Small businesses have gone through a lot in the past year. The COVID-19 pandemic forced many businesses to close for good while countless others jumped through hoops to stay afloat amidst changing ordinances. Despite clear hardships in 2020, small business owners learned a lot of lessons that taught them resilience, patience, and compassion that they took into 2021.
Seasoned and rookie business owners alike need to build on these lessons so their business can continue to grow. Understanding what businesses went through during the COVID-19 pandemic, along with the data behind it, can help you make more informed decisions in the years to come. That’s why we’re going over 115 small business statistics that can help your business thrive. You can also skip ahead to our infographic to see the highlights.
Table of contents
Small businesses by the numbers
It’s safe to say that small businesses make a big impact on the economy. In fact, small businesses make up 99.9% of all businesses according to the U.S. Small Business Administration. Many of us rely on small businesses for everything from employment to our favorite desserts.
31% of businesses have been open for a decade or more
There are nearly 32 million small businesses in the United States.
There are about 61 million small business employees in the United States
19% of business owners invested in a new franchise location in 2020
47% of United States employees work for small businesses
58% of business owners started a business from scratch in 2020
- Many people started new businesses in 2020. It’s not easy to start from scratch, but many people decided that it was time to start their new venture.
- Small businesses employ lots of people. Even if you don’t work for one, you probably know someone who does.
Small business challenges statistics
Like any entrepreneur, small business owners face their own sets of challenges. A global pandemic, unfortunately, creates even more obstacles to overcome.
Many owners in the past year had trouble filling open positions. Others had cash flow woes that made it tough to keep the lights on. Yelp reported that more than 97,000 businesses closed towards the end of last year. Regardless, countless businesses still overcame the challenges thrown at them.
46% of business owners have openings that they can’t fill
26% of business owners said labor quality was their top business problem
32% of business owners report few qualified applications for their open positions
24% of small business owners were concerned with staying competitive on shipping and pricing
30% of small business owners have difficulty attracting relevant or high-quality traffic to their site
For business owners who experienced lower profits, 35% blamed weaker sales
67% said that limited marketing budget was their core small business marketing challenge
Outside of the COVID-19 pandemic, 23% of business owners said the lack of capital or cash flow was the biggest challenge of 2020
In a survey of 500 women small business owners, 55% felt men have an easier time starting their own business
- Finding qualified workers remains a top issue for small business owners. Although small businesses employ lots of Americans, they still have trouble filling openings.
- Sales volume is a major factor for profits. A slump in sales may be a result of consumers losing their jobs, refusing to shop in person, and other preferences that changed as a result of the pandemic.
- A lack of cash flow is another difficulty for businesses. The U.S. entered a recession in early 2020 because of the pandemic. Government aid and reopenings helped small businesses hang on, but many still struggle.
Small business and marketing statistics
Despite what some may think, even small businesses need marketing. Small businesses can benefit from investing in extra marketing efforts where word-of-mouth falls short. In our increasingly digital and remote world, digital marketing is essential—especially for mom-and-pop small businesses.
39% of small businesses are expanding their social media presence
78% of small businesses use Facebook
55% of small business owners plan to invest in digital marketing
43% said that the most important challenge small businesses face is building a visible brand
40% of small businesses adjusted their website to make it more mobile-friendly in light of the pandemic
30% of small businesses are increasing marketing efforts
68% of consumers use a brand’s website to collect information
39% of small businesses re-designed their website in light of the pandemic
81% of small businesses plan to invest in social media in 2021
28% of small businesses plan to increase communication with customers through email
54% of business owners reported a boost in website traffic since the beginning of the COVID-19 pandemic
48% of small business owners implemented an online store in 2020
- Digital marketing takes the front seat for small businesses. With the growing push to a remote-first world, improving online marketing efforts is a must.
- Small business owners are prioritizing websites. Business owners can sell online and directly provide important information to customers.
- Marketing budgets are a challenge for small businesses. There’s no doubt that small business owners understand the importance of marketing. However, it’s not easy to scrape out a budget for it if they’re having difficulties with profits.
Small business finances and growth statistics
The U.S. Small Business Administration reported that small businesses generate 44% of economic activity. This includes sales, loans, payroll and everything in between. We already know that many small businesses struggled with sales. However, understanding business finances goes much further than sales alone.
