Based on the U.S. Small Business Association’s (SBA) definition of “small businesses,” (independent businesses with fewer than 500 employees, there are 33.2 million small businesses in the country that account for 99.9% of all U.S. firms, according to U.S. Chamber of Commerce. Small businesses are clearly the lifeblood of the country’s economy, and looking even closer at each state, there are distinct areas where small businesses play a more central role.
In fact, a recent study conducted by Qrfy.com found that of all states, Florida has the highest concentration of small businesses, with 64% of businesses categorized as small businesses. The analysis, utilizing the most up-to-date data from the U.S. Census Bureau from 2021, determined the percentage of registered businesses with fewer than five employees for each state.
Out of a total of 616,961 registered establishments in Florida, 394,849 were identified as having fewer than five employees. The combined annual payroll for these small businesses in Florida amounted to $32,799,642,000, averaging approximately $83,068.82 per business.
Small Business Impact Spans the U.S.
Based on Qrfy.com’s analysis, New York secured the second position with 62.71% of its businesses falling into the small business category. Out of 535,758 registered establishments, 335,950 had fewer than five employees, accumulating an annual payroll of $33,618,837,000, averaging $100,070.95 per small business. Wyoming snagged the third spot, with 61.83% of its businesses classified as small businesses, out of a total of 22,474 registered establishments. The annual payroll for these small businesses in Wyoming summed up to $1,286,032,000, averaging $92,546.91 per business.
Montana and Colorado rounded up the top five, showcasing 61.54% and 60.93% of small businesses, respectively. The top 10 states in this study also included Utah, California, Idaho, Maine, and Alaska, all demonstrating a significant prevalence of small businesses.
“It is interesting to see the extent to which smaller businesses contribute to the overall number of businesses in each state, especially when they are competing with far larger companies in the same industries,” noted Marc Porcar, CEO of Qrfy.com. “A possible explanation behind the top 10 results could be the higher living costs of states like Florida and New York, which may encourage people to be more entrepreneurial in order to make a living. Hopefully, we will see more public figures released for subsequent years to see whether these trends continue at all.”
Conversely, Tennessee held the lowest position in the study, recording only 49.19% of all businesses having fewer than five registered employees out of 144,457 total registered establishments.
Because this research and analysis is based on 2021, Porcar noted that COVID-19 also could have been a significant factor. The end of the lockdown period “may have influenced people to start their own small businesses whilst working from home,” he explained.