2021 Trends in U.S. Small Businesses

This year, a nationwide survey of small business owners was conducted by the Small Business Trends Alliance (SBTA) in conjunction with Guidant Financial. The study has produced a wealth of data indicating some unexpected trends across the small business economic subsector. An abundance of interesting data from the survey report represents 2021 operational, financing, management, marketing, cutbacks, tech, growth trends, COVID effects, and more. The survey reveals some surprising statistics that serve to characterize small business owners’ decision-making and future planning.

2021 Small Business Trends and Indicators for 2022

Here are some statistics from Guidant’s 2021 Small Business Trends survey reflecting current small business trends and what they may indicate for the coming year. For increased insight in developing your rationale, it may help to consider this information during your strategic business planning for 2022.

Revenue Losses and Cutbacks

The sweeping effects of COVID-19 on the small business economy are unprecedented. The Small Business Trends survey discovered some unexpected insights into small business ownership.
• 23% of survey respondents said their business lost revenues during the pandemic.
• 6% of respondents reported that they experienced increased revenues.
• 11% of the business owners said they have reduced their operating budgets.
• 11% of the respondents said they temporarily shut down their business.
• 10% of the small business owners said they cut their own incomes during the pandemic.
• Over 6% of companies furloughed employees and 5% ordered layoffs of workers.
• There was a 19% decline in the total number of profitable businesses from 82% to 63%.
• 78% of small business owners say they expect to stay in business after the pandemic.
• Just 4% say they expect that their businesses will not survive the pandemic.

Optimism of Small Business Owners for 2022 and Long-term

The new federal stimulus act promises to continue helping U.S. small businesses stay afloat through the remaining pandemic-related economic challenges. This is likely responsible in significant part for the overall positive outlook business owners express regarding the future of their companies beyond the pandemic:

• 61% of small business owners said they received relief through the Paycheck Protection Program (PPP), or the Economic Injury Disaster Loans (EIDL), or both.
• 49% of business owners said they are fairly confident or very confident in the economic future of their companies.
• 34% of owners said they are not confident or have a strong lack of confidence.
• 17% of the owners did not offer an estimate of their confidence level.

Small Businesses Time in Operation

How long have existing small businesses been in operation by 2021?
• 31% of owners said they have been operating their company for at least 10 years.
• 19% of owners said they have been in business for one year or less.
• 19% of owners said they have been in business between 2 to 3 years.

Most Common Startup Funding Methods

What are the most frequently used resources for financing small business startups in the United States?

• 39% of owners said they used cash to fund the startup of their small business.
• 20% of owners said they used Rollovers for Business Startups (ROBS), which are 401(k) business financing to use cash to start their small business debt-free.
• 10% of owners said they received financial assistance from family and friends to start their businesses.
• 9% of owners said they used SBA loans and lines of credit to fund their startups.

How Many Employees Do U.S. Small Businesses Employ?

How big are small businesses in the United States, in terms of staff size?

• 20% of US American small businesses included in the survey are owned and operated by solo entrepreneurs without any employees.
• 44% of the businesses have from 2 to 5 employees, which means this is the most common staff size for small businesses in the survey.
• 17% of the business owners said their companies employ from 6 to 10 people.
• Just 1% of small business survey respondents employ more than 100 employees.

Who Owns US American Small Businesses in 2021?

Women in ownership of US small businesses have been increasing in numbers over the years:

• 32% of US small businesses are owned by women in 2021. That total is up 13% this year, the largest increase in recent years,
• The vast majority of small businesses are owned by men (68%).

Which generations own the majority of small businesses?

The ratio of owners by gender has shifted away from dominance by Baby Boomers over recent years. Currently, ownership of small businesses is:
• Gen X 46%
• Baby Boomers 41%
• Millennials 13%
• Gen Z 1%

Major Challenges for Business Owners in 2020

Of course, the global coronavirus pandemic was the most widespread and impactful challenge of 2020. Some of the following issues owners reported are directly related to the accompanying economic crisis brought on by the shutdown due to COVID-19. Other issues had been developing over recent years:

• 23% of business owners said insufficient capital or cash flow continues to be their most serious challenge.
• Over the past several years, talent recruiting and retention has been continuously reported as one of the top two most common issues for small businesses. 19% listed it as a major concern this year.
• 15% said that marketing and advertising is a serious problem for them (a 7% increase).
• 20% more small business owners than in 2019 said providing or managing employee benefits has been a challenge over the past year, for a total of 8%.

2022 Growth Plans for Small Businesses

Even with the pandemic, most US small business owners (51%) say that growing their business is their top focus. 30% say their priority is sustaining their current level of business. Just 9% of participants in the 2021 survey said they are interested in selling their companies.

The Future of US American Small Business

Small business owners in 2021 have ambitious plans for growing their businesses and/or making significant positive changes over the next year.

• 49% of company owners are planning to increase staff size and either remodel or expand their business.
• 55% plan to shift along with societal changes that necessitate more digital marketing.
• 30% plan to spend on traditional marketing.
• 27% of business owners said they will invest in their company’s IT infrastructure.

Biggest Topics of Interest for Small Business Owners in 2021

When small business owners were asked which topics were the highest priority for them, their responses ranked in this order:
1. Business taxes
2. Issues related to COVID-19
3. Healthcare
4. Economic relief
5. Interest rates

Conclusion: U.S. Small Businesses are Highly Resilient

It certainly stands out from the data that only 63% of the survey respondents’ businesses were profitable in 2020. That number plunged from 82% just a year earlier. Yet, 78% said they expect their companies to remain open through and beyond the pandemic. Unfortunately, 4% do expect their businesses to close permanently due to the 2020 crisis.
So, the great story that unfolds in the 2021 survey data appears to be about most small business owners enduring a year of astoundingly adverse economic and operating conditions. It’s further about the US American small business owners retaining extraordinary optimism and deep resolve in pursuing their entrepreneurial vision.

Overall, the 2020-2022 snapshot of the US small business subsector is a picture of an amazingly resilient segment of the national economy. It’s driven by a collective positive force that has just proven to match the worst of attacks on its future. US small business owners have proven over these two years that they can confront seemingly overwhelming individual challenges while strengthening the economy around them. So, the headline appears to be that US American small business has validated their durability as the anchor of the larger US economy.


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