“The resilience and determination among entrepreneurs in the face of adversity is truly inspiring,” said Jeremy Hartman, Vice President, Venture Forward at GoDaddy. “This new survey data shows the impact online microbusinesses can have on people and their communities, especially during difficult economic times.”
Notable takeaways from the survey of 4,000 online microbusiness owners in the U.S., 90% of whom has fewer than 10 employees, which was conducted from July 19 to 30:
- Black and female individuals started more microbusinesses during the pandemic: 17% of all existing microbusinesses were started in the last 16 months; Black-owned microbusinesses accounted for 26% of those new starts (from 15% before March 2020) and female-owned microbusinesses accounted for 57% of new starts (from 48% before March 2020).
- Increased optimism: 69% of entrepreneurs were optimistic about their business in July compared with only 53% expressing optimism at that time last year, up almost a third. Optimism among minority owners significantly exceeded the national average, with 84% of Black owners and 77% of Hispanic owners expressing optimism.
- Low upfront costs, high rewards: More than 60% of respondents jump-started their businesses with less than $5,000, with the vast majority of individuals funding from personal savings, and 1 in 4 microbusiness owners make at least $4,000 in monthly gross income.
- Employment status: Overall, 24% of microbusinesses are owned by people who would otherwise be classified as out of the workforce – laid off, students, retired, disabled or homemakers. Among microbusinesses started during the pandemic, 33% were started by owners who were not otherwise employed at the time, up from 22% of businesses started before the pandemic, much of this increase was due to people who had been furloughed or laid off.
- Support needed by microbusiness owners: 43% of microbusiness owners cited access to capital as the most important area of assistance they needed from their local governments to be successful. Marketing help was second at 38% and tax incentives were third at 28%. When asked about overall challenges to growth, 63% said they wanted help with marketing, 36% said they wanted better access to capital, 28% said they needed help getting online.
Microbusinesses help individuals and economies
GoDaddy Venture Forward is a multiyear research initiative that quantifies the impact online microbusinesses have on their local economies, providing a unique view into the attitudes, demographics, employment status, and revenue generation of microbusiness owners all over the country.
Working with economists and academics, Venture Forward has found that, on average, adding one microbusiness per 100 people raises the median income for every household in a community by $485, and each of these entrepreneurs tends to create two new jobs.
“We see from this data how some individuals form these businesses out of necessity and the ability to go quickly from idea to income can make all the difference to them,” Hartman said. “This is an economic option that didn’t exist in the past. We’re proud to give voice to this unique demographic of everyday entrepreneurs and empower policy makers with data to support them.”
Surge in entrepreneurship within Black community
The past year saw a spike in Black-owned microbusinesses, with new starts among survey respondents nearly doubling to 26% in July from 15% at the same time a year ago. Of note, Black microbusiness owners are most likely to be digital-only, and to run their business as a source of supplemental income in comparison to other demographic groups. The study also found that 71% of Black business owners are solopreneurs, compared to 58% of all other groups, and that more than 80% of Black business owners hope to make their microbusiness a main source of income, compared to 67% of all other groups.
Financial assistance continues to be a challenge for Black, Hispanic and women microbusiness owners
While the research shows that America’s microbusiness founders are an increasingly diverse group, people of color and women continue to have a tougher time getting financial assistance.
Overall, 22% of respondents applied for federal funding such as PPP assistance during the pandemic and 80% reported being approved, while 27% of Black owners applied but only 56% said they were approved. Female owners were 10 percentage points less likely than men to report being approved (75% vs 85%).
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