Small business growth is on the rise.
U.S. entrepreneurs applied to start 5.4 million new enterprises last year for what the Biden administration called a “small business boom,” according to a White House report published Thursday.
Crediting emergency relief programs that delivered $450 billion to businesses, the administration said the sector saw 20 percent higher growth than any year on record, with data dating back to 1948. According to an April analysis of the Quarterly Census of Employment and Wages, during the third quarter of 2021, the number of total U.S. businesses was 7 percent above pre-pandemic levels, and 74 percent of all counties nationwide counted more shops, storefronts and other local establishments than before the Covid crisis.
Small businesses created 1.9 million jobs during 2021’s first three quarters, while new enterprises with fewer than 50 employees drove 49 percent of net job growth for firms of all sizes, the report said.
Those employment opportunities should grow in the months ahead, a January National Federation of Independent Businesses (NFIB) survey showed. Its survey of 1,504 small firms in retail, wholesale, manufacturing, finance, construction, agriculture and transportation showed that 26 percent planned to hire more in the following three months, and 47 percent were actively listing jobs.
“The record levels of Americans starting new businesses in 2021 is likely to enhance productivity in the years to come,” the administration wrote.
Shoppers show support
Consumers are spending more with small businesses in their communities. A March ICSC survey of more than 1,000 shoppers showed that 42 percent frequent small businesses more than they did pre-Covid, with more than half visiting local independent businesses at least once a week. Ninety-four percent say they regularly shop, spend at or use the services of small businesses.
“Although there has been a rise in e-commerce, pent up demand, supply chain issues, and other factors—including convenience—have driven consumers to brick-and-mortar stores, and small businesses are a key part of that,” ICSC spokesperson Stephanie Cegielski told Sourcing Journal. The council’s Small Business Consumer Survey found that 82 percent of consumers say having a physical location is important for small businesses, and 60 percent prefer to engage with small businesses in person.
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“So although shoppers may hear about a small business or shop online, that need for the in-person experience is still there and consumers are eager to frequent them,” Cegielski said. “Given the role small businesses play in building communities, it’s clear consumers value that in-person, face-to-face interaction when shopping and using their services.”
While footfall most frequently benefits local restaurants and bars (67 percent), along with stores that provide groceries or specialty foods and alcohol (50 percent), 33 percent of consumers said they shopped at stores that primarily sell apparel, footwear and accessories. Spending at small fashion boutiques is driven primarily by Gen Z shoppers, who make up 46 percent of their consumer base. Millennials (36 percent), Gen X (31 percent) and Baby Boomers (29 percent) also frequent neighborhood clothing stores.
“We’ve seen trends that show Gen Z is more focused on causes and values that align with what they personally believe, and small businesses tend to fall into that category,” Cegielski said. “We’re also seeing that boutique, local fashion retailers are quite popular among Gen Z. Overall, 67 percent of Gen Z respondents preferred that more small businesses open in their communities, rather than larger brands—suggesting a strong affinity for small businesses overall.”
All generations see value in spending with small businesses. More than half (52 percent) of all respondents said they want to keep their money local, while 49 percent said they’re swayed by the quality of goods and services. Convenience is a driver for 47 percent of consumers, while 46 percent said they prefer the prices and value of the products they purchase at small, local retail.
“Many small businesses offer more local, bespoke or harder-to-find items that aren’t necessarily stocked at larger retailers,” Cegielski said. Consumers also appreciate the personal element small businesses bring to shopping, “while larger retailers don’t always have the ability to provide a one-of-a-kind experience.”
“Each generation finds value in the products and services offered at these tenants which is why they continue to be a part of our daily lives,” ICSC president and CEO Tom McGee said, noting that small businesses tenants account for 70 percent of the retail marketplace. “Small business owners are innovators and creators at their core, delivering the products and services we depend on and making our neighborhoods, towns, and cities more vibrant places to live and work.” While small businesses were “among the hardest hit during the pandemic,” McGee said they are “making a strong comeback based on continued consumer demand.”
Cegielski said she was “surprised” to find that 68 percent of respondents cited the pandemic’s role in “increasing small business support.”
“We know Americans cherish and value small businesses, but the depth of that support is impressive,” she said.