signifies a robust market with increasing job opportunities.

Utah’s favorable business climate supports growth and innovation. The state provides resources and incentives that are beneficial for startups. You will find a supportive network of entrepreneurs and resources in Utah.

Local organizations and mentorship programs are designed to help new businesses succeed.

With these advantages, Utah leads in rankings and creates a thriving ecosystem for your business. Consider these factors when planning your business formation strategy.

16. Georgia secures the second spot, closely trailing Utah with a score of 60.22, a mere 0.86 points behind.

Businesses in Georgia experience significant revenue growth, enhancing the state’s attractiveness for new startups.

The state’s tax policies support business profitability, encouraging local and foreign investments.

The close score of just 0.86 points behind Utah highlights a competitive landscape. This proximity indicates that Georgia has the potential to rise to the top in future assessments.

Georgia’s business-friendly climate is reinforced by proactive governmental support and resources. Programs aimed at fostering entrepreneurship contribute to its standing in business formation statistics.

Engaging with local networks and chambers of commerce can also offer valuable guidance as you consider forming a business in Georgia.

17. Florida and Idaho rank next, with 60.17 and 58.69, respectively.

In the context of business formation statistics, Florida and Idaho demonstrate notable performance. Their scores reflect a healthy environment for new businesses.

Florida offers various advantages for entrepreneurs. These include access to a large consumer base and favorable tax policies, which can facilitate startup growth.

Idaho provides a different appeal. Its lower cost of living and strong local support networks make it an attractive option for small businesses.

Both states contribute to a competitive landscape in business formation. The scores indicate the ease of starting a business and the supportive environment each state offers.

Both states have various tax incentives that promote entrepreneurship.

Florida and Idaho maintain streamlined processes for business registration, which can expedite startup times. Access to local business resources and mentorship programs enhances their appeal.

Understanding these factors can guide your decision if you consider establishing a business in either state.

18. Nevada rounds up the five best states to start a business, scoring 56.68.

Nevada has no corporate income tax, allowing you to retain more profits. The state offers streamlined processes for starting and operating a business.

With numerous resources available, business support services are more accessible.

The increasing number of small businesses in Nevada showcases its growing appeal. Entrepreneurs find it an attractive location due to strategic advantages, including:

Additionally, Nevada benefits from the tourism and hospitality sectors, which can drive customer bases for new businesses. Access to a skilled workforce enhances your potential for success.

With its supportive atmosphere for business startups and established enterprises alike, Nevada continues to be a preferred destination for entrepreneurs looking to launch and grow their ventures.

The combination of diverse opportunities and strategic advantages makes it an excellent choice for your business journey.

19. Arizona, Colorado, and Texas are next, going toe to toe, scoring 56.51, 56.44, and 56.19, respectively.

With a score of 56.51, Arizona continues to attract entrepreneurs. The state’s favorable regulations and business-friendly atmosphere contribute to its position.

Colorado is next, with a score of 56.44. The state is known for its innovative ecosystem and startup support, making it an attractive option for new businesses.

Texas, with a score of 56.19, remains a powerhouse. Its robust economy, diverse industries, and lack of state income tax create an appealing landscape for business formation.

Each state offers unique advantages. Understanding local conditions can help you decide where to establish your business.

20. North Carolina and Tennessee round out the top ten list of best states to form a business, with scores of 54.86 and 53.32, respectively.

(Source: Wallethub)

North Carolina has a strong and diverse economy. It is known for being business-friendly and having a mix of industries, including technology and agriculture.

The state offers a skilled workforce bolstered by significant educational institutions focused on business and technology.

Tennessee does not have a state income tax, which can be a significant incentive for new businesses. The state has emerging markets in healthcare, automotive, and logistics, offering numerous opportunities for entrepreneurs.

Both states provide resources and support for small business owners. They offer a range of incentives intended to boost local economies.

Whether you are considering starting a business or expanding an existing one, these states present viable options. The supportive business environment makes them valuable considerations for your entrepreneurial journey.

21. California has the highest number of small businesses overall, with 4,146,852 small businesses representing 99.8% of the state’s total number of businesses and hiring 7.5 million employees.

(Source: Small Business Administration)

This environment fosters innovation and supports the state’s economy through various sectors.

The continuous growth of small businesses in California is a testament to the supportive frameworks, including access to resources and funding opportunities.

