Remember when people used to say “80% of small businesses fail in the first 5 years”? Maybe people still say that, but you and I know that this isn’t exactly accurate.
The truth is that more people are starting businesses than ever before and they are being run longer than ever before.
There are 28 million small businesses (under 500 employees) registered in the United States.
- Over 22 million are non-employer businesses
- 80% of non-employer businesses have less than $50,000 in annual revenue
This breakdown has been largely the same since the 80’s, when the number of home-based businesses skyrocketed. This was the age of independent sellers (e.g. Avon), freelance bookkeepers, artisans, and consultants. For the most part these businesses remained a supplement to other income.
Today, the number of non-employer businesses continues to grow as a percentage of all small businesses. Like in the 80’s, many of these businesses were never intended to be a primary source of income. They are born out of passion and skills, rather than a desire to start a business.
But unlike the 80’s, this new generation of online businesses has a larger potential customer base and more opportunity to grow beyond a side-hustle if the owner chooses to.
We’re just getting started
It’s never been easier to start and operate an online business. Online business owners are retailers, freelancers, makers, programmers, consultants, service providers, and anyone else who conducts most of their business through digital channels.
There is no publicly available data to estimate the percentage of all new businesses that are online businesses. But here’s what we do know:
- The number of new businesses created continues to grow
- New business owners tend to skew younger (i.e. less baby boomers, more Gen X and beyond.)
- Platforms like Shopify (500k+ online businesses), Freshbooks (1M+ online businesses), and Stripe (millions of online businesses) continue to grow by servicing mostly online businesses
- Communities like A Better Lemonade Stand, Indie Hackers, Product Hunt, and NomadList didn’t exist 5 years ago, and are growing fast despite already being large communities
Let’s retire the term “small business” as a catch all
I don’t know anyone who runs an online business that calls themselves a small business owner. Same goes for online business owner, online entrepreneur etc. It seems we’re having a difficult time categorizing this new group of businesses and their owners. Mostly, we’re identifying ourselves by passion and skill set, as opposed to the size of our businesses, and there is something really nice about that.
An industry is being created to service this “hard to categorize” group of businesses
The building blocks of any online business are the ability to find customers, communicate with customers, accept payments, and deliver the goods (physical or otherwise). These tools have been around for about 10 years in some form. The difference today is that companies like Shopify and Stripe have built their initial tools into platforms and those platforms into communities. Each has enabled an ecosystem of new products and services targeted at the needs of online business owners.
Shopify and Stripe made it easy to start a business and start accepting payments. Now their partners make it easier to run and grow those businesses. While the success of their customers encourages the next generation of online business owners to get started.
So what’s next?
If you see a product or service that is designed for traditional “small businesses” you will see the equivalent for online businesses in the next 5 years.
Banking is no different.
So we built a bank account for your online business.