Small businesses have gone further on remote work than the data on large companies would suggest. While enterprise firms debated return-to-office mandates, businesses with fewer than 500 employees quietly built distributed workforces at higher rates and kept them.
The data below covers adoption rates, cost savings, productivity outcomes, technology investments, and the challenges that come with running a distributed team at small-business scale. Sources include Gusto's SMB payroll platform data, Verizon's State of Small Business Survey, Gallup's Hybrid Work Indicator, Stanford's WFH Research project, and Buffer's annual remote work survey.
For more context on managing distributed teams, see our guides on remote team management and virtual assistant services, or explore our broader small business statistics page.
Remote work adoption rates among small businesses
Small businesses are proportionally more likely to offer remote work than large enterprises, and the gap is wide.
70% of companies with fewer than 500 employees offer fully flexible schedules, compared with only 14% of corporations with more than 25,000 employees. Smaller firms are the most likely to choose fully flexible arrangements and the least likely to require full-time office attendance. (FlexOS / WFH Research, 2024)
That pattern holds in Gusto's payroll platform data. Since 2021, the number of fully remote workers on Gusto's small business platform has increased by 240%. Geographic dispersion tells a similar story: 43% of companies with 10-24 employees have workers in multiple states, rising to 60% for 25-50 employee firms and 76% for firms with more than 50 employees. (Gusto, 2023)
Industry shapes the adoption curve significantly. Professional services small businesses are the most likely to offer hybrid or fully remote arrangements, at 56%. Personal services businesses -- salons, restaurants, retail -- sit at the other end at 16%, largely because the work requires physical presence. (Gusto New Business Formation Report, 2025)
Newer companies show a slight pullback. The share of new businesses offering fully remote or hybrid work dropped from 40% in 2023 to 34% in 2024, as return-to-office pressure from larger employers created some spillover effect. (Gusto New Business Formation Report, 2024)
Cost savings from remote work at small-business scale
The cost math on remote work favors businesses of all sizes, but small businesses see different levers than large enterprises do.
Employers save approximately $11,000 per year for each employee who works remotely half the time. The savings come from reduced real estate costs, lower absenteeism, and decreased turnover. (Global Workplace Analytics, 2024)
Office real estate is the most direct line item. Downsizing or eliminating office space saves approximately $5,580 per employee per year in rent alone, with additional savings in utilities, office equipment, and food and beverage costs pushing the total higher. (Global Workplace Analytics, 2024)
Turnover reduction may be the larger cost driver for small businesses. Gusto's analysis found that remote classification cuts the odds of an employee quitting by up to 13%. Applied to replacement and lost-productivity costs, the savings can reach $84,000 per year per technical worker who stays because of remote flexibility. (Gusto, 2023)
50% of small business owners hired non-local employees specifically for remote roles in the past year, and 73% consider it important to offer a home internet stipend for hybrid and remote workers. SMBs are absorbing new enabling costs while shedding larger fixed ones. (Verizon Business State of Small Business Survey, 2024)
Productivity and performance outcomes
Gusto's dedicated survey of 930 SMB owners is the most detailed data source here, and the results lean positive.
Remote SMBs that offer substantial flexibility in working hours are 20% more likely to report that remote work has boosted their performance, compared to those with no flexibility. Hybrid SMBs with the same flexibility see a larger lift -- 32% more likely to report improved performance. (Gusto, 2023)
Fully remote small businesses also score higher across nearly every performance indicator in Gusto's data: finding talent, building culture, achieving high performance, and retaining employees. The counterintuitive finding: 40% of fully remote SMBs reported being "far above average" at building personal connections among workers, compared to 33% of fully in-office firms and only 24% of hybrid companies. (Gusto, 2023)
At the macro level, remote and hybrid work has stabilized as a share of the economy. Work from home accounts for 21.2% of all paid workdays in the United States as of 2025, according to Stanford's WFH Research project, and that share has held consistent for over a year. (Stanford SIEPR, 2025)
Verizon's small business survey found that 56% of SMBs report higher employee morale and 62% report better collaboration compared to before the pandemic, with investments in remote-enabling technology cited as a contributing factor. (Verizon, 2024)
Technology and tools small businesses use
66% of SMBs upgraded their internet bandwidth in 2024. 67% increased spending on video conferencing software and 57% on collaboration tools. (Verizon Business State of Small Business Survey, 2024)
AI adoption among SMBs is accelerating alongside remote work. The share of small businesses using AI doubled year-over-year, from 14% in 2023 to 39% in 2024, and 78% of SMB AI users say it has boosted their productivity. (Verizon / Intuit QuickBooks SMB Annual Index Report, 2024-2025)