Understanding these dynamics can provide insights into business formation trends in the state. Recognizing California’s small business landscape is essential whether you are an entrepreneur or an investor.

22. Texas and Florida are next in the ranking of the number of small businesses by state, with 3.2 million and 3.1 million small businesses, respectively.

(Source: Small Business Administration)

Both Texas and Florida provide robust economic conditions that promote small business growth. These states support various industries, from technology to tourism, attracting entrepreneurs.

Business-friendly policies encourage startups and existing businesses to thrive.

Texas and Florida exemplify the significant role of small businesses in driving economic activity and job creation. Their increasing numbers reflect successful initiatives and an appealing landscape for entrepreneurs.

23. New York ranks in fourth place, with 2.2 million.

Key sectors contributing to this landscape include:

• Financial Services
• Health Care
• Technology
• Retail

The diverse economy supports new businesses across various industries, and your opportunities for engagement in these sectors may be significant.

New York’s status as a leading economic hub fosters innovation and growth. The state’s infrastructure, talent pool, and access to capital attract entrepreneurs.

In 2023, the gross state product reached $2.189 trillion, showcasing the economic activity generating jobs and income. This economic strength enhances the business climate.

New York’s population and cultural diversity, both demographically and culturally, contribute to its thriving business environment. The city’s global connections offer unique prospects for expansion.

24. Illinois follows with 1.3 million small businesses.

Small businesses in Illinois are defined as those with fewer than 500 employees. This classification encapsulates a wide range of industries, contributing to both job creation and economic diversity.

From March 2021 to March 2022, 39,600 small businesses opened in the state, indicating a dynamic entrepreneurial environment.

Illinois banks supported this growth with $15.6 billion in new lending, primarily through loans of $1 million or less. This type of financing is crucial for small business development.

The small business sector comprises about 99.6% of all Illinois businesses. These companies employ roughly 44.8% of the state’s workforce, highlighting their importance to local economies.

You can also note that transportation and warehousing is Illinois’s leading small business industry. This area reflects the state’s strategic location and infrastructure advantages, making it particularly attractive for small enterprises.

25. Close behind, with 1.2 million, Georgia has the sixth-highest number of small businesses.

(Source: Small Business Administration)

Small businesses account for a significant portion of Georgia’s economy. In 2021, small firms exported goods worth $11.2 billion, which comprised 28.2% of Georgia’s total exports.

Understanding Georgia’s role is vital as you evaluate business formation statistics. The state’s robust small business sector is a driving force behind its economic health.

This makes Georgia an attractive location for entrepreneurs and small business owners.

26. This is followed by Pennsylvania, with 1.1 million, and North Carolina, with 1 million.

Pennsylvania and North Carolina have shown notable business formation activity. You can see the growth in these states reflected in their population numbers.

The increased population in these states correlates with a rise in entrepreneurial ventures. As more individuals move in, the demand for new businesses rises.

Both states have different regulatory environments, which can influence business decisions. Consider how local policies may affect your formation plans.

27. Ohio and New Jersey wrap up the top 10, with 989,435 and 952,029 registered small businesses, respectively.

These numbers reflect the entrepreneurial spirit prevalent in both states. Small businesses constitute a vital segment of the economy, providing jobs and fostering innovation.

As you consider small business opportunities, these states may offer valuable insights and potential avenues for growth, given their robust infrastructure and support systems for entrepreneurs.

28. Wyoming has the fewest small businesses, with just over 72,000 registered there.

(Source: Small Business Administration)

Despite having the lowest number of small businesses, Wyoming shows a substantial rate of entrepreneurial spirit. Entrepreneurs per capita are notable, with 12,357 small businesses per 100,000 people.

From March 2021 to March 2022, over 3,000 businesses opened in Wyoming. This reflects a growing interest in establishing businesses, even in a state with fewer overall entries than others.

29. This is followed by Alaska, with 74,587 small businesses.

Small businesses in Alaska play a crucial role in the economy. They comprise various industries, including retail, tourism, and services.

Small businesses employed around 137,271 people, which accounts for 52.4% of the private workforce in 2017. Firms with fewer than 20 employees represent the largest share of this employment.

Despite being one of the largest states geographically, Alaska’s small business landscape is competitive yet diverse.

Startups often emerge in response to local needs and opportunities. Challenges such as distance and logistics create unique dynamics for business formation and sustainability in the region.