42% of small business owners said money and finances was a top stressor
39% of small business owners use cash to start their business
10% of small business owners get help from family and friends to start their business
36% of business owners put money towards new equipment
39% of business owners increased employee compensation
59% of business owners were not interested in a loan
23% of business owners borrow on a regular basis
Small business owners make an average of $67,140 a year
Only 8% of business owners said labor costs were their top business concern
49% of small business owners with online stores saw a boost in sales in 2020
61% of small business owners with brick-and-mortar stores saw a decrease in sales in 2020
33% of small businesses owners saw all of their revenue coming from online avenues in 2020
Only 63% of small businesses accept checks
More small businesses prefer card payments than cash, but 70% of small businesses still accept cash
For business owners who experienced higher profits, 66% said it was due to sales volumes
- An online presence helped small business owners boost sales. With many consumers turning to online and contactless shopping, online stores were a big benefit for many businesses.
- Compensating employees didn’t worry many business owners in 2021. In fact, many raised wages for employees.
- Small business owners prefer other financing methods over loans. Small business owners didn’t seem too interested in getting themselves into more debt. Instead, cash and aid from loved ones were more appealing ways to finance their businesses.
Small business technology and cybersecurity statistics
If you handle anyone’s sensitive information, cybersecurity should be at the top of your priority list. Data breaches cost businesses $3.86 million per breach in 2020. A breach means a hacker could expose payment, contact, and other sensitive information.
Preparing your small business for a cyber attack can save you a lot of time and money in the long run. Upgrading your business’s technology can improve both your security and productivity.
58% of small- to medium-sized businesses (SMB) leaders said security vulnerability is their biggest data storage challenge
32% of SMBs say budget is their greatest barrier to IT security
24% of SMBs say their greatest barrier to IT security are employees not following guidelines
40% of small business owners feel that economic uncertainty will prevent them from making necessary cybersecurity investments
For companies with less than 20 employees, only 34% provide employees with technology to improve remote work cybersecurity
23% of small business owners said data security was a challenge because of the complexities of online data storage and protection
Only 20% of small business carry cyber coverage
20% of SMB leaders said they don’t currently have a data backup or disaster recovery solution in place
39% of SMBs have less than $1,000 allocated for their IT security budget
27% of business owners plan to invest in IT infrastructure
42% of SMBs said news about data breaches made them review and reevaluate their IT security roadmap
64% of SMBs are deploying some or all of their IT infrastructure in the cloud
For companies with less than 20 employees, only 25% implemented a remote work policy focused on cybersecurity as a result of COVID-19
- Small business owners understand the importance of cybersecurity. However, few have invested in coverage or improvements.
- Finances are a barrier to implementing better cybersecurity solutions. The state of the economy and a business’s cash flow are the main financial roadblocks for small business owners.
- Employees may struggle with cybersecurity if their employers don’t provide them with the right tools. A standard policy and improved technology are both ways owners can equip employees for success.
Small business owner statistics
Small business owners come from all walks of life and have lots of motivators to start their own businesses. Some are parents who want flexible schedules to spend time with their family. Others are seasoned workers who are ready to pursue their passion. Small business owners also differ in how they define success and how they run their businesses.
52% of Gen X small business owners are most motivated by flexible working conditions and being their own boss
52% of women-owned businesses have one to four employees
41% of small business owners are Baby Boomers
Roughly 52% of minority-owned businesses have one to four employees
About 53% of Hispanic-owned businesses have one to four employees
46% of small business owners are Gen X
47% of small business owners say that the biggest misconception of starting a business is that you’ll be less stressed
When asked, “how happy are you as a small business owner?” 43% of business owners said they were very happy
1% of small business owners are Gen Z
48% of small business owners define success as achieving profitability
46% of small business owners says their defining moment for starting a business was their passion for entrepreneurship
13% of small business owners are Millennials
58% of small business owners gave themselves five years or less to make it or break it
28% of women say self-belief and self-doubt were obstacles to starting a business
17% of small business owners started their own business because they were dissatisfied with corporate America
41% of Gen Z small business owners are most motivated by passion and purpose for their work
29% of small business owners started their own business because they were ready to be their own boss
- Gen X remains the largest age group of small business owners. They’re followed by Baby Boomers, Millennials, and Gen Z.
- Many small business owners choose this path because they want to be their own boss. Other top motivators include a passion for entrepreneurship and for their work.
- Despite high stress and challenges, many are very happy as small business owners. For some, perks like managing your own working conditions and getting away from corporate America are enough to make the tough times worth it.
COVID-19 and small businesses statistics
It’s clear that the COVID-19 pandemic came with its share of difficulties for all aspects of life. Many small businesses unfortunately took the brunt of it and small business revenue suffered as a result. However, we did see companies adjust in light of dwindling demand and changing government regulations. Many small businesses today are still working to stay afloat and serve their customers.
