Small businesses are the backbone of the global economy. Think 90% of firms that account for more than 50% of employment, according to the World Bank. Those numbers were expected to keep growing, prior to the pandemic. Just look at how the ranks of women-owned businesses in the U.S. alone increased 21% over the past five years, adding $1.9 trillion to the GDP and employing 9.4 million workers, according to a report from AMEX.
This of course was before COVID-19 took hold worldwide earlier this year. And while many businesses were forced to close temporarily and lay off or furlough workers, women were disproportionately affected by these job losses. Underrepresented founders were also more heavily impacted and received less funding to maintain their businesses.
With such massive potential to the U.S. and the global economy at stake, Fast Company and Inc. were eager to learn about the challenges and opportunities that lay ahead for these business owners. In our third annual State of Entrepreneurship Survey, we polled 391 entrepreneurs. In years past, we focused on women. This year’s report now includes male and nonbinary founders from all over the world, although 82.6% are running U.S.-based firms. And while the majority (57.8%) have fewer than 10 employees, their companies range from sole proprietorships to venture-backed startups across 28 industry sectors from advertising and retail to real estate and utilities.
The bulk (80%) of respondents reported bootstrapping their businesses with their own savings, but the good news was that 67.9% indicated they were profitable in 2019. Even better, 65% have been able to stay open, 63% didn’t have to do furloughs or layoffs, and over 40% of founders said their revenue had stayed the same or increased during the pandemic.
But that doesn’t mean there weren’t challenges. Eighty-one percent of founders said they cut unnecessary expenses and 39% deferred or reduced executive pay to make ends meet. This has taken a toll, with nearly half (46.9%) reporting that they’re working more hours than before the pandemic.
Among the issues keeping them up at night (44% were suffering insomnia and 62% were experiencing anxiety), 43.92% said they were concerned about maintaining morale among employees and 40.20% wanted to ensure employees stayed productive. Still concerning, but to a lesser degree was employee retention, diversity and inclusion efforts, and managing those who were sick or had sick family members.
On a larger scale, these founders were looking at the broader geopolitical landscape and expressed concern about a range of issues including:
- Economy (58.82%)
- Education (49.58%)
- Healthcare (47.04%)
- Climate change (46.07%)
- Distribution of wealth in the U.S. (33.80%)
With the uncertainty of the pandemic still reverberating, all these concerns add to the stress that an overwhelming majority (81%) of founders say they are feeling. Forty-eight percent went so far as to say they were just exhausted.
But there is another small bright spot: Nearly half (46%) say their employees are about as productive working remotely and they themselves are also feeling more productive in this environment. This may be because, among those founders who were juggling managing their companies with homeschooling children, their spouses were putting in just as much effort in caregiving.