30. North Dakota and Vermont are next, with 75,265 and 78,883 registered small businesses, respectively.

Both states present unique environments for business owners. North Dakota’s economy benefits from natural resources, while Vermont capitalizes on its scenic attractions and local products.

Understanding the dynamics in these states can help you identify potential opportunities for growth and investment. The composition of small businesses varies, providing a mix of challenges and rewards in both regions.

The small business landscape in these states contributes to innovation and economic stability.

Engaging with local chambers of commerce can provide further insights into available resources and support for new businesses.

31. South Dakota and Delaware are next, with 90,274 and 93,686 small businesses, respectively.

(Source: Small Business Administration)

When examining small business statistics, South Dakota and Delaware hold notable positions.

South Dakota is home to 90,274 small businesses. These enterprises are crucial for the local economy, providing jobs and promoting economic growth.

Delaware follows closely with 93,686 small businesses. This number reflects the state’s favorable business environment and regulatory framework, attracting entrepreneurs and startups.

Understanding the dynamics of small businesses in South Dakota and Delaware can help stakeholders identify opportunities for growth and collaboration. Their respective ecosystems are committed to nurturing small businesses.

32. Followed by Rhode Island and West Virginia with 108,360 and 111,614 small businesses, respectively.

Rhode Island and West Virginia represent essential markets for small businesses in the United States.

Both states showcase the diversity and adaptability of small businesses, particularly in sectors like retail, services, and manufacturing.

Monitoring small businesses’ growth and challenges can provide insights into regional economic health. Support from local governments, initiatives, and resources continues to help these businesses thrive.

33. Montana and New Hampshire Wrap Up the Last Ten List

Montana and New Hampshire have the fewest small businesses in the United States. However, these states have fewer small businesses but still contribute significantly to their local economies.

Small businesses are crucial for job creation, innovation, and community development. In Montana, businesses often focus on the tourism, agriculture, and healthcare sectors.

New Hampshire has a diverse business landscape with manufacturing, technology, and hospitality strengths.

Due to their size and geography, both states face unique challenges that impact business growth and resource availability.

Understanding the concentration of small businesses in these regions is essential for policy-making and economic development efforts.

34. The most significant number of new business applications submitted in 2023 was in Florida, with 667,031 new applications.

(Source: US Chamber of Commerce)

The state’s favorable business environment, including a diverse economy and supportive regulations, encourages new ventures. Entrepreneurs in Florida benefit from a large market and a strong labor force.

Key industries contributing to this growth include:

• Tourism
• Technology
• Healthcare

These sectors attract new businesses, enhancing Florida’s economic landscape. The many applications may indicate a trend toward entrepreneurship in various demographics.

Florida’s performance in business formation is notable in the context of national statistics. The state surpasses others, leading to a competitive and dynamic market for new ventures.

35. This is followed by California, with 558,011 applications in 2023.

(Source: US Chamber of Commerce)

The state consistently ranks high in business formation due to its diverse economy and entrepreneurial spirit.

Several factors contribute to California’s robust business environment:

• Access to Capital: The state hosts numerous venture capital firms and investors.
• Innovation and Technology: California is home to Silicon Valley, a significant driver of tech startups.
• Large Market: With a population exceeding 39 million, there is a substantial customer base.

California’s figures reflect a strong trend in business interest compared to other states. For instance, notable application growth in the previous year highlighted the state’s dynamic economic landscape.

36. In third place is Texas, with 501,398 small businesses.

(Source: US Chamber of Commerce)

In Texas, small businesses account for a substantial share of the workforce. They provide employment opportunities for millions of residents.

The environment for business formation in Texas remains favorable. Various initiatives exist to support entrepreneurs, thus ensuring a vibrant ecosystem for new ventures.

Small businesses in Texas are well-positioned to thrive in a diverse economy that includes industries such as technology, energy, and agriculture.

37. New York, Georgia, and Illinois are next on the list, with 313,481, 277,626, and 174,667 new applications, respectively.

These states demonstrate significant business formation activity, contributing to a vibrant economic landscape.

Each state has unique advantages supporting business growth, from resource access to favorable regulations. Understanding these trends can enhance your insights into the business environment.

38. North Carolina and New Jersey are in seventh and eighth place, with 170,924 and 160,996 new businesses, respectively.

North Carolina ranks have gained popularity thanks to its favorable business climate and supportive ecosystem.

