Women were more than twice as likely to start a business during COVID-19 than men – just one of the findings unveiled 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. These guides discuss how small businesses are continuing to change after COVID.
The COVID-19 pandemic was one of the biggest threats to American small business owners in a century. With partial or complete shutdowns impacting the ability of some businesses to service their customers for more than a year, small business owners had to 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:
Businesses went digital, embraced government help
- The pandemic had a major impact on small businesses. Close to 44 percent of all small business owners said that they experienced a revenue or business loss due to COVID-19. More than half of all GenX and Baby Boomer owners said that they experienced a loss.
- Digital-savvy Gen Z-owned businesses managed the situation well, with only 17 percent citing a loss from COVID-19. This was likely due to the fact that more than 80 percent of Gen Z-owned businesses expect to get more than half of their revenue from digital sources like web, mobile, online delivery, social media by 2022. Only 33 percent of Baby Boomer-owned businesses said the same.
- Overall, close to half of all small business owners said they embraced more digital practices in response to COVID-19. This will contribute to 52 percent of all small businesses getting more than half of their revenues digitally by 2022, up from 42 percent in 2019.
- 56 percent 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
- Women were twice as likely to start a business during 2020 than men. This 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 because of 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. Men are twice as likely (11.3 percent to 5.6 percent) to buy into an existing business or franchise. Women (57 percent) are also more likely to start their businesses without a partner or partners than men (42 percent).
Small businesses remain optimistic after COVID
- When asked about the broader economy, 84 percent of small business owners said they are somewhat, very or extremely optimistic about a recovery.
- When asked about their own businesses, 94 percent expressed optimism about their recovery after COVID-19.
- 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 e-commerce businesses tend to be the most exposed, with 64 percent of those small businesses lacking insurance.
- 49 percent of small business respondents shared that PayPal is the most used product/service, followed by email and LinkedIn.
- 52 percent of respondents cited friends, family and colleagues as the most useful resource used for direction and business advice.
- 55 percent of small business owners expect to work from home in the next 12 months. Baby Boomers (65.5 percent) have higher expectations of working from home than any other generation. Gen Z (30 percent) expects to work more from an on-site location than any other generation, followed by Millennials (20.9 percent).
- 52 percent of respondents expect 50 percent of sales or greater to happen online by 2022 (up from 42 percent in 2019).
“Small business owners have recently faced one of the most challenging times seen in decades, yet they remain resilient, nimble and unstoppable,” said Guy Goldstein, CEO and co-founder of NEXT. “This entrepreneurial spirit is what drives NEXT’s dedication to providing small businesses with a more accessible, affordable and customized insurance experience. But we also want to be a resource on their journey to success, and we hope this guide will be a useful asset.”
“Starting your own business is incredibly rewarding but equally as challenging and even more so if you don’t have the proper resources or mentors to support you along the way,” said Kelly Dramberger, founder of Sweet Tea Catering in Houston, Texas. “COVID-19 was tough for the small business community; however, the entrepreneurial spirit cannot be broken. I am encouraged by the optimism we are seeing amongst so many entrepreneurs, women in particular, who have taken the past year as an opportunity to chase their dreams. NEXT’s Small Business Guide is a valuable resource for all aspiring entrepreneurs and something I would have found very useful early on in my career.”
The Definitive Guide to Starting Your Small Business, which includes expert advice from small business owners, subject matter experts in banking, payroll and insurance, along with data from the State of Small Business Survey, is available for download for free from the NEXT blog post. Full survey results from the State of Small Business Survey can be requested from firstname.lastname@example.org.
About NEXT Insurance:
NEXT Insurance is transforming small business insurance with simple, digital and affordable coverage tailored to the self-employed. Trusted by 250K business owners, NEXT offers policies that are easy to buy in 10 minutes or less and provides 24/7 access to Live Certificates of Insurance, Additional Insured, and more with no extra fees. NEXT utilizes AI and machine learning to simplify the purchasing process and drive down costs by up to 30 percent. Founded in 2016, the company is headquartered in Palo Alto, has received a total of $881 million in venture capital funding and has been recognized two consecutive years by Forbes Fintech 50, JMP Securities InsurTech 50 and Forbes Best StartUp Employers.