210 Small Business Statistics

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.

Source: Bank of America, SBA, and NFIB

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%)

Source: Bank of America, Data for Good, and JPMorgan Chase

Self-Employment and Metro Declines

The number of self-employed people in metropolitan areas declined by 21% between April 2019 and November 2020.

• 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

Source: SBA Office of Advocacy, New York City Comptroller

• 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

Industry Cross-Section

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

Retail - 11% of Small Businesses

Business Services - 11% of Small Businesses

Health, Beauty, and Fitness Services - 9% of Small Businesses

Residential and Commercial Services - 7% of Small Businesses

Financial Impacts

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.

• 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.

• 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.

Source: JPMorgan Chase, Guidant Financial

Employment

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.

• 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.

Source: SBA

Women-Owned Businesses

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:

Source: JPMorgan Chase, Guidant Financial, U.S. Chamber of Commerce

Other statistics:

• 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.”

Minority-Owned Businesses

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

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.

Other Statistics:

• 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.

Source: JPMorgan Chase, Guidant

• 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.

Source: American Express, WBENC, SBA

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.

• 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

Source: Data for Good, JPMorgan Chase

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

• 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.

Sources: NFIB, Guidant, Census

Bottom Line

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.

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