Small Business Loans During The Pandemic – Each year, Guiding surveys America’s hard-working and resilient small business owners about who they are, their lives as business owners, their plans for the future — and how their business has impacted current affairs.
Then, we combine this information into our annual Small Business Trends Report to help paint the landscape of America’s small business. Check out our current small business trends for 2023 here:
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What motivates Americans to become business owners – and motivates them to “make the leap”? Our report shows that business owners go into business primarily because they are “ready to be their own boss” (28%) and overall dissatisfaction with corporate America (23%). These motivations show that many people are ready to break away from the corporate lifestyle and take control of their own career paths.
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Many were driven to own a business because of their passion (13%). In contrast, others reported that they were motivated to start a business because they (10%) – and were not ready to retire (10%).
A small number of entrepreneurs jumped into small business ownership because an opportunity presented itself (9%), received inspiration for a new business idea (4%), or experienced a life event such as a divorce or death (2%).
Many consider the millennial generation to be highly entrepreneurial. But the gap between millennial business owners and previous generations continues to widen. According to our survey, Baby Boomers (39.63%) and Gen X (47.20%) own the majority of small businesses. Millennials made up about 13 percent (12.92%) of our survey sample.
The generation gap among business owners is still significant, with millennial business owners up six percent from last year’s Small Business Trends Study, showing promising growth. And we may see more millennials flood the business scene over the next few years. According to Bloomberg, the average age to start a business is 35.
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Baby Boomer business owners, on the other hand, decreased slightly (-5.95%) compared to last year. The Great Retirement may account for this decline as approximately 28.6 million baby boomers left the job market and retired in the third quarter of 2020 alone.
A recent study by the Pew Research Center also found that Covid-19 contributed to a rapid increase in boomers leaving the labor market. Since the disaster, the number of boomer-age retirees has increased by about 1.1 million.
The Silent Generation, also known as the “postwar” generation born between 1928-1946, makes up less than one percent (0.25%) of the small business owners in our report.
Small businesses drive the U.S. economy – playing a critical role in economic growth and job creation. Despite increased efforts to represent women in leadership roles and an emphasis on diversity in the business world, including women’s business support initiatives, more and more small businesses are still owned by men.
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In our survey, women own 25 percent of small businesses this year. Men continue to be a significant presence in the small business landscape, with 75 percent of small business owners. Less than one percent chose to identify as a gender other than male or female (0.37%).
The majority of survey participants identified as white or Caucasian (76%). Other ethnic groups, including “Black or African American” (5.19%), “Asian or Asian-American” (4.83%), and “Hispanic, Latino, or Spanish origin” (4.70%) each had about five percent representation.
Despite progress in diversity among small business owners since last year’s Small Business Trends Study, there’s still a significant gap — but the gap is narrowing.
According to Forbes Advisors, up to 43 percent of small businesses are owned by women. About 19 percent of small businesses were owned by ethnic minorities, including about 13 percent of Hispanic small business owners.
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New data shows more small businesses are embracing diversity, equity and inclusion (DE&I) in the workplace. More than 80 percent of small business owners prioritize DE&I, and more than 50 percent say diversity plays an important role in their business. With this data, we expect to see continued improvement in the diversity of business owners.
Guidant strives to empower entrepreneurs and small business owners from underserved communities, including people of color, women and other marginalized groups. We believe that promoting diversity in small businesses is important for the future and we hope to see more diverse representation in the coming years.
Over the past two years, small businessmen have been moving away from traditional major political parties. Both Democratic-affiliated (-10%) and Republican-affiliated (-9%) small business owners declined nearly 10 percent from 2021.
Business owners identifying as “libertarian” increased by 14 percent — and the number of business owners who felt disconnected from political parties increased by 22 percent.
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These changes in affiliation indicate that many small business owners are dissatisfied with the current political landscape, feeling that their values or needs are not being addressed in the system.
Despite this political shift, most small business owners still identify as “Republican” (42%), while 19 percent identify as “Democrat.”
How many small business owners have degrees? According to our survey, most business owners have a bachelor’s degree (41%) and a significant portion have a master’s degree (29%). Ten percent of business owners surveyed have an associate’s degree, while less than five percent have earned a doctorate (4%). Our research findings indicate that education plays an important role in small business ownership, as most business owners hold a bachelor’s or master’s degree.
Today’s small business owners face a challenging business landscape characterized by economic uncertainty and a rapidly changing political environment. Despite these difficulties, many business owners are forging a path to success – by starting a new franchise, buying an existing business, or starting a business from scratch.
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From our research, many small business owners (33%) bought an existing independent business with the benefit of an established business and a ready customer base. A smaller proportion of small business owners (21%) started from scratch, down from 23 percent in last year’s study.
Since inflation drives up the cost of goods and services, starting a business in 2023 is definitely more expensive than in previous years. Entrepreneurs and aspiring business owners also fear a growing or ongoing recession, which can make many hesitant to take the “leap” into business ownership.
Given these economic challenges, it’s not surprising that there are fewer small business owners starting from scratch this year. Still, many small business owners continue to adapt and thrive in a turbulent economic environment.
In recent years, franchise ownership has become more popular. The proven business model, existing loyal customer base, ongoing support, and training are especially attractive to small business owners.
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Franchising has grown in popularity, with the number of franchisees up nearly 12 percent since last year. Among respondents surveyed, franchises made up 46 percent of small businesses – and most franchisees chose to open a new franchise location (35%) rather than purchase an existing franchise (11%).
Small businesses are always evolving to meet market demands. In 2023, the top small business industries have shifted. Retail continues to be the largest small business industry from our category, making up 18 percent of small businesses. The food and restaurant (12%) sector maintained its position as the second largest industry.
It ranks fifth this year at seven percent. The rest of the top small business industries follow closely
Last year, the business services sector ranked third in our category with health, beauty and fitness services and business services fourth and fifth respectively. The
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Economics is an important aspect of any business and small businesses are no exception. Considered the backbone of the American economy, small businesses are often the first to feel the effects of economic change, whether positive or negative.
So, are we in recession or recovery? How do small business owners feel about today’s economy?
Among small business owners surveyed in our segment, nearly half feel the U.S. economy is “heading into a prolonged recession” (48%) — while only 19 percent of small business owners don’t believe we’re heading into a recession. Towards a long-term recession.
Inflation is affecting small businesses – affecting everything from costs to profits. According to our survey, most small business owners reported increased prices (27%), decreased revenue (15%), and increased wages (13%) as the top three ways the economy has affected their business. Six percent of surveyed respondents also experienced inventory losses due to supply chain issues.
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A small proportion of business owners responded to inflationary pressures by reducing their own wages (7%) and budgets (6%) to reduce the impact of inflation.
During the economic downturn, some small businesses saw revenue growth (6%) and hired new workers to expand their workforce (4%). Others reported “no significant effect” (4%).
Not all small businesses experience the same level of impact from inflation; A minority of respondents experienced more devastating effects. A small percentage of business owners laid off employees (2%), another two percent had to temporarily close their doors. Unfortunately, some small businesses are forced to close permanently (1%) and cut wages for employees