Several factors contribute to North Carolina’s strong performance:

• Low tax rates: The state offers attractive tax incentives for new businesses.
• Access to capital: Growing investment opportunities make it easier for entrepreneurs to secure financing.
• Skilled workforce: The educational institutions in the area provide a steady stream of qualified talent.

While New Jersey faces challenges such as a higher cost of living, it still attracts entrepreneurs for various reasons.

Critical advantages of starting a business in New Jersey include:

• Diverse economy: The state has a robust economy across multiple sectors, including technology and pharmaceuticals.
• Strategic location: New Jersey’s proximity to major markets like New York City and Philadelphia benefits business expansion.
• Supportive resources: Various programs and support networks are available to guide new businesses through the startup process.

Both states are committed to fostering growth and attracting new businesses, making them ideal locations for entrepreneurs.

39. Rounding up this list are Pennsylvania and Ohio, with 153,599 and 148,623 new business applications.

Pennsylvania’s business landscape benefits from a diverse economy, including healthcare, education, and manufacturing. This diversity often supports new ventures and startups.

Ohio, on the other hand, showcases strengths in manufacturing, finance, and agriculture, which creates fertile ground for business growth and innovation.

Both states have implemented initiatives to streamline the application process for new businesses. The reduction in bureaucratic barriers allows entrepreneurs to focus on their ventures.

Additionally, organizations in these states provide resources and support for new business owners. Networking opportunities, mentorship programs, and financial assistance contribute to the increase in applications.

40. 978,400 new business applications filed in 2023 were for the retail sector, making it the most popular industry for entrants.

(Source: US Chamber of Commerce)

The popularity of the retail industry can be attributed to various factors:

• Consumer Demand: There is a continuous demand for diverse products and services.
• E-commerce Growth: The rise of online shopping has lowered the barriers for new entrants.
• Accessibility: Starting a retail business often requires lower initial investments than other sectors.

The retail landscape is diverse, encompassing several subcategories. Popular areas within retail include:

• Clothing and Apparel
• Food and Beverage
• Home Goods

As you explore opportunities in this sector, consider the following aspects:

• Market Research: Understand consumer preferences and trends.
• Location: A strategic location can enhance foot traffic.
• Online Presence: Establishing a reliable e-commerce platform can drive sales.

This surge in new applications reflects a hopeful entrepreneurial spirit, signaling a robust environment for retail businesses. The industry’s adaptability and innovation play vital roles in attracting new entrants.

41. Professional services follow, with 686,200 new business establishments in the sector.

(Source: US Chamber of Commerce)

Each of these areas has contributed to the increase in new businesses. Many individuals have chosen to start their firms, driven by a combination of their expertise and a desire for entrepreneurial independence.

The rise in new business applications often correlates with job transitions. Many professionals leave traditional employment to pursue opportunities in personal practices or consultative roles, particularly during economic shifts.

The data shows a consistent upward trend in establishments over recent years, reflecting a broader move toward self-employment and specialized service offerings.

The influx of new businesses in professional services stimulates job creation and enhances competition and innovation in the marketplace, creating diverse options for consumers and corporations alike.

42. The construction industry saw over half a million new businesses created in 2023.

(Source: Oberlo)

With 3.62 million small businesses operating in the construction industry, this sector remains among the most common for new startups. The ongoing demand showcases the resilience and potential of construction ventures.

As you consider the implications of this growth, note that labor shortages are an ongoing concern. With a high turnover rate, construction companies often face challenges in retaining skilled workers, impacting project timelines and costs.

The emergence of these new businesses signals a robust environment for investment and innovation in construction.

43. In fourth place is transportation and warehousing, with 393,800 new applications.

In the realm of business formation, the transportation and warehousing sector has achieved significant growth.

The sector is pivotal for the overall economy, facilitating the movement of goods. Entrepreneurs are encouraged to consider strategic locations for new ventures, focusing on accessibility to transportation routes.

This landscape presents opportunities for those entering the field, particularly in regions with high demand for logistics services.

44. Health care and social assistance are fifth place, with 328,400 new business applications in 2023.

(Source: US Chamber of Commerce)

The surge in applications highlights your potential for entrepreneurial ventures in this field. Among these applications, many aim to address gaps in service delivery or capitalize on emerging trends.

