Collage of business owners
Photo of Asahi Pompey

Asahi Pompey

President of the Goldman Sachs Foundation

It’s time to double down on the Fundamental Economy: America’s small businesses.

Over the last year, small businesses overhauled their operations and revenue strategies to adjust to ever-changing circumstances. Whether it be setting up remote work, managing supply chain disruptions or debuting new products, pivoting became course of business.

According to our new survey of more than 2,500 Goldman Sachs 10,000 Small Businesses participants, the majority of them believe 2021 will be better than 2020, but only half believe it will be better than the economy they knew before COVID-19 hit.

At the top of their concerns is a lack of access to capital, especially among Black women business owners. Our research shows that, though Black women are the most likely to prioritize hiring more workers if they receive funding, they are the least likely to secure funding or have a banking relationship.

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This is the same kind of inequity that prompted us to launch our One Million Black Women initiative. There is concrete evidence that addressing the challenges Black women entrepreneurs face will spur greater job creation in the economy at large.

I also hear from small business owners that they are struggling to find and retain good employees. They know that employees with people skills, rather than technical skills alone, are essential to their sustained growth and recovery.

Our small-business owners are well-positioned for a strong rebound, but after the strain of the past year, they know how fragile their gains are. To build an inclusive and sustainable recovery, we need to support our fundamental economy and the small businesses that create it.

Looking Ahead

Small business owners are cautiously optimistic.

Small businesses are a sizable share of our economy and are a bellwether for economic recovery. While a clear majority of small business owners believe the economy in 2021 will be better than it was during the pandemic in 2020, less believe it will be better than it was prior to the pandemic, in 2019.

A post-pandemic economy:
measured optimism

2021 will be better than 2020 78% All Businesses
2021 will be better than 2019 36% All Businesses

Small businesses see a return to normalcy.

Icon of an 'Open' sign
70% All Businesses

Say operations have already returned or will return to normal in the the third quarter of 2021 now that the COVID-19 vaccine is now in circulation.

And are better prepared for the future.

70% All Businesses

Feel better prepared to mitigate new risks than they did in 2020

Collage of people working in different environments

Small businesses are optimistic, but commitment to meeting their workforce and capital needs is necessary for a full, inclusive recovery.

Pivoting the Business

Adaptation is survival.

The vast majority of small business owners pivoted their operations over the last year, introducing new products, new sales strategies, and new supply chains, but small business owners indicate that many employees are not able to do their jobs remotely.

Small businesses adapted to overcome.

95% All Businesses

Pivoted or adapted their business in response to the pandemic

Adaptation impacted the core business.

How businesses have pivoted

Launched new products/services in response to the pandemic
49% All Businesses
Deployed new sales strategies in response to the pandemic
50% All Businesses
Found new suppliers in response to the pandemic
35% Retail-Focused
Two business owners standing in front of shelves full of products

Remote work doesn’t always work for small businesses.

33% All Businesses
Say no employees can effectively work remotely
56% All Businesses
Say 25% or less of employees can effectively work remotely

Strategic pivots ensured small business survival and will be instrumental to recovery as businesses continue their personal, and often in-person, work.

Talent & Workforce

Non-technical roles are in demand and fundamental to our recovery.

Fundamental business roles, such as sales, marketing, customer service, and operations are needed to support small business growth. Right now, small businesses are struggling to fill these fundamental roles, and see less overall need for more specialized skills, such as data management, technology, accounting, and finance.

Non-technical roles are fundamental for business growth.

71% All Businesses
Sales and marketing
46% All Businesses
Customer service & operational roles

Will be very important for recovery or growth after the pandemic

Man with glasses in a white shirt

Demand is lower for more technical roles.

Only 29% of All Businesses

Technically-skilled employees will be very important for recovery or growth after the pandemic

Yet, non-technical roles are hard to fill.

49% of All Businesses

Say that roles in these fundamental categories are the most difficult to hire for

Man with glasses in a white shirt
50% of Businesses

Say the most common obstacles to hiring are too few applicants with the right skills and insufficient or unpredictable cash flow needed to pay new employees

Small businesses need fundamental workers to execute on new business strategies.

Access to Capital

Capital is our biggest roadblock and critical to recovery.

Small businesses say they’ll use capital to hire workers and invest in an inclusive recovery, yet many continue to struggle to get the funding they need, especially Black business owners.

Small business owners want and need more credit.

34% All Businesses
48% Black-Owned Businesses

Desire to take on more debt over the next year

Man and woman tying a knot around a package

However, many are uncertain about approval.

53% All Businesses
65% Black-Owned Businesses

Not very confident they
would be approved for a new line of credit or loan

Not everyone has a banking relationship.

12% All Businesses
20% Black Women-Owned Businesses

Do not currently have a banking relationship

Collage of workers

Small businesses say they’ll use new funding to hire workers.

23% All Businesses
32% Black Women-Owned Businesses

Would use new funding to hire more employees

For small businesses, greater access to capital drives job creation, growth and future economic recovery.

Methodology: For more information on this research, read our methodology.