Women are responsible for more than half of online microbusinesses started in the U.S. since the onset of the pandemic.
Black people and women have started more of these very small businesses during the pandemic than they did prior to it, according to GoDaddy’s Venture Forward initiative, which polled 4,000 online microbusiness owners in July. Nine out of 10 of these entrepreneurs have fewer than 10 employees. (NYSE: GDDY)
About 17% of all microbusinesses were started between March 2020 and July. Women-owned microbusinesses comprised 57% of new starts, up from 48% before March 2020, per Venture Forward. Black-owned microbusinesses made up 26% of those, a jump from 15% pre-pandemic.
Many of these microbusinesses were started in areas of the country with large Black populations, Venture Forward data released earlier this year showed, and stimulus checks often powered business creation.
More than 60% of those polled got their business off the ground with less than $5,000, and most funded their ventures with personal savings. One in 4 bring in at least $4,000 in monthly gross income.
Black and other women of color have been major drivers of new business growth during the Covid-19 pandemic, and they were more likely to start a business due to financial need. After 2020’s widespread racial justice protests and conversations, consumers have made more of an effort to support businesses owned by people of color, and large companies have committed to investing in Black-owned businesses.
Another noteworthy finding, given the exodus of women from the workforce: About one-quarter of microbusinesses overall are run by people who would otherwise be considered out of the workforce, like homemakers, retired or disabled people, or those who’ve been laid off, Venture Forward discovered.
One-third of microbusinesses started during the pandemic were launched by owners that fall under this umbrella, up from 22% pre-pandemic; in many cases, they were prompted by pandemic furloughs or layoffs. Seeking flexibility or hoping to turn a side hustle into their main source of income, women have turned to entrepreneurship for more control over their own schedules and to improve their financial opportunities.
Still, the spread of the Delta variant in recent months, lingering supply chain issues and widespread staffing shortages have continued to challenge women and Black business owners, many of whom are still financially strained due to the Covid crisis. Experts have said recovery is likely to take longer for these business owners; women entrepreneurs say additional tax breaks or grants would provide the most significant boost.
To be successful, more than 40% of these microbusiness entrepreneurs told Venture Forward access to capital is their greatest need from local governments; 38% said marketing help and 28% named tax incentives. Women owners were less likely than men to receive federal funding like PPP loans.
Although Venture Forward said optimism among microbusiness owners is stronger now than it was last year — Black and Hispanic businesses owners are most optimistic about their business outlooks — more than half of small business owners polled in the latest MetLife and U.S. Chamber of Commerce survey expect the small business climate to remain crippled by the pandemic for at least six months.
About 13% believe a return to normal is only three months away, while the same percentage are never counting a return to normal, reflecting uncertainty among these business owners.
Hiring continues to be a major pain point right now, according to the Chamber poll, which was conducted a month ago. Small business owners said it’s become more challenging to find candidates with the right skills and experience and to compete with bigger businesses in securing talent.