Additionally, health care and social assistance encompass various businesses. Potential opportunities include:

• Home health care services
• Consulting firms
• Telehealth providers
• Mental health support services

The data indicates a robust appetite for new entries driven by ongoing consumer needs and expectations. changes

Considering these dynamics, if you’re looking to enter the market, focus on identifying areas where you can make a meaningful impact. Understanding market trends can guide your strategy and enhance your chances of success.

45. In the US, 4.53 million small businesses provide professional, scientific, and technical services, making this industry the most common for small businesses.

(Source: Small Business Administration)

The professional, scientific, and technical services sector is significant in the United States.

This sector accounts for approximately 13.6% of the country’s 33.3 million small businesses, which indicates that roughly one in seven small businesses falls into this category.

Critical segments within this sector include:

• Consulting Services
• Legal Services
• Architectural and Engineering Services
• Accounting Services

Small businesses in these areas play a crucial role in providing specialized knowledge. They contribute significantly to job creation and economic growth.

The growth of these businesses also reflects changes in workforce needs and technology. Increasingly, clients seek experts who can offer customized solutions.

Given the competitive nature of this industry, staying updated on trends and demands can be essential. Leveraging technology and innovation can help your business thrive in this environment.

46. Construction ranks Second on the list of small businesses by industry, with 3.62 million.

(Source: Small Business Administration)

The construction industry plays a significant role in the small business landscape.

Small construction businesses offer residential building services and specialized trades like plumbing and electrical work. These businesses provide millions of jobs and contribute significantly to local economies.

The construction sector often deals with varied regulations and permits, making compliance crucial for success.

47. With 3.39 million small businesses, the transportation and warehousing sector follows close behind in third place.

The transportation and warehousing sector plays a crucial role in the landscape of small businesses.

This sector includes various services such as freight transportation, logistics, and warehouse operations. Increased e-commerce and global trade contribute to the growth of small businesses in transportation and warehousing.

This industry provides numerous jobs, offering a reliable source of employment for many individuals.

This sector’s significant number of small businesses indicates strong demand and investment. Entrepreneurs often find opportunities in last-mile delivery, freight brokerage, and online logistics management.

As e-commerce evolves, the transportation and warehousing sector will likely attract more startups and innovations. Your approach to forming a business in this field may involve considering trends such as automation and sustainable practices.

48. Real estate and rental and leasing are the fourth-most common industries for small businesses, with 3.33 million.

The real estate and rental and leasing industry ranks fourth-most joint sector for small businesses.

This industry encompasses various activities, including:

• Residential real estate: Involves rental and leasing of housing units.
• Commercial real estate: Focuses on leasing spaces for business operations.
• Rental services: Provides equipment and consumer goods for temporary use.

Many entrepreneurs choose this sector due to its potential for steady income and investment opportunities. Real estate can serve as a viable pathway to generating ongoing revenue.

Economic trends, such as interest rates and employment rates, impact the real estate market. Understanding these factors is essential for those looking to succeed in this industry.

Engaging with professionals in this field can provide valuable insights and enhance your understanding of market dynamics. Consider developing a network that includes real estate agents, property managers, and lenders for support.

In addition to traditional real estate ventures, short-term rentals have become popular. This can include platforms like Airbnb, which often attracts more individuals to this sector.

Recognizing the opportunities in real estate, rental, and leasing can lead to successful business formation in this thriving industry.

49. Administrative, support, and waste management is the fifth most common industry for small businesses in the US, with 2.91 million small businesses.

The administrative, support, and waste management sector has established itself as the fifth most common industry for small businesses in the United States.

This industry includes a mix of startups and established firms. These businesses often focus on improving efficiency and reducing operational costs for their clients.

Small administrative support and waste management businesses can face challenges such as regulatory compliance. Staying updated on local and federal regulations is essential for operating successfully.

50. Retail trade is the sixth-most common industry for small businesses, with 2.89 million.

The retail sector is significant for small business formation, comprising 2.89 million establishments in the United States. This positions retail trade as the sixth-most common industry among small businesses.

Types of Retail Businesses:

• Clothing stores
• Grocery stores
• E-commerce retailers

The growth in retail trade reflects consumer demand and the shift towards online shopping. In recent years, established retail businesses have adapted and integrated digital strategies.

Understanding the dynamics of retail trade is crucial for aspiring small business owners. With a robust market, ample opportunities exist to tap into consumer needs and preferences.

