As we enter the new year, the landscape of entrepreneurship in the U.S. and worldwide is once again changing. As more people seek to become their own boss and reap the benefits of self-employment, they must also consider the trends impacting businesses across all sectors and industries.
In this guide, we'll look at small-business statistics, cover the state of entrepreneurship heading into 2023, and note the most pressing trends to look for to keep your business ahead of the curve. If you don't have a startup yet but are interested in becoming a small-business owner, our findings will help shed some light on how you can begin your entrepreneurial journey. Read on to find out more.
With a new year comes new entrepreneurship statistics. Entrepreneurs registered almost 5.5 million new businesses in the U.S. in 2022. Overall, about 31 million Americans are entrepreneurs — that's 16% of the adult workforce. We'll assess these entrepreneurs, highlighting their differences in gender, race/ethnicity, and age. We'll then touch on the most lucrative industries for entrepreneurs to enter now, financing strategies, the most significant factors for startup success, and more.
At the time of this study, entrepreneurs in the U.S. were more likely to be male than female. The latest data shows that more than half (59%) of all American entrepreneurs were men. As for race/ethnicity, white people made up 71% of the entrepreneur workforce in America, followed by Hispanics/Latinos (14%), Black/African Americans (6%), and Asians (6%). Since 2010, the number of white entrepreneurs has slightly declined, while Hispanic/Latino entrepreneurs have shown minor gains.
When divided by age group, more than half of American entrepreneurs (63%) were older than 40. The remaining 37% were younger millennials or Gen Zers. Black/African American males at age 46, and American Indian/Alaskan Native females at age 48.5 were the oldest entrepreneurial groups on average. Both male and female Hispanic/Latino entrepreneurs were the youngest on average (40).
In reality, there's no right age to become your own boss. Younger small-business owners may be more in touch with technology and less risk-averse, but older entrepreneurs tend to be more experienced and have access to more connections and capital.
Whether you're 20 or 40, you'll have a better chance at successfully launching a new business in some industries than others. Consider the following growing industries (and their aggregate growth rates) if you're interested in becoming your own boss now:
American entrepreneurs can capitalize on various viable business services within these industries to get the ball rolling and eventually solidify themselves as successful small-business owners. Starting a new business in Texas or Florida could be especially favorable, as they are among the top states with the fastest-growing firms in the country.
Becoming a small-business owner is challenging, but it may not be as difficult as you think. Although 20% of new businesses in the US fail within the first year, 50% are still running 5 years later!
Over one-third of startups didn't get their product-market fit right, dooming them from the get-go. Marketing, team, finance, tech, operations, and legal problems also plagued small-business owners, causing up to 22% of startup failures.
On a global scale, starting your new business outside the clutches of corporate America can also be a wise career choice. Consider starting your own business in:
You'll need to get your finances in order to become a successful small-business owner. According to a recent survey, two-thirds of entrepreneurs used personal funds to kickstart their new businesses, and others relied on additional sources to become their own boss. Here's a list of some funding options that entrepreneurs depend on to give their businesses a fighting chance (from most used to least used):
Considering it costs just over $100,000 to start a business, entrepreneurs need to prop themselves up with the necessary financing to achieve a healthy cash flow as soon as possible.
The average entrepreneur's annual salary in the U.S. is $70,849, but the top 10% of earners make over $118,000 per year. And certain factors, like location, can significantly impact a startup's financial success (business owners in New York make the most, while new businesses in Hawaii generate the least). College degrees can factor in as well; an entrepreneur with a master's degree tends to have a higher average salary than one with a bachelor's degree or high school diploma alone.
Education and place of residence can differentiate a successful entrepreneur from a less fortunate one. Still, other factors come into play that are vital to achieving long-lasting self-employment success. According to 42% of respondents, the timing of their new business was a major key to their success.
Onboarding a solid team, coming up with a great idea, crafting a comprehensive business plan, and securing necessary funding were also instrumental in new business success. Unfortunately, a number of entrepreneurs miss the mark on one or more of these factors, contributing to the significant failure rate of startups. The U.S. Small Business Administration (SBA) is a great resource for entrepreneurs who need help starting, growing, or recovering a business.
Technological advancements continue to shape our world, and entrepreneurs must keep track of them to ensure they offer the highest-quality business services possible. For example, entrepreneurs selling products online will need to invest in worthwhile business applications — like e-commerce and email marketing software — to properly conduct their small-business administration duties. Also, as artificial intelligence and virtual worlds become more present in our lives, entrepreneurs must quickly understand their functions and how to capitalize on them.