Buffer's State of Remote Work survey found that 78% of remote teams have technology systems for collaboration in place and 71% have systems for communication, both up from earlier years. (Buffer, 2023)
Tools matter less than people expect. Three-quarters of successful remote and hybrid small businesses in Gusto's survey rely on regular manager-employee check-ins, documentation practices, and clear goal-setting -- practices that are far less common among underperforming remote SMBs. The technology is table stakes; the management habits are the variable. (Gusto, 2023)
Challenges small businesses face with remote work
53% of small businesses are concerned that employees will look for jobs elsewhere if remote work isn't an option -- a figure that rose 17 percentage points in a single year. Remote flexibility has gone from a nice-to-have to something owners feel they cannot pull away. (Verizon, 2024)
Cybersecurity is a structural weakness for remote SMBs. Companies with remote workers take an average of 58 extra days to identify and contain data breaches compared to those without remote employees. Small businesses carry disproportionate risk here: few have dedicated security staff or the budget for enterprise-level controls. (IBM/Ponemon Cost of a Data Breach Report, 2024)
Culture and connection show up consistently as concerns. About half of small business owners cite maintaining company culture as a top challenge, and Buffer's data shows that 51% of fully remote workers report limited connection with colleagues as a significant concern. 30% say collaboration is harder remotely than in person. (Buffer, 2023)
Productivity anxiety persists even when actual productivity holds up. 45% of small business owners name ensuring productivity as a challenge of remote work -- a gap between owner concern and employee output that data on both sides has not yet closed. (Verizon, 2024)
Employee preferences and retention
35% of workers on Gusto's SMB platform cited work-life balance and flexibility as the defining factor in their most recent job acceptance decision, ranking it above total compensation. Remote companies offering high schedule flexibility are twice as likely to report being far above average at finding high-quality candidates. (Gusto, 2023)
Gallup's Hybrid Work Indicator shows that as of early 2025, 52% of remote-capable U.S. employees work hybrid, 27% are fully remote, and only 21% are fully on-site. Hybrid workers have the highest engagement rates at 35%, followed by fully remote at 33% and fully in-office at 27%. Six in ten exclusively remote employees say they are extremely likely to search for a new job if their remote flexibility is removed. (Gallup, 2024-2025)
The retention numbers are consistent across studies. Remote teams retain employees at a 94.2% rate compared to 81.6% for office-only staff. Full-time office workers had 26% annual turnover in 2023 versus 17% for hybrid and remote workers. (Multiple retention studies, 2023-2024)
Remote job postings also draw more applicant interest. Remote roles receive approximately 2.5 times as many applications as in-person equivalents, and companies with remote listings report a 21% increase in applications from underrepresented groups. For small businesses competing on compensation with larger employers, that wider applicant pool matters. (LinkedIn data / hiring aggregators, 2024-2025)
Key statistics at a glance
| Metric | Figure | Source |
|---|---|---|
| SMBs (<500 employees) offering flexible schedules | 70% | FlexOS / WFH Research, 2024 |
| Growth in fully remote workers on Gusto's platform since 2021 | 240% | Gusto, 2023 |
| Annual savings per half-time remote employee | ~$11,000 | Global Workplace Analytics, 2024 |
| Rent savings per remote employee per year | ~$5,580 | Global Workplace Analytics, 2024 |
| Reduction in quit probability with remote classification | Up to 13% | Gusto, 2023 |
| Remote SMBs reporting better collaboration vs. pre-pandemic | 62% | Verizon, 2024 |
| WFH as a share of all U.S. paid workdays | 21.2% | Stanford WFH Research, 2025 |
| SMBs that upgraded internet bandwidth in 2024 | 66% | Verizon, 2024 |
| SMBs worried about losing staff without remote option | 53% | Verizon, 2024 |
| Extra days to contain a breach with remote workers | 58 days | IBM/Ponemon, 2024 |
| Remote employee preference: flexibility above compensation | 35% | Gusto, 2023 |
| Remote teams vs. in-office: retention rate difference | 94.2% vs. 81.6% | Multiple studies, 2023-2024 |
Sources
- Gusto. (2023). Quantifying the Rise of Remote and Hybrid Work. gusto.com
- Gusto. (2023). Survey: What Makes Remote and Hybrid SMBs Successful. gusto.com
- Gusto. (2024). New Business Formation Report 2024. gusto.com
- Gusto. (2025). New Business Formation Report 2025. gusto.com
- Verizon Business. (2024). State of Small Business Survey. verizon.com
- Global Workplace Analytics. (2024). Cost Savings for Employers. globalworkplaceanalytics.com
- Stanford SIEPR / WFH Research. (2025). Working from Home: 2025 Five Key Facts. siepr.stanford.edu
- Gallup. (2024-2025). Global Hybrid Work Indicator. gallup.com
- Buffer. (2023). State of Remote Work 2023. buffer.com
- IBM / Ponemon Institute. (2024). Cost of a Data Breach Report. ibm.com
- Intuit QuickBooks. (2025). SMB Annual Index Report. quickbooks.intuit.com