51. The top reason for business failure is underestimating initial expenses.

(Source: Worldmetrics)

Underestimating initial expenses is a common pitfall for many entrepreneurs. Accurate budgeting is crucial for the survival of any business.

Identify all the expenses you will face before your business starts generating revenue. This includes permits, licenses, and equipment. Account for ongoing costs like rent, utilities, and salaries. These can quickly accumulate.

Always include a buffer for unforeseen expenses. Financial setbacks, such as maintenance or legal issues, can arise from various sources.

By accurately estimating your initial expenses, you can strengthen your business’s foundation. Proper financial planning enhances your chances of long-term success.

52. 69% of U.S. entrepreneurs start their businesses at home.

This trend reflects the accessibility and low overhead costs associated with home-based startups. Many entrepreneurs find it practical to launch their ideas without the burden of rent or lease expenses.

59% of businesses over three and a half years old operate from home. Home-based businesses often have lower startup costs. About 44% of owners invest $5,000 or less to start their ventures.

Most home-based businesses report modest revenues, with 57.1% earning less than $25,000 annually.

Operating from home allows entrepreneurs to maintain flexibility in their schedules. This setup can contribute to a better work-life balance, which is an attractive feature for many.

With the rise of digital tools and remote work, more people are finding it feasible to start and run successful businesses without leaving their homes.

53. 82% of failed businesses cited cash flow problems as a critical factor in their failure.

Cash flow issues are a significant concern for small businesses.

Here are some common reasons why cash flow problems arise:

• Poor Budgeting: Inadequate financial planning can lead to overspending.
• Delayed Payments: Late payments from clients can disrupt cash flow.
• Unexpected Expenses: Unforeseen costs can quickly consume available funds.

Effective cash flow management is essential for survival. Engaging in proper cash flow practices matters immensely. Awareness of cash flow challenges enables you to implement proactive solutions.

Regularly assessing your financial position helps prevent potential pitfalls. Being informed and prepared is vital to sustaining your business.

54. The average entrepreneur starts 3.8 companies in their lifetime.

Many factors influence this number. You may encounter various motivations for starting new companies, from financial goals to personal passions. Each venture offers unique lessons that contribute to your growth as an entrepreneur.

Reasons for multiple startups:

• Learning Experience: Each company teaches valuable skills.
• Market Demand: You may identify new opportunities.
• Pivoting: Sometimes, previous businesses fail, prompting new ideas.

Starting multiple businesses allows you to diversify your skills. You often develop a more robust understanding of market trends and customer needs. This adaptive mindset can lead to more tremendous success in future endeavors.

The journey of entrepreneurship is not without challenges. Many businesses may face failure, yet this does not deter continued attempts. Embracing a mindset of resilience can propel you to launch new companies.

Additionally, the support of networks and resources can enhance your chances of success. Engaging with other entrepreneurs allows you to share insights and strategies.

In entrepreneurship, the journey often matters as much as the destination. Each venture contributes to your overall experience and potential for future success.

55. 71% of small business owners are the sole employees of their business

Many small businesses in the United States operate with minimal staffing. 71% of small business owners are the sole employees of their ventures.

This trend indicates that many entrepreneurs handle all aspects of their business independently.

Small businesses encompass diverse sectors, allowing owners to tailor their operations to meet specific market needs without the complexities of managing staff.

The ability to operate independently is a hallmark of entrepreneurship in the small business landscape, reflecting both the challenges and rewards of being your boss.

56. 83% of successful entrepreneurs worked an average of 10 hours daily in the first five years of their business.

Being a successful entrepreneur often requires significant dedication. Research indicates that 83% of successful entrepreneurs committed to working about 10 hours each day during their ventures’ initial five years.

This level of commitment reflects the intense effort needed to establish and grow a business.

You might find that the first few years will require a substantial time investment to navigate challenges and seize opportunities.

Understanding this commitment can prepare you for the realities of entrepreneurship. Remember, the initial hard work can pave the way for future success and stability.

57. 29% of small businesses fail because they run out of money.

Access to capital is a crucial factor for the success of small businesses. 29% of small businesses fail because they run out of money.

Several causes contribute to cash flow problems:

• Poor financial management: Inadequate planning can lead to overspending.
• Lack of funding sources: Many businesses struggle to secure loans or financial support.
• Unexpected expenses: Emergencies can drain available cash reserves quickly.

