Alabama Small Business Statistics (2022)

A lot of people might not know this, but the state of Alabama has a lot going for it, especially in the realm of business. Many multinational corporations have pitched camp in the Yellowhammer State including Airbus, AT&T, Mercedes Benz, Hyundai, and Toyota. Also operating in Alabama are thousands of small business owners that have invested heavily in the state, especially in the waste management sector.

Alabama’s pro-business strategy demonstrates the state’s support for small enterprises, which has helped many small firms prosper in the present climate, owing to the availability of free development centers and business support networks.

Starting a business in the state has its challenges, especially if aspiring entrepreneurs aren’t aware of the state’s business landscape. That’s why I’ve compiled a list of 10 small business statistics to assist future small business owners in understanding the state’s business environment before they start their business venture.

Quick Alabama Small Business Statistics for Entrepreneurs

  • There are 408,374 small businesses in Alabama.
  • Small businesses in Alabama employ 809,024 people.
  • Racial minorities make up 30% of all small business owners.
  • Women make up 47.7% of workers and own 43.3% of businesses.
  • Alabama has no state minimum wage, hence the federal minimum wage of $7.25 is applied.
  • The unemployment rate in Alabama is 3.1%.
  • Despite the COVID-19 pandemic, Alabama attracted $5 billion in capital investment.
  • Veterans made up 6.4% of workers and owned 9.1% of businesses.
  • In 2019, small businesses took out loans worth $1.5 billion.
  • Small firms exported goods worth $2.6 billion in 2019.

Alabama Small Business Statistics

1. What is considered a small business in Alabama?

According to the US Small Business Administration (SBA), a business with fewer than 500 employees qualifies as a small business. This applies to the small corner bookstore that employs one person and also to the local factory that produces construction equipment. As long as they employ fewer than 500 people, they are small businesses.

There are 408,374 small businesses in Alabama today, and they represent 99% of all businesses in the state.

2. How many Alabamians are employed by small businesses?

Small businesses in Alabama employ a total of 809,024 people. They make up 46.7% of all employees in the state. As of November 2021, the unemployment rate in the state was 3.1%, a 0.2% increase from June 2021.

The state government does not impose a minimum wage on employers. However, every business must adhere to a federally mandated $7.25 minimum wage.

3. Alabama small business statistics by industry

Administrative, support, and waste management industries employ 45,978 individuals and comprise 49,497 of Alabama’s 408,374 small enterprises. They are the state’s second-largest industries. The utilities industry is the smallest in the state with only 251 small businesses invested in the sector.

4. Alabama small business ownership by ethnicity

In 2019, Alabama had 2.43 times the number of white citizens (3.19 million) than any other race or ethnicity. The second- and third-most prevalent ethnic groupings were 1.31 million Black or African American and 133,000 Hispanic citizens.

Business ownership is distributed among these groups as follows:

  • White — 302,801
  • Black or African American — 70,972
  • Hispanic — 10,233
  • Asian — 12,705
  • American Indian and Alaska Native — 1,341

5. Alabama small business ownership by gender

According to the American Community Survey of 2018, men own 219,746 small businesses in Alabama, while women own 154,112. In addition, there are 13,925 small businesses managed by both women and men.

6. How COVID-19 has affected small businesses across Alabama

According to an Alabama Workforce Council poll, 1,794 small business owners claimed that the COVID-19 epidemic influenced everything from market demand to financial impact and employment procedures. A lack of market demand is the most significant problem restricting company activity, according to 35.9% of respondents. Employee layoffs were reported by 33% of respondents as a result of the epidemic.

7. Alabama small business financing

Alabama banks lent $1.5 billion to firms with sales of $1 million or less in 2019. Total new lending to companies with $100,000 or less equaled $1.1 billion, while total new lending to businesses through $1 million or less amounted to $4 billion.

The Alabama Small Business Development Corporation (SBDC) provides grants to small businesses through proposal writing competitions. Awards can range from $500 to $50,000 or more.

8. Small business failure statistics

According to University of Alabama data, the failure rate of firms in Alabama over the course of 18 months is 20%. But that figure is 80% for Black-owned firms. In addition, almost 90% of Black-owned firms in Alabama are nonemployer enterprises (businesses that have no paid workers, have yearly commercial receipts of $1,000 or more, and are liable to federal income taxes). 

During COVID-19, 41% of Black-owned enterprises collapsed, compared to only 29% of white-owned businesses.

9. What challenges plague small businesses in Alabama?

Some of the challenges that small businesses in Alabama experience include the following:

  • Cash flow: Almost every small business owner has cash flow issues. One basic approach to solve this problem is to keep careful track of your money, including where it comes from and where it goes. Also, using online billing software, better budgeting methods, and effective cash flow management is highly advised.
  • Hiring new workers: The cost of hiring employees is a burden for small business owners who have to factor in the equipment, benefits, taxes, and bonuses that are involved with having a qualified workforce. If you can, having a few workers makes running your business a lot simpler. It’s always a good idea to weigh profit vs expense.
  • The economy: We can’t predict how the economy will turn out. But luckily, small business owners can take a couple of measures to protect themselves during tough economic times. Taking out an SBA 504 loan, for example, can protect you from rising interest rates since the loan keeps overall finance expenses low, allowing you to take advantage of lower tax rates.

Having the right registered agent by your side is something most small business owners in Alabama should consider. A good registered agent will help you with your business registration process, assist you with finding qualified employees for your business, make sure your business stays in compliance with the Alabama Secretary of State, and provide other important perks.

Have a look at my review of the best registered agents in Alabama to find out which company is best for your business.

10. Alabama small business marketing

Someone once said that running a business without advertising is like winking at a girl in the dark. You know what you are doing but nobody else does. Advertising is key if you want your business in Alabama to attract new clients. Here are some marketing strategies that most entrepreneurs in Alabama use to woo customers:

  • Word of mouth: Encourage clients to express their thoughts about your small business on social and professional networks. Word of mouth increases your chances of getting others interested in your products and services. You should also trust your own friends’ opinions. But first, you need to create a fantastic product or service, and then deliver it to your clients in a spectacular way.
  • Build a website: A website serves as a portal for your visitors to learn about who you are, what you believe in, and what makes you stand out. Your website’s purpose is to convert visitors into leads, and the quality of your leads is directly proportional to its greatness.
  • Email marketing: Email is also a wonderful technique to grow your small business’s contact list. Simply providing quality and relevant information with your newsletter such as a white paper, a video, or a resource in exchange for your visitor’s email address is a solid opt-in method for growing your list.
  • Content marketing: Content marketing is a great method to get leads from search engines, but it can also educate your consumers about best practices. This involves creating new material that addresses your audience’s most pressing issues and curating information that is relevant to your visitors. Once you’ve developed good content, share it on social media sites like Linkedin, Twitter, and Facebook, where your target audience is active.

The Final Word

Running a small business in Alabama is a dream come true for every aspiring entrepreneur in the state. I have compiled this brief list of small business statistics to assist entrepreneurs in understanding the business climate in Alabama before they make the final step to business ownership.


Small Business Statistics By State


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