Every year, Guidant surveys America’s hardworking and resilient small business owners to learn who they are, their lives as business owners, their future plans — and how their business has weathered current affairs.
Then, we gather this information into our annual Small Business Trends report to help us paint a landscape of small businesses in America. Here’s a look at our current small business trends for 2023:
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What inspires Americans to become business owners — and motivates them to “make the leap“? Our report shows that business owners primarily went into business because they were “ready to be their own boss” (28%) and overall dissatisfaction with corporate America (23%). These motivations show more people are ready to break away from a corporate lifestyle and take control of their own career path.
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Many were inspired to become business owners to pursue their passions (13%). In contrast, others reported they were motivated to start a business because they were laid off (10%) — and not ready to retire (10%).
A smaller number of entrepreneurs leaped into small business ownership because an opportunity presented itself (9%), gained inspiration for a new business idea (4%), or experienced a life event, such as a divorce or death (2%).
Many consider the Millennial generation to be highly entrepreneurial. But the gap between Millennial business owners and earlier generations continues to be steep. According to our survey, Baby Boomers (39.63%) and Gen X (47.20%) make up the majority of small business owners. Millennials made up nearly 13 percent (12.92%) of our survey sample.
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While the generation gap between business owners is still significant, Millennial business owners increased by six percent from last year ‘s Small Business Trends study, showing promising growth. And we may see more Millennials hop into the business scene within the next several years. According to Bloomberg, the average age to start a business is 35 years old.
Baby Boomer business owners, on the other hand, have slightly decreased from last year (-5.95%). The Great Retirement may account for this decrease as roughly 28.6 million Baby Boomers left the job market and retired in the third quarter of 2020 alone.
A recent study from the Pew Research Center also revealed that COVID-19 has contributed to the rapid surge of Boomers leaving the labor market. Since the outbreak, the number of Boomer-aged retirees has increased by around 1.1 million.
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The Silent Generation, also known as the “Post War” generation born between 1928-1946, accounts for less than one percent (0.25%) of small business owners in our report.
Small businesses drive the American economy — playing a crucial role in economic growth and providing job opportunities. Even with an emphasis on diversity in the business world, including the increased efforts of representing women in leadership roles and Women Business Collaborative initiatives, more small businesses are still owned by men.
In our survey, women made up 25 percent of small business owners this year. Men continue to hold a significant presence in the small business landscape, accounting for 75 percent of small business owners. Less than one percent chose to identify as a gender other than male or female (0.37%).
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The majority of survey participants identified as White or Caucasian (76%). Other ethnic groups, including “Black or African American” (5.19%), “Asian or Asian-American” (4.83%), and “Hispanic, Latino or Spanish Origin” (4.70%) were represented at roughly five percent each.
Despite progress in diversity among small business owners since last year’s Small Business Trends study, there is still a significant gap — but the gap is narrowing.
According to Forbes Advisor, women own up to 43 percent of small businesses. Racial minorities own around 19 percent of small businesses of which about 13 percent were Hispanic small business owners.
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New data also shows more small businesses are embracing diversity, equity, and inclusion (DE&I) in the workplace. Over 80 percent of small business owners are making DE&I a priority, and over 50 percent said that diversity plays a critical role in their business. With this data, we hope to see the diversity of business owners continue to improve.
Guidant strives to empower entrepreneurs and small business owners from underrepresented communities, including people of color, women, and other marginalized groups. We believe that promoting diversity in small business is critical for the future and we hope to see more diverse representation in the years ahead.
In the past two years, there has been a shift away from traditional big political parties among small business owners. Both Democratic-affiliated (-10%) and Republican-affiliated (-9%) small business owners have decreased by roughly 10 percent since 2021.
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Business owners who affiliate as “Libertarian” increased by 14 percent — and the number of business owners who feel disconnected from political parties has risen by 22 percent.
These shifts in affiliation suggest that many small business owners are discontent with the current political landscape, feeling that their values or needs are not being addressed in the system.
How many small business owners have a degree? According to our study, most business owners have a bachelor’s degree (41%) with a significant portion holding a Master’s degree (29%). Ten percent of business owners surveyed hold an associate, while under five percent earned a doctorate (4%). Our study findings indicate that education plays a significant role in small business ownership, as a majority of business owners hold a bachelor’s or master’s degree.
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Today’s small business owners face a challenging business landscape, marked by economic uncertainty and a rapidly changing political climate. Despite these difficulties, many business owners are paving the way to success — whether by starting a new franchise, purchasing an existing business, or launching a business from scratch.
From our study, many small business owners (33%) purchased an existing independent business, taking advantage of an established business and a ready-made customer base. A smaller amount of small business owners (21%) started from scratch, showing a decrease of 23 percent from last year’s study.
With inflation driving up the costs of goods and services, starting a business in 2023 is certainly more expensive than previous years. Entrepreneurs and aspiring business owners also fear a looming or ongoing recession, which can make many hesitant to “make the leap” into business ownership.
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Considering these economic challenges, it’s not surprising that there are fewer small business owners starting from scratch this year. Still, many small business owners continue to adapt and thrive in a turbulent economic climate.
In recent years, franchise ownership has become more popular. The proven business model, existing loyal customer base, ongoing support, and training are especially attractive for aspiring small business owners ready to make the leap.
The popularity of franchising has risen, with the number of franchisees growing by approximately 12 percent since last year. Out of the respondents surveyed, franchisees made up 46 percent of small businesses — and most franchisees chose to start a new franchise location (35%) over purchasing an existing franchise (11%).
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Small business industries are always evolving to meet the needs of the market. In 2023, the top small business industries have shifted. Retail continues to be the largest small business industry from our segment, making up 18 percent of small businesses. The Food and Restaurant (12%) sector maintained its position as the second largest industry.
Last year, the Business Services sector held third place in our segment with Health, Beauty and Fitness Services and Commercial Services following in fourth and fifth place. The
The economy is a crucial aspect of any business, and small businesses are no exception. Considered the backbone of the American economy, small businesses are often the first to experience the effects of economic changes, whether positive or negative.
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Out of the surveyed small business owners in our segment, nearly half reported feeling that the U.S. economy is “going into a long-term recession” (48%) — whereas only 19 percent of small business owners don’t believe we’re headed toward a long-term recession.
Inflation is taking a toll on small businesses — affecting everything from costs to profitability. According to our study, most small business owners reported increased prices (27%), loss of revenue (15%), and increased wages (13%) as the top three ways the economy has impacted their businesses. Six percent of surveyed respondents also suffered a loss of inventory due to supply chain issues.
A small portion of business owners responded to inflationary pressures by cutting their own wages (7%) and reducing their budgets (6%) to mitigate the impacts of inflation.
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Amid an economic slump, a few small businesses experienced growth in revenue (6%) and even hired new employees (4%) to expand their workforces. Others reported “no significant effect” (4%).
Not all small businesses faced the same level of impact from inflation; A minority of respondents faced more devastating impacts. A small percentage of business owners reported laying off employees (2%), while another two percent had to close their doors temporarily. Sadly, a few small businesses were forced to permanently close (1%) and cut employee wages (1%).
In spite of recent economic challenges, many small businesses continued to thrive. A majority of business owners (66%) reported profitability, indicating that many business owners have found ways to maintain or even increase profits in the face of inflation.
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The other 34 percent of small business owners stated that they were currently unprofitable. Inflation can
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