June 29, 2021
By Delaney Sexton
Contributing Editor

Hot Topic Tuesday- Two Thirds of Small Business Owners Plan on Selling

“About two-thirds of business owners start their business from scratch, while less than a quarter of owners purchased the business they own,” states a March economic report about the paths people take to business ownership by the SBA Office of Advocacy. “The starting method for small businesses tends to be relatively stable over time but differs based on owner demographics.”

Here are some of the key points:

• 67% businesses that employ workers were founded by their owner. 22% of business owners purchased their business, 7% of business owners were gifted their business, and 4% of business owners inherited their business.
• 80% of businesses with employees that are 2 years old or younger were started by their owners.
• The owners of businesses without employees are more likely to have founded their business. 77% founded their business, and 16% purchased their business.
• Once a business reaches 16 years or older, only about 58% of their owners founded the business.
• Men and women have almost the same likelihood of founding their own business with 70% of men founding their own business and 68% of women founding their own business.
• 81% of Blacks/African Americans, 77% of Hispanics, and 74% of Native Americans founded their own firm. 69% of White business owners founded their firm, 67% of Asian business owners founded their firm, and 73% of Veteran business owners founded their firm.
• 38% of owners of accommodation and food services firms purchased their business. 34% of retail trade business owners purchased their firm. 28% of owners of manufacturing firms purchased their business.
• 20% of finance firms were purchased, 19% of information firms were purchased, and only 12% of construction firms were purchased.
• Around two thirds of current business owners plan on selling their business, but business owners are less likely to purchase a firm than found their own.

Source: SBA Office of Advocacy