Over the past year and a half, the coronavirus pandemic has changed the way millions of Americans view work, prompting a national labor shortage and waves of resignations across the country. Some have even taken this opportunity to leave the job market entirely and start their own companies, according to new findings.
Web hosting company GoDaddy found in its latest survey that 17% of all microbusinesses in the U.S. today were started in the last 16 months. Of this percentage, 26% were started by Black entrepreneurs (up from 15% before March 2020) and 57% by women entrepreneurs (up from 48% before March 2020).
Those outside of the traditional workforce make up a significant portion of microbusiness owners
Nearly a quarter (24%) of microbusinesses were started by laid-off employees, students, retirees, people with disabilities and homemakers — people who may not have participated in the traditional labor market otherwise — according to the GoDaddy survey. In addition, a third of microbusinesses that got their start during the pandemic were owned by people who were not employed at the time, mainly from being laid off or furloughed during the health crisis.
The country also saw an increase in Black-owned microbusinesses during the pandemic, up to 26% in July 2021 from 15% in the previous year. Black microbusiness owners were also more likely than all other groups to:
- Be solopreneurs (71% vs. 58% of overall respondents)
- Want to make their microbusinesses a main source of income (over 80% vs. 67% of overall respondents)
And despite the challenges facing the nation in the months ahead, including labor shortages and supply chain issues, the majority of respondents (69%) remain optimistic about their business prospects, compared to last year’s 53%. These sentiments are even higher for business owners of color — 84% of Black owners and 77% of Latino owners are hopeful for the future.
Microbusinesses are thriving, but many still lack access to funding
At first look, U.S. microbusinesses seem to be thriving. Although more than 60% of microbusinesses started with less than $5,000 — with the majority of these individuals using their personal savings to do so — a quarter of them now make at least $4,000 in gross income a month.
However, microbusiness owners still report challenges with financing their business operations. Many small businesses were severely impacted by the first round of economic shutdowns across the country, and perhaps as a result, 43% of microbusiness owners say that access to capital is the biggest way that their local governments can support their success right now. Coming in second was marketing help (38%), while tax incentives trailed behind in third (28%).
People of color and women are experiencing even more obstacles with securing financial assistance for their microbusinesses during this time: A different survey from Goldman Sachs found that only 2 in 10 Black small business owners are very confident in their ability to access emergency capital if needed, compared to 31% of small business owners overall.
These figures reflect the actual disparity shown in GoDaddy's findings:
- 27% of Black owners applied for federal funding during the pandemic, but only 56% of that group were approved (compared to 22% of overall respondents who applied and 80% who were approved)
- Female owners were less likely than their male counterparts to get approved for federal funding (75% vs. 85%)
Methodology: GoDaddy conducted a survey of 4,000 American online microbusiness owners from July 19 to July 30, 2021. Of the survey sample, 90% have fewer than 10 employees.