Emphasizing employee relationships, incorporating sustainability practices, combating inflation and economic insecurity, and incorporating video content into marketing are other trends to look for in 2023. From Gen Zers to baby boomers, all entrepreneurs can benefit from understanding current and predicted business trends.
In our post-pandemic world, remote work has prevailed over going back to the office. Since remote workers have reported higher productivity, increased happiness, lower stress, and fewer interruptions working from home, the office will likely continue to be a thing of the past for many small-business owners. But it's not just employees who benefit from this work arrangement; companies do, too. In fact, organizations that operate remotely experience 25% less turnover.
Another notable trend is mobile commerce, the process of making a transaction via mobile device. Considering the vast majority of Americans own a mobile phone and nearly one-third have used it to make a purchase every week in 2021, entrepreneurs would do well to capitalize on this attachment. While those in the residential and commercial services sectors may not necessarily include mobile commerce efforts in their business plans, direct-to-consumer product and service sellers could.
Like mobile commerce, social commerce — selling goods or services using social media — is also taking the digital world by storm. As a highly convenient and interactive shopping experience, the global value of social commerce is estimated to hit nearly $3 trillion by 2026, skyrocketing from $992 billion in 2022. On top of e-commerce initiatives via websites or branded apps, entrepreneurs may want to consider expanding their business services by capitalizing on the rise and popularity of social commerce.
While we've previously touched on the most popular industries for entrepreneurs, we'll now go over a few niche markets rapidly gaining popularity heading into 2023.
The first is digital marketing, which is becoming increasingly imperative to every business in today's digital landscape. Business services like search engine optimization, pay-per-click advertising, and social media marketing are different facets of digital marketing.
Health and fitness is another consistently profitable niche. The pandemic has made it even more lucrative, mainly due to the increased demand for online workout classes. Studies have shown that 90% of Americans who exercise will continue to do so at home even if they can use their local gyms, so any fitness-inclined entrepreneurs can confidently explore a career in online coaching.
Lastly, personal finance and investing is a great niche to enter because people are always looking for ways to grow their wealth. For example, Google searches related to investing and financial planning have risen 70% over the past two years. So, if you are qualified to become a self-employed financial advisor, many potential clients could be waiting for your help.
The average age of American entrepreneurs may skew younger in the future. According to a survey conducted in 2022, around 60% of teenagers are interested in starting their own businesses one day instead of working a traditional job. Of them, 45% want to learn the ropes from current business owners, and 37% would consider signing up for entrepreneurship programs at school or elsewhere. Tutoring, pet care, handmade goods, and graphic design are all great startup business ideas for kids looking to explore the entrepreneurial lifestyle now.
Consumer behavior is becoming more sustainable. According to a report from IBM's Institute for Business Value last year, over half of consumers have said environmental sustainability is more important to them now than ever. They're also making a concerted effort to reach sustainability goals at home (like reducing water and energy consumption) and buy socially responsible or sustainable products.
Companies recognize these trends in sustainable living and can shift their business plans to minimize their environmental impacts. Updating company policies, avoiding single-use products, and implementing green technology are a few ways your business can make a difference.
The gig economy is something that most entrepreneurs are likely familiar with. It's an exchange of labor and resources, either in-person or through digital platforms, between a buyer and seller (the seller being the gig worker: a freelancer, independent contractor, or temporary employee). For example, gig workers in the food and restaurant industry often fulfill and deliver online orders through apps. The gig economy provides workers and suppliers with a cost-effective and flexible work arrangement, making it an excellent place for entrepreneurs to gain more experience in their particular fields or to outsource work if they can.
As we enter 2023, entrepreneurship is rising, especially among young people and women. There are endless opportunities across budding industries to become a self-starter, especially with a concrete business plan and strategy in hand. Sorting out your financing strategy, timing your product or service launch correctly, and surrounding yourself with an all-star team can propel your small business venture into something much more significant.
Keeping top trends in mind, like mobile and social commerce and the societal trend towards sustainability, can help shape your business to appeal to the 2023 crowd. Getting started isn't always easy, but Skynova can lighten the load. With our intuitive and easy-to-use online invoicing templates, that's one critical business application you'll no longer have to worry about. Check out our small-business software today to improve your management processes instantly.
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