This article is part of a larger series on Starting a Business.
Understanding and interpreting small business data and statistics can be the key to breaking into the small business marketplace. We’ve compiled more than 210 small business statistics to help you make an informed decision around starting a small business. Keep in mind that most of the data collection in 2021 has been greatly impacted by the COVID-19 pandemic events of 2020. This impact could have a lingering effect. You can apply this data to quantify your business plan, launch, and overall growth.
2019 to 2020 Comparison
We put together a benchmark comparing 2019 and 2020 data to help you understand our updated 2021 information in context. In order to see how COVID-19 impacted small businesses in 2020, it’s important to lay out the benchmark statistics for 2019.
24% of businesses expect to hire in next year
~ 16% of businesses expect to hire in next year
59% expect revenue to increase in next year
~ 45% expect revenue to increase in next year
NFIB SMB Optimism Index in July: 104.6
NFIB SMB Optimism Index in July: 98.8
NFIB SMB Uncertainty Index in November: 72
NFIB SMB Uncertainty Index in November: 98
Did You Know?
The NFIB Optimism Index is based on 10 seasonally adjusted survey indicators, gauging business health based on responses to queries such as “Plans to Increase Employment,” “Expect Retail Sales to Increase,” and “Now is a Good Time to Expand.”
As of January 2021, the National Federation of Independent Businesses SMB Optimism Index reached its 47-year low of 95, which is 0.9 points lower than December 2020, and 3 points lower than the national 47-year average of 98.
Small Business Plans for 2020 Thwarted
Many small businesses were optimistic in 2019 pre-COVID and had positive outlook statistics heading into 2020.
- Small businesses created 1.6 million net new jobs in 2019 with a positive outlook heading into 2020 for more
- 67% of businesses planned to expand in 2020 before the pandemic hit
- 12% of business owners intended to apply for a loan in the year ahead—many would end up needing one
- 56% of business owners planned to grow the business in the year ahead—for many businesses this would not have been possible after all
- 69% of business owners claimed to be have taken protective steps for the business in the case of economic downturn, mainly by establishing an emergency fund (37%)
While statistics continue to come together in regards to the impact COVID-19 had on the small business economy, some indicators are:
- 38% of essential SMBs stayed open in 2020
- 37% remained open by adjusting business style with safety
- 10% switched to remote operations
- 8% shut down but planned to reopen
- 7% reopened after a temporary closing
- 59% of entrepreneurs expect the COVID-19 impact to affect their bottom line for two years or less
- 31% of owners and managers reported that their business was not operating (May 2020)
Self-Employment and Metro Declines
The number of self-employed people in metropolitan areas declined by 21% between April 2019 and November 2020.
Did You Know?
New York City suffered the most business losses among metropolitan areas, with the number of self-employed people declining by 44%.
- Despite growing reopening rates from April – October 2020, as of November 2020, small business revenues were down 69% in Manhattan, 35% in Queens, 34% in Brooklyn, and 23% in the Bronx as compared to the beginning of the calendar year.
- In April 2021, The American Rescue Plan Act signed into law by the Federal government will provide $12.6 billion for New York State, New York City will receive $5.9 billion and other local governments will get $4.9 billion.
- As of March 2021, 78% of small businesses still reported negative business impacts
- Cash balances (cash flows) declined in every city among small business, averaging a national metropolitan decline of 12.7%
- Cash balance declined most steeply in Atlanta, whose average small business cash balances declined by 21%
- Cash balances declined most dramatically in the restaurant and personal services industries
Did You Know?
The Consumer Confidence Index (CCI) shows us how optimistic consumers feel about their financial situation. It affects every industry’s outlook, and is a key indicator of foreseeable consumer spending and barometer of the US economy. It’s one of many ways market research firms forecast industry data.
The top five small business industries are listed below, along with unique statistics to each industry and the effect COVID-19 had on each of these small business categories.
Food and Restaurant - 12% of Small Businesses
According to Nation’s Restaurant News, the larger industry sector of Accommodation and Food Service was enjoying a positive and steady climb in industry revenue and consumer spending since about 2014, increasing as much as 2.6% from 2014 to 2015. After an initial recovery in 2021, the industry will rebound to these comfortable growth rates averaging an annualized +3.4% increase in consumer spending through 2025.
