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There were 4.3 million new businesses created in 2020 — nearly 1 million more than were formed in 2019, according to U.S. Census Bureau data. But what has become of those businesses in 2021?
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Here’s a look at what the past year has meant for small businesses across the U.S.
The Pandemic Spurred the Need for More Healthcare Industry Small Businesses
An April survey conducted by Gusto found that among owners who started their businesses during the pandemic, healthcare and social assistance was the most popular industry, with 16% of new small businesses falling into this sector. Other popular categories were professional services (15.7%), food and beverage (15.5%), personal services (9%) and retail (7.3%).
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Many Small-Business Owners Feared They Would Not Survive the Year
An estimated 20% of new businesses that started in 2019 (pre-pandemic) failed within one year. But the pandemic has exacerbated the fail rate, with recent research estimating that 130,000 businesses above the norm closed in 2020, Gusto reported. And as of April, small-business owners were fearful that an even larger proportion of their businesses would close this year. Among all owners, 51% estimated that their business would fail within the year without additional government support.
“In 2020, everyone was home and everyone was supporting small business because the whole world was shut down, there were stimulus checks to help keep the economy moving and a lot of influential people were promoting small business survival on social media,” said Tricia and Hazel Arce, owners of The Toasted Mallow in Gilbert, Arizona. “This year, there hasn’t been much of that. There aren’t many programs to support small businesses and not much talk on keeping small businesses alive within the communities.”
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Adding to the difficulty many small businesses have faced are supply shortages and the inflated costs of goods.
“This past year we have struggled more than the year previous,” the Arces said. “We’ve had to increase prices on our products and on our shipping due to the price increase at the U.S. Postal Service and cost of goods. In 2020 we actually thrived, but in 2021 we are definitely head-deep in water due to the price increase on just about everything, from the boxes we use to the ingredients we use. A 50-pound bag of sugar was $19 in 2020 and now it’s $38. It’s been a struggle because when you’re a small business, you don’t get the …….
Source: https://www.gobankingrates.com/money/business/look-back-difficult-year-for-small-businesses/