Small Business Statistics for 2021

The U.S. economy is expected to grow by 3% in 2021, with small businesses accounting for 59% of that growth. What are the key statistics you should know about this year?

Understanding small company data and statistics may be the difference between success and failure in the small business world. To assist you in making an educated choice about establishing a small company, we’ve collected over 210 small business data. Keep in mind that the COVID-19 pandemic events of 2020 influenced the majority of data gathering in 2021. These effects may last for a long time. You may use this information to measure the success of your company strategy, launch, and general growth.

Comparison between 2019 and 2020

To assist you to comprehend our revised 2021 information in perspective, we created a comparison comparing 2019 and 2020 statistics. It’s crucial to set out the benchmark data for 2019 in order to understand how COVID-19 affected small companies in 2020.

The NFIB Optimism Index is based on ten seasonally adjusted survey variables, such as “Plans to Increase Employment,” “Expect Retail Sales to Increase,” and “Now is a Good Time to Expand.”

The National Federation of Independent Businesses SMB Optimism Index hit a 47-year low of 95 in January 2021, down 0.9 points from December 2020 and 3 points below the national 47-year average of 98.

Plans for small businesses in 2020

Many small companies were upbeat in 2019 before COVID, and their forecasts for 2020 were favorable.

• In 2019, small companies added 1.6 million net new employment, with a promising prospect for more in 2020.
• Prior to the pandemic, 67% of companies expected to grow in 2020.
• In the next year, 13% of company owners planned to seek a loan, with many of them requiring one.
• Despite the fact that many companies would not have been able to do so, 56 percent of business owners intended to expand their company in the next year.
• 69 percent of company owners said they had taken precautions to safeguard their companies in the event of a downturn, mostly by setting up an emergency fund (37 percent )

While data on the effect of COVID-19 on the small company sector is still being compiled, some indications include:

• In 2020, 38% of critical SMBs remained open.
• By aligning their business approach with safety, 37% of businesses were able to stay open.
• 10% of companies have moved to remote operations.
• 8% of businesses were closed, although they intended to reopen.
• After a brief closure, 7% of businesses reopened.
• COVID-19 is expected to have a two-year or less effect on 59 percent of businesses’ bottom lines.
• 31% of business owners and managers said their company was not functioning (May 2020)

Self-employment

Between April 2019 and November 2020, the number of self-employed individuals in urban regions decreased by 21%.

Among metropolitan regions, New York City experienced the greatest business losses, with the number of self-employed individuals falling by 44%.

• Despite increasing reopening rates from April to October 2020, as of November 2020, small company revenues in Manhattan, Queens, Brooklyn, and the Bronx were down 69 percent, 35 percent, 34 percent, and 23 percent, respectively, compared to the start of the calendar year.
• The American Rescue Plan Act, which was passed into law by the federal government in April 2021, would give $12.6 billion to New York State, $5.9 billion to New York City, and $4.9 billion to other municipal governments.
• 78 percent of small companies experienced unfavorable business effects as of March 2021.

• Small company cash balances (cash flows) decreased in every city, with a national average drop of 12.7 percent.
• Atlanta saw the steepest drop in cash holdings, with average small company cash balances falling by 21%.
• The restaurant and personal services sectors had the most significant declines in cash holdings.

The Consumer Confidence Index (CCI) measures consumer confidence in their financial position. It has an impact on the outlook of every sector and is a major predictor of future consumer spending as well as a gauge of the US economy. Market research companies use a variety of methods to predict industry data.

Cross-Section of Industries

Below are the top five small company industries, together with industry-specific data and the impact of COVID-19 on each of these small business categories.

Small businesses are in the food and restaurant industry

According to Nation’s Restaurant News, the broader industry sector of Accommodation and Food Service has been seeing a strong and consistent rise in industry income and consumer expenditure since about 2014, rising as high as 2.6 percent from 2014 to 2015. After a brief recovery in 2021, the sector will return to these more comfortable growth rates, with yearly increases in consumer spending averaging +3.4 percent through 2025.

Spending on lodging and food services from 2019 through 2025

• Consumer Spending in 2019: $13.4 billion
• Total Consumer Spending in 2020: $12.6 B (-59.9%)
• Total Consumer Spending Expected in 2021: $13 B (+3.34%)
• In 2025, the industry is expected to be worth $14.8 billion.