Accommodation and Food Service Spend and Forecast 2019-2025
- Total Consumer Spend 2019: $13.4 B
- Total Consumer Spend 2020: $12.6 B (－5.99%)
- Total Anticipated Consumer Spend 2021: $13 B (+3.24%)
- Forecast Industry Value in 2025: $14.8 B
Restaurant Industry Total Outlook 2019 to 2021
- Total Sales Decline from 2019 to 2020: (－19.2%)
- Total Sales Rebound in 2021: +10.2%
- Over 110,000 restaurants permanently closed in 2020
- 68% of customers say they’re more likely to purchase take-out or delivery now than before the pandemic
Retail - 11% of Small Businesses
Even with the surge of online shopping during the COVID-19 pandemic, retail took a significant hit in 2020 as many brick-and-mortar establishments were forced to close their doors, either temporarily or permanently. However, the industry is expected to fully rebound in 2021 at a rate of 6.6% and continue to accelerate at a more rapid rate than prior to 2020 through the year 2026. Retail success is a reflection of consumer confidence, economic stability, and consumer spending.
Business Services - 11% of Small Businesses
Business, Personal, and Professional Services is an industry category that was already struggling in 2018 and 2019, and the COVID-19 pandemic was its death blow, costing the industry nearly 16% over 2020. It’s also one of the slowest industries studied here to rebound, at a modest rate of +0.15 through 2021, but enjoying a comfortable comeback by 2025 to surpass pre-pandemic rates:
Health, Beauty, and Fitness Services - 9% of Small Businesses
Among the varied but related industry segments of Health Services, Beauty Services, and Fitness Services, Health Services will experience the most drastic rebound in 2021 at a rate of 16.6%, followed by Beauty Services at 3.24% and Fitness Services at 2.26%.
Residential and Commercial Services - 7% of Small Businesses
Because Residential and Commercial Services encompass businesses operating in everything from cleaning to decorating to construction, we’ve opted to provide data on Residential and Commercial franchises to provide a baseline of data for this wide category of business types. This industry segment—perhaps due to the increased stability of franchises, residential and commercial services being deemed “essential” during the pandemic, and the strong demand for residential services in 2020—didn’t suffer the blow experienced by many industries and small businesses.
- Commercial and Residential Service Franchises in 2019: 67,226
- Commercial and Residential Service Franchises in 2020: 68,008
- Average Annualized Establishment Growth Rate 2015 – 2019: +1.09%
- Establishment Growth Rate 2019 – 2020: +1.14%
It takes money to make money. And the past year has been one of the most financially difficult in American history and has marked the loss of over 22.4 million US jobs. The financial impact was stifling for civilians and businesses alike, despite federal efforts to rescue small businesses.
Did You Know?
According to the SBA, 9 million loans worth $750 billion were dispatched in the first 3 quarters of 2020 to help stabilize the small business sector and help it continue into 2021.
- 42% of entrepreneurs applied for one or more loans to address the impact of the COVID-19 pandemic. Entrepreneurs applied for the following:
- 34% Paycheck Protection Program
- 16% SBA Economic Injury Disaster Loan
- 5% Traditional Bank Loan or Other
- This financing was allocated by small business owners at the following rates:
- 75% Payroll and Staffing
- 62% Operating Expenses
- 20% Marketing and Promotion
- 20% New Equipment or Technology
- The average rate paid on short maturity loans was 4.9% in January 2021.
Of 86,000 surveyed SMB owners by Data for Good, two-thirds planned to reopen in the future, sourcing the following funds:
- 41% – Personal savings
- 39% – Don’t know
- 20% – Other Financing Plans
- Chief business financial concerns among personal vs formal businesses combined:
- 29% agree – paying worker salaries and wages
- 28% agree – paying bills
- ~22% agree – rent or lease
- 19% agree – debts and loans
- ~16% agree – taxes
- ~11% agree – employee benefits
- 42% agree – none of the above
- 12% agree – other
- The main barriers to funding were psychological, including the following:
- Across industries*, between September 2019 and September 2020, existing small enterprises managed to lower their expenses. Which expenses were limited, how, and how sustainable this survival method remains to be seen:
- All industry expenses on aggregate were 7% lower at the end of September 2020 as compared to the end of September 2019
- Health Care Services – lowered expenses by 2%
- Restaurants – lowered expenses by 18%
- Personal Services – lowered expenses by 19%
*Retail is the only industry category studied that did not lower its expenses during this period.
Job creation is a popular platform for politicians, and for good reason. In April 2020, US unemployment topped out at over 14%, representing 23.1 million Americans.
Did You Know?
COVID represented the highest unemployment rate since the Great Depression, when it reached 25.5% in August 1932.
Source: Washington Post
- Self-employed proprietor income declined 13% annualized in the second quarter of 2020 alone, which is the largest quarterly decline in recorded history.
- Only 45% of owners and managers of SMBs reported that they would rehire the same workers when their businesses reopened.
