It’s easy to find small business statistics that tell us things such as 52 percent of small businesses are home-based or that small businesses account for more than 65 percent of all new jobs. Those are cool stats, to be sure, but what do they have to do with your small business? Probably nothing – there’s little this information could do to help you yield greater profits. The following ten statistics, however, are critical to your small business success . Use them as benchmarks to gauge your own business performance.
1. Average annual revenue of small business: $3.6 million (Entrepreneur)
The average small business brings in $3.6 million in annual revenue; of course, this figure doesn’t lend itself to deciphering the actual profitability of a small business or the take-home pay of its owners, but it does offer a nice “par” figure you should aim to exceed.
What if you don’t bring in $3.6 million? Does it mean your small business is a failure? No, of course not – some business models do not require large revenues to succeed. A sole entrepreneur, for example, who earns $200,000 in revenues and takes home $150,000 of that could hardly be considered a failure; while a multi-employee firm that brings in $4 million but spends $4.5 million to make it would definitely be considered a failure.
The revenue figure is relative, but it does shed some light on what the average small business is doing.
2. Average annual revenue of small business with website: $5.03 million (Entrepreneur)
Do you still doubt the power of the web? If so, you’re missing out an opportunity to substantially increase revenue. One of the most important considerations is that operating a website rarely, if ever, costs $1.5 million per year; in fact, outside of the most massively-marketed websites you’d likely be hard-pressed to identify a site that cost even $500,000 to operate every year. Thus, that additional revenue earned through having a website could prove to yield incredible profits.
3. Percentage of small businesses with websites: 53 (Statistic Brain)
Despite the obvious revenue-related benefits to having a website, only 53 percent of small businesses actually have them. Moreover, based on casual observation we can say the majority of those websites are under-developed – in fact, they might be harming their companies’ images more than they’re helping generate leads.
The fact is a website isn’t an option for small businesses today; it’s a necessity. There is no weight to the argument that a given business continues to thrive sans-website – those businesses are clearly missing out on incredible online opportunities, given the fact they’ve figured out the brick-and-mortar aspects of operating successful businesses.
4. Non-employer businesses average annual revenue: $44,000 (Forbes)
Here’s where reality strikes: non-employer businesses, which make up the vast majority of small businesses, average just $44,000 in annual revenue. That number is skewed by the small percentage of non-employer businesses who make more than $250,000 (3.2%), since well over half of all non-employer businesses make less than $25,000.
What does all this mean? It’s very difficult to generate enormous wealth without help. Non-employer businesses are severely limited by time – one person can only do so much in any given day – and without having help they’re unable to maximize their potential earnings.
If you operate a non-employer business, now might be the time to investigate how hiring even a single employee can help you grow your business. Perhaps the most telling statistic related to non-employer businesses is this: only 368 out of 22.5 million non-employer establishments are able to earn annual revenues of $5 million or more.
5. Direct-mail postcards yield cheaper leads than email (Direct Marketing Association)
Many small businesses rely on email marketing because it’s cheaper to send an email than to invest in direct-mail marketing. However, the Direct Marketing Association has proven postcard marketing to yield a lower cost-per-lead than email marketing, print advertising, and telemarketing.
This is especially true if you have an in-house list, which boasts a cost-per-lead of just over $19. Email, in comparison, costs more than $55 per lead.
It can be tough for budget-minded small businesses to avoid the “more is better” trap; for efficient and successful small business marketing it’s critical to understand your customers and to market to them via their preferred methods. It’s easy to delete an unread email, but a postcard is a tangible, physical object customers get to hold and interact with. Moreover, the USPS says postcards are the most likely form of direct-mail to be noticed and read.
6. Percentage of small businesses that do not work with an accountant: 46 (Bloomberg)
This is a staggering number, particularly when you factor in that forty percent of small businesses spend 80 hours annually directly dealing with their federal taxes – that’s two weeks of lost time that, for most businesses, most certainly would justify the cost of hiring a seasonal CPA.
Think you can wing it on your taxes? Consider that the average additional payments the IRS demands for audited small businesses with less than $25,000 of annual revenue is $5,500 – roughly one-fifth of annual revenue, much less annual profits. The takeaway here is that it can literally pay to work with an accountant, who can not only save you money but keep your business out of hot water.
7. Percent of small business websites optimized for “m-commerce”: 5 (Business2Community)
Another staggering figure, given the ubiquity of mobile devices in today’s market. Don’t small business want to sell their customers, on their customer preferred platforms? If your small business doesn’t have a strong mobile presence, you will almost certainly lose ground – and sales – to competitors that do.
Consider that three out of five consumers search local businesses on their smartphones, 51 percent of customers are more likely to buy from mobile-optimized websites, and that worldwide 4.8 billion people own cell phones compared to just 4.2 billion who own toothbrushes (LocalVox).
If you own a small business and you don’t have a well-designed, mobile-optimized website you’re missing opportunities. Making an investment in web and mobile sites can pay off huge dividends while not doing so can spell doom for your small business.
8. Percentage of adults who are active on social networks: 72 (B2C)
That percentage might be even greater for your customer demographics, particularly if you serve young or tech-savvy customers. So if nearly three-quarters – or greater – of your customer base is on Facebook, Twitter, and other social media platforms, then it makes sense for your company to have your own dedicated social media marketing campaigns. If you don’t, you can bet at least some of your competitors will, and they’ll be the ones earning your business.
One of the best ways to motivate customer loyalty is to live like your customers, go where they go, do what they do, and reveal the human side of your company. A strategic approach to social media can help foster your brand image and even motivate direct sales, but even more important is the opportunity to connect with and engage customers in their preferred online environments.
9. Percentage of customers who receive a quick brand response to complaints on social media who would recommend said brand: 71 (Forbes)
One of the worst things about social media is that unanswered customer complaints can go viral and severely damage your company’s reputation in short order. However, you can take advantage of social media by swiftly and public addressing such complaints. When you show you care and take the time to be helpful – to solve customer problems as if they were your own – your customers will recommend you to friends and family members via priceless word-of-mouth. Thus, you should continually monitor social media sites and respond to questions and concerns as quickly as possible. Doing so will demonstrate your commitment to customers, and that will go a long way toward earning new and repeat business.
10. Total number of small businesses in the U.S.: 28 million (Business Weekly)
Specific industry statistics aside, the huge number of small businesses means one thing: competition. That’s competition for customer attention, customer dollars, choice marketing opportunities, media buzz, social media status, and more. The takeaway here: you must adequately market your small business in order to get in front of the right customers with the right offer at the right time. You can’t make money if you’re invisible.
Owning and operating a small business is rife with challenges, but the rewards of surmounting those challenges can be amazing. Studying general statistics can offer some benchmarks, but it’s far more important to analyze your own. Doing so will help you make sound business decisions that propel you