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Business Owner Demographics: Gender, Race and More

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Nearly all U.S. businesses are small businesses, according to the U.S. Small Business Administration (SBA) Office of Advocacy. Plus, more than 6 in 10 firms are very small businesses with fewer than five employees, according to a LendingTree analysis of the latest business owner demographics.

Business ownership data reflects broader racial and gender inequalities for both large and small businesses. White Americans own 85.6% of U.S. companies with employees, while men own 63.2%.

LendingTree researchers analyzed the U.S. Census Bureau 2021 American Business Survey — covering 2020, when the coronavirus pandemic started — to look at business owner demographics by gender, race and more. Here’s what they learned.

Key findings

  • Men own more than 6 in 10 U.S. businesses. Men own more than half of the stock or equity in 63.2% of businesses in the United States, while women own just 22.2%. Another 14.5% are equally male- and female-owned.
  • White Americans own 85.6% of U.S. businesses with employees. Just 2.5% of these businesses are owned by Black Americans, even though they account for 12.6% of the U.S. population. White Americans account for 70.4% of the U.S. population.
  • While startups may grab headlines, the majority of businesses powering the American economy are relatively old. 33.2% of U.S. businesses have been around for at least 16 years, and 63.3% of firms have been in business for at least six.
  • Veterans own 5.8% of American businesses. While that may sound low, it’s roughly in line with the population, as veterans make up 7.9% of the older-than-25 population. Nonveterans own 91.9% of businesses, while veterans and nonveterans equally own 2.3%.
  • American firms, in general, are pretty small. 62.2% of firms have fewer than five employees, with 13.1% having no employees.
METHODOLOGY

LendingTree researchers analyzed data from the U.S. Census Bureau 2021 American Business Survey. This survey uses the collection year in its name, so data within references 2020.

The survey includes nonfarm employer businesses filing IRS Forms 941 (quarterly federal tax return), 944 (annual federal tax return) or 1120 (corporate income tax return). While this survey queried businesses with employees, there are firms categorized as having zero workers within the analysis. In this case, no establishment within that firm or business reported paid employees in the March 12 pay period included on the survey, though it had paid employees at some time during the year.

For demographic discussions, business ownership is defined as having more than 50% of the stock or equity in the firm. Businesses with equal ownership — whether gender, race or something else — were tabulated separately.

Men own 63% of businesses

Men own 3.5 million (or 63.2%) businesses, while women own 1.2 million (or 22.2%). About 800,000 (or 14.5%) are equally male- and female-owned.

While this data is from 2020, there are signs of progress ahead. According to a survey published in June 2022 by online payroll company Gusto, 49% of new business owners were women in 2021 — a massive jump from 28% in 2019.

Ultimately, there’s a significant ownership difference here, but a 2022 LendingTree study found little ownership variance among one type of business: franchises. In fact, 4.7% of male-owned businesses are franchises, versus 4.2% among women.

86% of businesses with employees owned by white Americans

Much like the gender ownership gap, there’s a significant racial business ownership gap: 85.6% of U.S. businesses are owned by white Americans, even though they account for 70.4% of the population.

The opposite is true for Black Americans. They own just 2.5% of businesses with employees, despite accounting for 12.6% of the population. Black-owned businesses, according to think tank The Brookings Institution, are more likely to be sole proprietors, which generally means not having employees.

Looking for the right place to start a Black-owned business? According to a 2022 LendingTree study, these are the metros with the most Black-owned businesses:

  • Fayetteville, N.C.
  • Washington, D.C.
  • Richmond, Va.
  • Atlanta
  • Memphis, Tenn.

Meanwhile, 11.0% of businesses are Asian-owned — nearly double their population ratio (5.6%). American Indians, Alaska Natives, Native Hawaiians and other Pacific Islanders collectively own less than 1% of American businesses; these communities make up 1% of the U.S. population.

Most businesses have been operating for a while

Many businesses faced a significant stress test during the COVID-19 pandemic, but many companies that survived have been around for a while.

A third (33.2%) of businesses have been operating for 16 or more years. That increases to 63.3% for firms open for six or more years. Only 13.9% of businesses have been operating for less than two years.

  • 16 or more years in business: 33.2%
  • 11 to 15 years in business: 13.2%
  • 6 to 10 years in business: 16.9%
  • 4 to 5 years in business: 10.0%
  • 2 to 3 years in business: 12.8%
  • Less than 2 years in business: 13.9%

About 1 in 5 (18.4%) of U.S. businesses fail in the first year, according to a 2022 LendingTree analysis. The failure rate after 10 years is 65.5%, so these long-operating firms must be doing something right.

Veterans own 6% of businesses

The rate of businesses owned by veterans (5.8%) is roughly proportional to the percentage of veterans in the general 25-and-older population (7.9%). More than 320,000 businesses are entirely owned by veterans, while veterans and nonveterans equally own another 127,000 (2.3%). Nonveterans own more than 5 million (or 91.9%) businesses.

The SBA has the Veterans Business Outreach Center (VBOC) program, offering resources for veterans who want to grow this ownership percentage.

Most businesses are quite small

While large companies and their products are a big part of American life, most firms are small. Almost half of businesses have one to four employees (49.1%), and 13.1% have no employees. (As a reminder from the methodology, these companies had zero employees at the time of the pay period included in the survey, though they had paid employees previously that year.)

In total, 88.9% of businesses have fewer than 20 employees. On the other hand, the number of businesses with 250 employees or more amounts to less than a percentage point of all businesses.

Likewise, a large majority of businesses (72.5%) have sales and receipts of less than $1 million a year. Here’s a full breakdown:

  • Firms with sales/receipts of less than $5,000: 0.7%
  • Firms with sales/receipts of $5,000 to $9,999: 0.9%
  • Firms with sales/receipts of $10,000 to $24,999: 2.4%
  • Firms with sales/receipts of $25,000 to $49,999: 4.6%
  • Firms with sales/receipts of $50,000 to $99,999: 9.0%
  • Firms with sales/receipts of $100,000 to $249,999: 19.8%
  • Firms with sales/receipts of $250,000 to $499,999: 18.9%
  • Firms with sales/receipts of $500,000 to $999,999: 16.2%
  • Firms with sales/receipts of $1 million or more: 27.5%
 

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