- Of 86,000 surveyed SMB owners by Data for Good:
- 44% said they had to reduce the number of employees or workers at their business because of the pandemic, and
- 22% let go more than 10 employees.
- 45% of owner/managers of closed businesses reported that they would rehire the same workers when their businesses reopened.
According to the U.S. Chamber of Commerce, the COVID-19 pandemic has disproportionately affected the health of women-owned small businesses. At the beginning of 2020, 60% of female business owners ranked their business’s health as “Somewhat Good” or “Very Good.” By the end of Q3 2020, the number of women ranking this way dropped by 13%. As a result of COVID-19 and as of Q3 2020 to Q1 2021:
# of female business owners ranking their business in Somewhat or Very Good Health dropped by 13% during the pandemic (from 60% to 47%)
# of male business owners ranking their business in Somewhat or Very Good health only dropped by 5% during the pandemic (from 67% to 62%)
Female-owned businesses reporting an increase in staffing decreased by 3%
Male-owned businesses reporting an increase in staffing grew by 8%
Female-owned businesses have no increased plans for investment in their businesses (steady at 32% of owners)
Male counterparts saw an 11% jump in planning increased investments over the same period (from 28% to 39%)
Fewer women-owned businesses expect a revenue increase after Q3 of COVID
(this expectation dropped during COVID from 63% to 49%; a decrease of 14%)
Male confidence in revenue increases after Q3 of COVID remains unchanged, hovering around 58%
By Q3 of 2020, only 24% of female-owned businesses expected to increase staffing in the coming year
By Q3 of 2020, 36% of male-owned businesses expected to increase staffing in the coming year
- In spring 2020, more women owner-managers (33%) reported that household responsibilities were affecting their ability to focus on work “a great deal” or “a lot” more than men (25%).
- According to a 2021 Small Business Trends Alliance (SBTA) survey, 77% of women business owners expect their business to survive the COVID-19 pandemic.
- According to the SBTA, the top non-COVID-19 business challenges last reported faced by women entrepreneurs are:
- 24% – Marketing and Advertising
- 17% – Lack of Capital / Cash Flow
- 15% – Recruiting / Retention of Employees
- 14% – Managing / Providing Benefits
- 13% – Administrative Work (bookkeeping, payroll, strategy, etc.)
- According to the SBTA, 31% of surveyed women business owners are “Somewhat Confident” in small business post-COVID-19. Another 14% are “Very Confident.”
Black- and Hispanic-owned businesses were deeply impacted by the COVID-19 pandemic and face challenges of lower revenues, profit margins, and cash liquidity. Accordingly, Black- and Hispanic-owned businesses with comparable revenues and cash reserves are just as likely to survive as white-owned businesses, showing that the crux of the issue is access to capital.
Cash Balance Comparison 2020
Cash balances of white-owned restaurants rebounded at 50% (May 2020)
Cash balances of Black-owned restaurants rebounded at 38% (May 2020)
Black-owned personal services firms cash balances increased by 62%
Hispanic and white-owned firms cash balances increased by less than 25%
Cash balances of Black-owned firms decreased by 26%
Revenues of Asian-owned firms declined by more than 60%
Cash balances of Black-owned repair and maintenance firms increased by as much as 56% in May
Cash balances of Hispanic and white-owned repair and maintenance firms to less than 40%
Did You Know?
While 13% of business is founded by Black owners and 28% by Latinx owners, only 6% of Black owners had financed business growth, and 21% of Latinx owners had financed business growth in comparison to 73% of white business owners who had financed business growth.
Source: JPMorgan Chase (2013-2019 Cohort)
COVID-19 Relief by Race:
- Just over half of People of Color (POC) entrepreneurs surveyed by STMB received relief from the Paycheck Protection Program (PPP) or Economic Injury Disaster Loan (EIDL) in 2020.
- This is compared to 67% of white entrepreneurs who received either form of financial aid.
- 61% of small business owners received governmental economic relief.
- 55% of Black business owners want to grow their business rather than sustain, open a new location, or sell.
- In a 2021 STMB survey of Black business owners, 43% ranked their happiness level as “Very Happy,” the highest-ranking on the scale.
- The majority of Black business owners in America have a bachelor’s degree, at 33%. The next highest segment have a master’s degree, at 26%.
- 59% of Black business owners required $50,000 or less to start up. 43% of all Black business owners surveyed used cash.
Did You Know?
46% of black entrepreneurs are women, one of the highest percentages of female small business owners of any segment. Source: PRWeb.com
- There are 5.2 million self-employed minorities in the US.