From 2019 to 2021, the restaurant industry will have a total outlook.

• Total sales decreased by -19.2 percent from 2019 to 2020.
• In 2021, total sales are expected to increase by +10.2 percent.
• In 2020, almost 110,000 eateries will be permanently shuttered.
• Consumers are more inclined to order takeout or delivery today than they were before the epidemic, according to 68 percent of customers.

Retail accounts for 11% of all small businesses

Despite the increase in internet purchasing during the COVID-19 epidemic, retail suffered a major setback in 2020, as many brick-and-mortar stores were forced to shut, either temporarily or permanently. However, the sector is projected to completely recover in 2021 at a pace of 6.6 percent and then grow at a faster rate than before 2020 until 2026. Consumer confidence, economic stability, and consumer spending are all indicators of retail success.

11% of small businesses are service businesses

The COVID-19 pandemic dealt a death blow to the business, personal, and professional services sector, which was already suffering in 2018 and 2019, costing the industry approximately 16 percent by 2020. It’s also one of the slowest sectors to recover, with a modest +0.15 percent recovery rate through 2021, but a comfortable return by 2025 to exceed pre-pandemic rates:

Health, beauty, and fitness account for 9% of all small businesses

Health Services, Beauty Services, and Fitness Services will all have significant increases in 2021, with Health Services seeing the largest increase of 16.6%, followed by Beauty Services at 3.24 percent, and Fitness Services at 2.26 percent.

Residential and commercial services account for 7% of all small businesses

We’ve chosen to offer statistics on Residential and Commercial franchisees to establish a baseline of data for this broad area of company types since Residential and Commercial Services encompass anything from cleaning to decorating to construction. Because of the improved stability of franchises, the fact that residential and commercial services were considered “vital” during the pandemic, and the high demand for residential services in 2020, this industrial segment did not suffer the same hit as many other industries and small companies.

Growth of a Franchise

• In 2019, there were 67,226 commercial and residential service franchises.
• In 2020, there will be 68,008 commercial and residential service franchises.
• Annualized Establishment Growth Rate: +1.09 percent from 2015 to 2019.
• 2019–2020 Establishment Growth Rate: +1.14 percent

Financial Consequences

Despite government attempts to save small companies, the financial effect was suffocating for both individuals and businesses.

According to the Small Company Administration, 9 million loans totaling $750 billion were disbursed in the first three quarters of 2020 to assist stabilize the small business sector and ensure its viability into 2021.

• To deal with the effect of the COVID-19 epidemic, 42% of businesses sought one or more loans. Entrepreneurs applied for a variety of positions, including:
  • Paycheck Protection Program is a 34% program that protects your paycheck.
  • SBA Economic Injury Disaster Loan, 16 percent
  • Other than a traditional bank loan, which is 5%
• Small company owners provided this funding at the following rates:
  • Payroll and staffing account for 75% of total costs.
  • Operating Expenses: 62 percent
  • Marketing and promotion account for 20% of the budget.
  • 20 percent new technology or equipment
• In January 2021, the average rate paid on short-term loans was 4.9 percent.

Two-thirds of the 86,000 SMB owners polled by Data for Good intended to reopen in the future, using the following funds:

• Personal savings account for 41% of total savings.
• 39 percent – I’m not sure
• 20% – Alternative Financing Plans

• The following are the top financial issues for both individuals and formal businesses:
  • Paying workers salaries and wages is something that 29% of people agree with.
  • Paying bills is something that 28% of people agree on.
  • 22% believe that renting or leasing is the best option.
  • Debts and loans are something that 19 percent of people agree on.
  • Taxes are something that 16 percent of people agree on.
  • Employee perks are something that 11% of people agree on.
  • None of the above, according to 42% of respondents.
  • 12% of those polled agree – the rest are undecided.
• The following were the major psychological barriers to funding:

• Existing small businesses managed to cut costs across industries between September 2019 and September 2020. Which costs were cut, how, and how long this survival strategy would last remains to be seen:
  • At the end of September 2020, total industry expenditures were 7% lower than they were at the end of September 2019.
  • Health Care Services — costs were cut by 2%.
  • Restaurants — costs were cut by 18%.
  • Personal Services – costs were reduced by 19%.

The only industry examined that did not reduce its costs during this time was retail.

