After two record-breaking years of new business creation, Intuit QuickBooks forecasts the trend will persist in 2022, predicting up to 17 million new small businesses to be formed. The COVID-19 pandemic continues to influence how Americans want to work, with an overwhelming 83% of people saying it has accelerated their plans to start a business. These findings and more are highlighted in the QuickBooks New Business Insights report, based on a recent survey of 8,000 U.S. employees commissioned by Intuit (NASDAQ: INTU), the global technology platform that makes QuickBooks, TurboTax, Mint, Credit Karma, and Mailchimp.
The report’s findings underscore the importance of small businesses to the overall economy and consumers’ ongoing appetite to support them as we head into 2022.
Small businesses are driving the economy and job creation. More than 8 in 10 people (86%) said that small businesses are crucial to the economy. And of the projected 17 million new businesses expected to start in 2022, an estimated 5.6 million will hire employees.This projection, based on the U.S. Census Bureau data of Employer Identification Numbers (EIN), smashes the previous record set in 2020 of 4.3 million and is up 44% from the 2019 mark of 3.5 million.
The dream of Entrepreneurship lives on. More than half (57%) of respondents said they dream of one day owning their own business, citing “be my own boss” and “to have more control over my future” as their leading motivations.
These new entrepreneurs have consumer sentiment on their side. Nearly 3 in 5 people in the U.S. (57%) said they intend to spend more money at small businesses over the next six months because they want to help local employers and enjoy the stellar customer service they get. This is in addition to the 50% of respondents who said they’ve spent more with small businesses during the pandemic.
“When the pandemic hit, we saw an unprecedented number of new businesses formed as millions of people spotted new opportunities brought on by the ‘new normal’ or reevaluated their priorities,” said Alex Chriss, executive vice president and general manager of Intuit’s Small Business and Self-Employed Group. “Now, almost two years later, we’re continuing to see this trend, as 2022 promises to deliver even more small business growth and prosperity.”
In addition to the New Business Insights report, QuickBooks also recently surveyed 2,000 U.S. small business owners to understand the top priorities for businesses in the new year. According to the Small Business Insights report, small business owners overwhelmingly said they are focused on making the pivot to online permanent, which was accelerated by the pandemic. Nearly 9 out of 10 small businesses (88%) say online sales will be an important source of revenue in 2022 and 97% say digital technology will be important to their business next year. With this in mind, here are some key considerations for entrepreneurs looking to start a business in 2022:
Attracting and Retaining Talent. Despite current challenges in hiring, 44% of small businesses said they will expand their workforce over the next three months. This aligns with the trend of job seekers amid the Great Resignation -- with 40% of U.S. employees currently looking for new jobs. Small business owners can turn this to their advantage by highlighting the benefits of working for a small business. Of the 78% of survey respondents who have worked for a small business, the top cited benefits were close relationships with the owner(s), customers and a sense of belonging to the company. To further attract new talent, 44% of owners said they are increasing pay while 30% are hiring younger workers than before. To retain talent, 46% plan to increase pay for existing employees and 36% will offer larger bonuses.
Optimizing for Online. While the survey showed consumers’ appetite to support small businesses, it also underscored the importance of a strong online presence. A top priority for those starting a business in 2022 should be building a user-friendly website, with “increasing online sales” noted as the top priority of 40% of business owners. Notably, this isn’t limited to ecommerce businesses: 74% of brick-and-mortar businesses say online revenue is important. In addition to a website, social media is also proving to be vital for businesses, with revenue from social media accounting for a 33% of small business revenue, on average. Even brick-and-mortar businesses get 22% of their sales via social media.
Preparing for Macroeconomic Issues. Almost all business owners and consumers (97% each respectively) are worried about inflation. Among business owners, 45% cited “rising costs” as the largest threat their businesses face. To combat this, nearly two-thirds of business owners (63%) are planning to raise prices over the next three months. Other macroeconomic issues impacting small businesses include shipping and the supply chain, with 71% having experienced supply chain problems this year. But there are some encouraging signs small business supply chains may be turning a corner as 62% of those that have experienced issues say their problems have already been resolved or that they expect them to be resolved soon.
Securing Funding. More than two-thirds of entrepreneurs (67%) plan to fund their new business with personal savings, and 49% will apply for a small business loan from a bank or financial institution.
“Fintech has greatly expanded the availability of funding for small businesses and for many entrepreneurs it represents a simpler, faster way to access capital,” said Rania Succar, senior vice president of Intuit QuickBooks Money Offerings. “QuickBooks Capital, for example, leverages technology to help business owners that have been underserved by traditional financial institutions access the funds they need to sustain operations, invest in growth and thrive.”
These reports and more research and insights from Intuit QuickBooks are available at the new Year in Small Business hub. This hub highlights the year in small business data and features real-life entrepreneurial stories, small business insights and tips for how to run a small business in 2022.