- Approximately 6% of the minority population in the United States own their own business.
- Women of color own 47% of all women-owned businesses.
- They employ 2.2 million people and generated on average $387 billion in revenue
- From 2014 to 2019, businesses owned by women of color grew 43%
- Within that 43% of businesses owned by women of color, Black-owners’ businesses grew the fastest at 50%, Native Hawaiian and Pacific grew 41%, and Hispanic-owned grew 40%.
- Black women account for 2.7% of all businesses owned.
Threat Analysis to Business
In the traditional SWOT analysis, Threats and Opportunities indicate external indicators that should influence business strategy moving forward. Threats are not to be accepted blithely, but rather taken under advisement, combated, and countered with external opportunity.
Did You Know?
The SWOT analysis is a popular business development and strategic tool which allows the user to map out Strengths, Weaknesses, Opportunities, and Threats.
- The 5 most difficult tasks entrepreneurs face in general include:
- Sales (76% of entrepreneurs agree)
- Market Research (75% of entrepreneurs agree)
- Tax Accounting (75% of entrepreneurs agree)
- Cash Flow (74% of entrepreneurs agree)
- Setting Financial Goals (73% of entrepreneurs agree)
Source: Bank of America
Opportunities and Business Strategy Changes
- 24% of business owners made lemons into lemonade by restructuring their business model to accommodate the impacts of COVID-19:
- 61% developed new products or services
- 51% donated time, products or services
- Many business owners turned toward technology to combat the economic effects of COVID-19:
- 51% of businesses report increasing online interactions with their clients
- 36% of personal businesses that use online tools report that they are conducting all their sales online
- 35% of businesses that have changed operations have expanded the use of digital payments
- Some business owners do know what they need for their business to survive, and most of those come back to federal assistance programs. Of 86,000 surveyed SMB owners by Data for Good, owner most often cited:
- 36% agree – Credit Access and Guarantees
- 38% agree – Salary Subsidies
- 34% agree – Tax Deferrals
- 23% agree – Help taking care of household members
2021 and Beyond
2020 was grim, but as indicated above and below, there is opportunity in 2021 and beyond. These useful statistics will provide—finally—forward-looking data that reflects how our economy and small business sector can and will respond to the crisis that is hopefully mostly behind us.
- 2021 opportunities for entrepreneurial recovery include:
- 79% increased consumer confidence and spending
- 78% improved public health confidence
- 66% debt forgiveness
- 66% small business government relief programs
Did You Know
The No.1 reason 2021 SBTA surveyed entrepreneurs started their businesses—at 29%—was that they were “Ready to be their Own Boss.” The No. 2 reason—at 17%—was “Dissatisfied with Corporate America”
- Hiring Outlook is slow but steady, as 51% of small businesses attempted to hire employees in January, and seasonally adjusted net 17% planning to create new jobs in Q1+ of 2021.
- Capital Expenditure Outlook is low but increasing, with 22% of small business owners planning capital outlays in Q1+ of 2021.
- Already in January 2021, 16% of small business owners experiencing a sales decrease from the same period last year blame low sales volume. Another 6% blame increased costs of doing business.
- In January 2021, surveyed business owners for the NFIB Optimism Index reported the following concerns for business sustainability in 2021:
- 19% – Taxes (up 2% from January 2020)
- 3% – Inflation (up 2% from January 2020)
- 11% – Poor Sales (up 4% from January 2020)
- 1% – Financing and Interest Rates (same as January 2020)
- 7% – Cost of Labor (down 1% from January 2020)
- 15% – Government Regulation (up 2% from January 2020)
- 8% – Competition from Big Business (down 1% from January 2020)
- 21% – Quality of Labor (down 5% from January 2020)
- 7% – Cost and Availability of Insurance (down 4% from January 2020)
- 8% – Other (up 1% from January 2020)
- In January 2021, nearly one-half-million business birth applications were filed (492,133). This is 42.6% higher than the previous month, December 2020.
- Projected Business Formations (within 4 quarters) for January 2021, adjusted for seasonal variation, were 35,769, an increase of 42.9% compared to December 2020.
- The retail trade is bracing for a comeback, with 2021 monthly business applications already surpassing 100,000. Retail business applications reached a monthly low of less than 40,000 applications in the midst of the pandemic.
It’s been quite a year for businesses across the globe. The nice thing about data is that it doesn’t judge and it doesn’t announce good news or bad; it just is, and all we can do is work with it and use it to make informed decisions. Understanding how this data shapes our everyday business choices is the key to successfully interpreting it and using it to the advantage of planning, starting, or growing a small business.