The State of Small Business in America Post-COVID-19: Digital-First, Female-Owned and Optimistic About the Economy
Women were more than twice as likely to start a business during COVID-19 than men – just one of the findings unveiled today from a study commissioned by NEXT Insurance, a digital insurtech company. The survey, conducted by interviewing more than 500 small business owners of various ages, gender, industries and geographic locations, was highlighted as part of the NEXT’s Small Business Guide: How to Thrive from Day One released today.
The COVID-19 pandemic and its corresponding economic and human health impacts posed the biggest threat to American small business owners in a century. With partial or complete regional shutdowns impacting the ability of most businesses to service their customers for more than a year starting in March 2020, small business owners were forced to adapt and find new ways to generate revenue, secure financing and make ends meet. The State of Small Business Survey showed how small business owners adapted to COVID-19 restrictions, while also uncovering some longer-term gender and generational trends. Some of the findings include:
COVID-19 Forced Businesses to Go Digital, Embrace Government Assistance
The pandemic had a major impact on small business with close to 44 per cent of all small business owners saying they experienced a revenue or business loss due to COVID-19, with more than half of all GenX and Baby Boomer owners saying they experienced a loss.
Digital-savvy Gen Z-owned businesses fared best with only 17 per cent of those businesses citing a loss from COVID19. This was likely due to the fact that more than 80 per cent of Gen Z-owned businesses expect to get more than half of their revenue from digital (web, mobile, online delivery, social media) by 2022 versus only 33 per cent of Baby Boomer-owned businesses.
Overall, close to half of all small business owners said they embraced more digital practices in response to COVID-19 which will contribute to 52 per cent of all small businesses getting more than half of their revenues digitally by 2022, up from 42 per cent in 2019.
More than half (56 per cent) of all small business owners took advantage of the Paycheck Protection Program (PPP) as a way to supplement their revenue and pay key expenses.
Women Are Starting Businesses More Than Men, Often from Scratch and By Themselves
Women were more than twice as likely to start a business during 2020 than men, which is noteworthy in a year when new business applications reached an all-time high of 4.35 million according to Census.gov. This was likely in part driven by the 2.3 million women who left the labor force between February 2020 and January 2021 due to the economic, health and childcare impacts of COVID-19 according to the National Women’s Law Center.
Women are more likely to start a business from scratch than men, with men twice as likely (11.3 per cent to 5.6 per cent) to buy into an existing business or franchise. Women (57 per cent) are also more likely to start their businesses without a partner or partners than men (42 per cent).
Small Business Owners are Bullish on Their Businesses and the Broader Economy
When asked about the broader economy, 84 per cent of small business owners said they are somewhat, very or extremely optimistic about a recovery.
When asked about their own businesses, 94 per cent expressed optimism about a recovery.
Gen Z is the most optimistic generation and the only generation that was more optimistic about the broader economy than their own business.
Other Interesting Findings:
Retail and e-commerce businesses tend to be the most exposed in terms of lack of insurance with 64 per cent of those small businesses without insurance.
Nearly half (49 per cent) of small business respondents shared that PayPal is the most used product/service, followed by email and LinkedIn.
52 per cent of respondents cited friends, family and colleagues as the most useful resource used for direction and business advice.
“Small businesses faced the most challenging year they have seen in decades in 2020 showing how resilient they can be in the face of adversity,” said Guy Goldstein, CEO and co-founder of NEXT. “Despite COVID-19, we saw more small business starts in 2020 than any year in recorded history in the U.S., proving entrepreneurship is alive and well, and that the next generation of small business owners is ready to lead an economic recovery. We commissioned the State of Small Business Survey and released a small business startup guide to help this new generation of entrepreneurs learn from the experiences of small business owners who have been on the journey on which they are about to embark.”
“Starting your own business is incredibly rewarding but equally as challenging and even more so if you don’t have the proper resources or mentors to support you along the way,” said Kelly Dramberger, founder of Sweet Tea Catering in Houston, Texas. “COVID-19 was tough for the small business community; however, the entrepreneurial spirit cannot be broken. I am encouraged by the optimism we are seeing amongst so many entrepreneurs, women in particular, who have taken the past year as an opportunity to chase their dreams. NEXT’s Small Business Guide is a valuable resource for all aspiring entrepreneurs and something I would have found very useful early on in my career.”