Employment

Job creation is a popular political platform, and with good reason. Unemployment in the United States peaked at above 14 percent in April 2020, affecting 23.1 million people.

When COVID hit 25.5 percent in August 1932, it was the greatest unemployment rate since the Great Depression.

• In the second quarter of 2020, self-employed proprietor income fell 13% on an annualized basis, the biggest quarterly drop in recorded history.
• Only 45 percent of SMB owners and managers said they would rehire the same employees when their companies reopened.
• Data for Good surveyed 86,000 small business owners and found the following results:
  • Because of the epidemic, 44% of respondents stated they had to decrease the number of employees or workers at their company, and
  • More than ten workers were laid off in 22% of the cases.
  • When their companies reopened, 45 percent of closed-down company owners/managers said they would rehire the same employees.

Women-Owned Companies

The COVID-19 epidemic has disproportionately impacted the health of women-owned small companies, according to the US Chamber of Commerce. 60 percent of female business owners rated their company’s health as “Somewhat Good” or “Very Good” at the start of 2020. By the end of Q3 2020, the number of women in this position had decreased by 13%. As a consequence of COVID-19, starting in Q3 2020 and ending in Q1 2021.

Additional data:

• More women (33 percent) than males stated that home obligations were hurting their ability to concentrate on work “a great deal” or “a lot” in spring 2020. (25 percent ).
• According to a study conducted by the Small Business Trends Alliance (SBTA) in 2021, 77% of women business owners believe their company will survive the COVID-19 epidemic.

• According to the SBTA, the following are the top non-COVID-19 business obstacles that women entrepreneurs have recently reported:
  • Marketing and advertising account for 24% of the total.
  • 17 percent – Cash Flow/Capital Shortage
  • Recruiting and Retention of Employees (15%)
  • 14 percent – Benefits Management/Provision
  • Administrative work accounts for 13% of the total (bookkeeping, payroll, strategy, etc.)
• According to the SBTA, after COVID-19, 31% of questioned women business owners feel “Somewhat Confident” in their small company. Another 14% describe themselves as “Very Confident.”

Minority-Owned Companies

The COVID-19 epidemic wreaked havoc on Black and Hispanic-owned companies, resulting in decreased sales, profit margins, and financial liquidity. As a result, Black and Hispanic-owned companies with similar sales and cash reserves have the same chance of surviving as white-owned enterprises, demonstrating that access to finance is at the heart of the problem.

Comparison of Cash Balances in 2020

While Black business entrepreneurs created 13% of businesses and Latinx business owners founded 28%, just 6% of Black company owners and 21% of Latinx business owners had funded business development, compared to 73% of white business owners who had financed business growth.

COVID-19 Race-Based Relief:

• • In 2020, little over half of POC businesses polled by STMB got assistance from the Paycheck Protection Program (PPP) or the Economic Injury Disaster Loan (EIDL).
  • In comparison, 67% of white entrepreneurs got some kind of financial assistance.
  • 61 percent of small company owners got financial assistance from the government.

Other information:

• Instead of sustaining, expanding, or selling their company, 55% of Black business owners desire to expand it.
• In a study of Black company owners conducted by the STMB in 2021, 43 percent said they were “Very Happy,” the highest rating on the scale.
• The majority of Black company owners in America, 33 percent, hold a bachelor’s degree. At 26%, the next highest group has a master’s degree.
• 59 percent of Black company owners needed less than $50,000 to get started. Cash was utilized by 43% of all Black company owners polled.

Women make up 46 percent of black entrepreneurs, making them the group with the greatest proportion of female small company owners. PRWeb.com is the source for this information.

• In the United States, there are 5.2 million self-employed minorities.
• In the United States, about 6% of the minority population owns a company.
• All women-owned companies are owned by women of color, who account for 47% of all women-owned enterprises.
• They employ 2.2 million people and produce $387 billion in sales on average.
• From 2014 to 2019, the number of companies owned by women of color increased by 43%.
• Black-owned companies expanded at the highest rate of 50 percent, Native Hawaiian and Pacific-owned businesses grew at 41 percent, and Hispanic-owned businesses grew at 40 percent of the 43 percent of businesses owned by women of color.
• Only 2.7 percent of all companies are owned by black women.