62% of small business owners used personal funds in response to financial challenges in 2020
78% of small business owners reported a decrease in revenues in 2020
90% of Asian-owned small businesses reported a decrease in revenue in 2020
67% of Asian- and Black-owned small businesses reduced operations in 2020
79% of small businesses owners had outstanding debt in 2020
35% of small business owners with lower credit scores used online lenders
63% of Hispanic-owned firms reduced operations in 2020
44% of small businesses had more than $100,000 in debt in 2020
26% of small businesses temporarily closed in 2020
55% of small business owners faced disruptions because of government mandates
48% of small businesses modified operations in 2020
56% of small businesses reduced operations in 2020
58% of small business owners faced disruptions because of changes in demand
Only 14% of business owners expected employment growth in 2020
88% of small business owners said sales had not returned to normal when surveyed in September and October 2020
57% of small business owners says businesses like theirs won’t recover until the second half of 2021 and beyond
- Minority-owned businesses took a big hit during the pandemic. Hispanic-, Asian-, and Black-owned businesses all reduced operations in 2020.
- Sales have not returned to normal for most businesses. Small business owners expect recovery to come much later.
- Changes in demand and government mandates disrupted businesses. Openings, closings, capacity restrictions, and changes in consumer preference forced many businesses to quickly adapt.
Small business PPP loan statistics
The U.S. Small Business Administration administered the paycheck protection program, also known as PPP. The program was intended to help businesses keep their employees on payroll during the COVID-19 crisis. Womply was the the #1 source of PPP loan applications. We helped 1 million businesses, independent contractors, gig workers, and self-employed individuals with PPP.
52% of small business owners said they’d spend more than half of their PPP loan on payroll and the remainder on rent, utilities, and mortgage on interest
The U.S. Small Business Administration approved 11,823,594 PPP loans
56% of small business owners says the amount they received for the PPP was not sufficient for their expenses and needs
The U.S. Small Business Administration distributed $799,832,866,520 total net dollars in PPP loans
82% of small businesses applied for PPP loan
5,467 lenders participated in the PPP
Only 60% of small business owners fully understand how PPP loan forgiveness works
Of the 5.2 million PPP loans disbursed in 2020, 145,000 are under review for loan forgiveness
64% of small businesses would apply for more government-provided assistance if it were made available
Of the 5.2 million PPP loans disbursed in 2020, 3.3 million were forgiven
Only 40% of small business owners planned to spend 100% of their PPP loan on payroll
Of the small businesses that received none of the PPP funding they applied for, 71% reduced the number of employees on their payroll
Of the small businesses that received all of the PPP funding they applied for, only 46% reduced the number of employees on their payroll
Of the small businesses whose sales had not returned to normal, 30% said it’s unlikely they could survive until sales recover without additional government assistance
When asked if they intend to rehire staff laid they laid off with their PPP loan, 64% of small business owners said no, because they did not lay off any staff
- Many small businesses applied for PPP loans. These loans helped businesses keep employees on their payroll.
- Businesses who received PPP loans were able to keep more people on their payroll compared to businesses who didn’t receive any PPP loan funding.
- PPP loans were not enough for small businesses. The initial amount wasn’t sufficient for some and many say they’d need more aid until sales eventually recover.
Future of small business statistics
Many small business owners are looking on the bright side and predict high growth in the future. They have a lot of knowledge under their belt to take on new challenges.
49% of small business owners plan to increase staff and remodel or expand their business
48% of small business owners say there’s no need for a physical store
51% of business owners were interested in growing their business
30% of small business owners are somewhat confident in small business in the current political climate
65% of small business owners says that the worst of the pandemic is behind us
33% of small business owners say the economy’s health is good
55% of Americans say they dream of starting their own small business
64% of small business owners remain concerned about the impact of COVID-19 on their business
Three in four small business owners predict online sales will increase in 2021
57% of small businesses anticipate revenue increasing in 2021
43% of Gen Z business owners say the pandemic increased their desire to run a business
- Many business owners are optimistic for the future. With vaccines readily available in the U.S. and states reopening, small business owners are expecting sales to increase.
- Entrepreneurship is still a dream for many Americans. The difficulties brought on by COVID-19 haven’t deterred Americans from wanting to be their own boss.
- Business owners are planning for growth in the future. As sales improve for some, growth is essential to keep up.
Being a small business owner is no easy task. However, growing something you can call your own is one of the many rewards of owning a small business. The key to being agile is keeping a pulse on trends and statistics like these, which can help you predict and prepare for changes.
Sometimes, those trends forecast some rocky roads for the future. But despite the obstacles in your path, you can always find growth opportunities. Learn more about how small businesses can grow in a slow economy.
Take a look at some of our other popular small business resources below to help you run a better business.