To mitigate cash flow issues, you should implement effective financial planning strategies:

• Create a Budget: Outline your expected income and expenses.
• Monitor Cash Flow: Regularly review your cash flow statement to spot trends.
• Build an Emergency Fund: Save a portion of your profits for unanticipated costs.

Exploring various funding sources can help sustain your business:

• Bank Loans: Often provide favorable terms if you qualify.
• Crowdfunding: An increasingly popular way to raise capital.
• Merchant Cash Advances: Quick access to cash, though typically at higher costs.

Ensuring adequate financial resources can significantly enhance your business’s longevity and success.

58. 71% of small businesses are owned and operated by a single person.

Solo business owners often seek independence and the flexibility of managing their operations. As a solo entrepreneur, you have complete control over business decisions, aligning activities with your vision.

Operating alone can present challenges, such as managing all aspects of the business, from finance to marketing.

Common Business Types for Solo Owners:

• Freelance services (writing, design, consulting)
• E-commerce (online stores, dropshipping)
• Professional services (accounting, legal)

Many solo-owned businesses are in sectors that allow for remote work and online engagement. This model can also cater to the growing trend of digital entrepreneurship.

Maintaining a lean operation helps maximize profits, although it may require extensive time and effort.

59. Small businesses account for 99.9% of all businesses in the United States.

While small businesses employ only about 40% of the workforce in some states, they employ more than 61.6 million individuals across the nation.

Small businesses enhance local economies and foster innovation and competition. They are the backbone of American entrepreneurship, showcasing resilience and adaptability in various economic climates.

60. Women-owned small businesses have grown by 21% in the last five years

This growth outpaced the overall business growth in the same period, which was only 9%.

Here are some key statistics that highlight this trend:

• According to the latest data, 12.9 million women-owned businesses exist in the U.S.
• Women-owned firms account for approximately 42% of all U.S. businesses.

The rise in women’s entrepreneurship presents various opportunities:

• Diverse Industries: Women start businesses across multiple sectors, including technology, health, and personal services.
• Revenue Growth: Reports show that revenue generated by women-owned businesses also increased significantly, indicating a substantial economic impact.

The rise of women in business aligns with broader societal changes. As more women pursue entrepreneurship, their efforts contribute to the economy and empower communities.

Moreover, initiatives supporting women-led startups are increasing, promoting further growth and sustainability in this segment.

The trends in women-owned businesses reflect an increase in numbers and a transformation in the business landscape.

61. 90% of new startups fail.

This high statistic highlights the challenges you might face as an entrepreneur.

Factors contributing to this failure rate include:

• Lack of Market Demand: Many startups create products or services that do not meet existing market needs.
• Cash Flow Problems: Insufficient funding and mismanagement of finances can lead to collapse.
• Poor Business Model: Even promising ideas can falter without an effective strategy.

Understanding these statistics can help you prepare better. You can learn from the mistakes of others and implement strategies aimed at improving your chances of success.

Having a solid business plan, understanding your target market, and managing your finances is crucial. With informed decisions, you can increase your likelihood of being among the 10% that succeed.

62. Technology has enabled more accessible and affordable business formation, especially for online businesses.

(Source: PLOS ONE Study)

The rise of digital technology has transformed how businesses are formed. This shift has led to increased accessibility and reduced costs for entrepreneurs.

Many states offer online platforms for business registration, streamlining the process. You can access affordable legal services and templates online, reducing traditional legal fees.

A wealth of resources, such as webinars and online courses, are available to guide you through the formation process.

Setting up an online store is more straightforward with user-friendly platforms like Shopify and Etsy.

You can leverage social media and search engine marketing to reach customers without hefty advertising budgets. Cloud technology allows you to manage operations, collaborate with team members, and scale your business from anywhere.

According to a Verizon Business survey, 43% of small businesses are implementing digital tools to expand. 30% have already enhanced their services to include online delivery options.

These factors illustrate how technology simplifies business formation, particularly for online-oriented ventures.

Final Thoughts on Business Formation Statistics

Business formation statistics play a crucial role in understanding trends in new business creation. Analyzing these statistics can provide valuable insights into the economic landscape and entrepreneurial environment.

These insights can help you track shifts in entrepreneurship and identify potential opportunities.

Given the dynamic nature of the economy, keeping an eye on business formation statistics will help you make informed decisions and stay ahead of trends.

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