Women were more than twice as likely to start a business during COVID-19 than men – just one of the findings unveiled today recently from a study commissioned by NEXT Insurance, the leading digital insurtech company transforming small business insurance. The survey, conducted by interviewing more than 500 small business owners of various ages, gender, industries and geographic locations, was highlighted as part of the NEXT’s Small Business Guide: How to Thrive from Day One.
The COVID-19 pandemic and its corresponding economic and human health impacts posed one of the biggest threats to American small business owners in a century. With partial or complete regional shutdowns impacting the ability of some businesses to service their customers for more than a year, small business owners were forced to adapt and find new ways to generate revenue, secure financing and make ends meet. “The State of Small Business Survey” showed how small business owners adapted to COVID-19 restrictions, while also uncovering some longer-term lessons, gender and generational trends. Some of the findings include:
COVID-19 Forced Businesses to Go Digital, Embrace Government Assistance
• The pandemic had a major impact on small business with close to 44% of all small business owners saying they experienced a revenue or business loss due to COVID-19, with more than half of all GenX and Baby Boomer owners saying they experienced a loss.
• Digital-savvy Gen Z-owned businesses fared best with only 17% of those businesses citing a loss from COVID-19. This was likely due to the fact that more than 80% of Gen Z-owned businesses expect to get more than half of their revenue from digital (web, mobile, online delivery, social media) by 2022 versus only 33% of Baby Boomer-owned businesses.
• Overall, close to half of all small business owners said they embraced more digital practices in response to COVID-19 which will contribute to 52% of all small businesses getting more than half of their revenues digitally by 2022, up from 42% in 2019.
• More than half (56%) of all small business owners took advantage of the Paycheck Protection Program (PPP) as a way to supplement their revenue and pay key expenses.
Women Are Starting Businesses More Than Men, Often from Scratch and by Themselves
• Women were more than twice as likely to start a business during 2020 than men, which is noteworthy in a year when new business applications reached an all-time high of 4.35 million according to Census.gov. This was likely in part driven by the 2.3 million women who left the labor force between February 2020 and January 2021 due to the economic, health and childcare impacts of COVID-19 according to the National Women’s Law Center.
• Data suggests women are more likely to start a business from scratch than men, with men twice as likely (11.3% to 5.6%) to buy into an existing business or franchise. Women (57%) are also more likely to start their businesses without a partner or partners than men (42%).
Small Business Owners are Bullish on Their Businesses and the Broader Economy
• When asked about the broader economy, 84% of small business owners said they are somewhat, very or extremely optimistic about a recovery.
• When asked about their own businesses, 94% expressed optimism about a recovery.
• Gen Z is the most optimistic generation and the only generation that was more optimistic about the broader economy than their own business.
Other Interesting Findings
• Retail and ecommerce businesses tend to be the most exposed in terms of lack of insurance with 64% of those small businesses without insurance.
• Nearly half (49%) of small business respondents shared that PayPal is the most used product/service, followed by email and LinkedIn.
• 52% of respondents cited friends, family and colleagues as the most useful resource used for direction and business advice.
• More than half (55%) of small business owners expect to work from home in the next 12 months. Baby Boomers (65.5%) have higher expectations of working from home than any other generation. Gen Z (30%) expects to work more from an on site location than any other generation, followed by Millennials (20.9%).