Analysis of Business Threats

Threats and Opportunities are external indications that should affect company strategy going forward in a conventional SWOT analysis. Threats should not be taken lightly, but rather carefully considered, combated, and fought with external resources.

The SWOT analysis is a common company development and strategic technique for mapping out strengths, weaknesses, opportunities, and threats.

• The following are the five most challenging challenges that entrepreneurs confront in general:
  • Sales (76 percent of business owners agree)
  • Research into the market (75 percent of entrepreneurs agree)
  • The flow of Cash (74 percent of entrepreneurs agree)
  • Setting Financial Objectives (73 percent of entrepreneurs agree)

Changes in Business Strategy and Opportunities

• By changing their company strategy to meet the effects of COVID-19, 24 percent of business owners turned lemons into lemonade:
  • Sixty-one percent created new goods or services.
  • 51% of the time, goods, or services were given.
• To counteract the economic consequences of COVID-19, several company owners resorted to technology:
  • 51% of companies say their online contacts with customers are growing.
  • Sixty-six percent of small companies that utilize internet tools say they do all of their business online.
  • 35 percent of companies that have altered their business models have increased their usage of digital payments.
• Some company owners do know what they need to stay in business, and the majority of them turn to government aid programs for help. The following are the top reasons given by 86,000 SMB owners polled by Data for Good:
  • Credit Access and Guarantees – 36 percent agree
  • Salary Subsidies – 38 percent agree
  • Tax Deferrals – Tax Deferrals – Tax Deferrals – Tax Deferrals
  • 23 percent agree – assistance in caring for family members

The Year 2021 and Beyond

2020 looked bleak, but as seen above and below, there is hope for 2021 and beyond. These helpful figures will provide—for the first time—forward-looking data on how our economy and small company sector may and will react to the crisis, which is thankfully largely over.

• The following are some of the possibilities for entrepreneurship recovery in 2021:
  • Consumer confidence and expenditure rose by 79 percent.
  • The public’s perception of health has increased by 78%.
  • Debt remission of 66 percent
  • 66 percent of small company assistance programs are funded by the government.

The No. 1 reason entrepreneurs began their companies, according to the 2021 SBTA poll, was because they were “Ready to be their Own Boss.” “Dissatisfied with Corporate America” was the No. 2 reason (17%).

• The hiring outlook is mixed, with 51 percent of small companies attempting to recruit workers in January and a seasonally adjusted net of 17 percent intending to hire in Q1+ of 2021.
• The outlook for capital expenditures is mixed, with 22 percent of small company owners anticipating capital expenditures in Q1+ of 2021.
• Low sales volume was blamed by 16 percent of small company owners who saw a sales drop from the same time the previous year in January 2021. Another 6% say it’s because of rising company expenses.
• The following worries for business sustainability in 2021 were expressed by polled company owners for the NFIB Optimism Index in January 2021:
  • Taxes are 19 percent of the total (up 2 percent from January 2020)
  • An inflation rate of 3% (up 2 percent from January 2020)
  • Poor sales accounted for 11% of the total (up 4 percent from January 2020)
  • 1 percent – Interest Rates and Financing (same as January 2020)
  • 7 percent – Labor Costs (down 1 percent from January 2020)
  • Government regulation accounts for 15% of the total (up 2 percent from January 2020)
  • 8 percent – Big Business competition (down 1 percent from January 2020)
  • 21 percent – Labor Quality (down 5 percent from January 2020)
  • 7 percent – Insurance Costs and Availability (down 4 percent from January 2020)
  • 8% – Additional (up 1 percent from January 2020)
• Nearly half a million business birth applications were submitted in January 2021. (492,133). This is an increase of 42.6 percent over the previous month, December 2020.
• Adjusted for seasonal fluctuation, projected Business Formations (within 4 quarters) for January 2021 were 35,769, up 42.9 percent from December 2020.
• The retail industry is poised for a return, with monthly company applications for 2021 now exceeding 100,000. In the middle of the epidemic, retail business applications fell to a monthly low of fewer than 40,000.

Conclusion

It’s been an eventful year for companies all around the world. Data is wonderful in that it does not judge or proclaim good or bad news; it just is, and all we can do is work with it and utilize it to make educated choices. Understanding how this data influences our daily business decisions is critical to effectively understanding and using it for the planning, start-up, or growth of a small company.