Launching a start-up in the state of New York is not a walk in the park. Entrepreneurs face high taxes and a complicated regulatory environment. However, the state has a lot to offer new and migrating business owners.
Proximity to New York City means that entrepreneurs have access to multiple sources of capital funding and skilled labor. In fact, many small businesses are placing less emphasis on the tax issues when calculating their chances of success and more on the ability to connect with the right target audience.
I’ve compiled a list of 10 small business statistics from the Empire State to assist aspiring entrepreneurs to make the right decision before starting their business journey.
Quick New York Small Business Statistics for Entrepreneurs
- There are 2.3 million small businesses in New York.
- 4.1 million people are employed by small businesses.
- Racial minorities make up 33.4% of workers.
- Women make up 48.5% of workers and own 40% of businesses.
- 72% of New York small enterprises have revenue under $1 million.
- 36% of small businesses are less than five years old.
- The state’s unemployment rate stands at 4.2%.
- The number of small businesses in New York City has decreased by 44.7%.
- Small businesses have access to a $50,000 grant from the state government for COVID-19 related expenses.
- Small businesses in New York exported goods worth $35 billion in 2019.
New York Small Business Statistics
1. What is considered a small business in New York?
While a company might be classed as a small business based on its number of workers, yearly revenue, or both, the US Small Business Administration (SBA) classifies a small business as one with fewer than 500 employees.
Going by this definition, there are 2.3 million small businesses in New York, which make up 99.8% of all businesses in the state.
In 2019, 35,721 recognized enterprises exported items totaling $62.4 billion from New York. Of those, 33,316 (or 93.3%) exporters were small firms. Small businesses exported $35.3 billion in products.
2. How many New Yorkers are employed by small businesses?
A total of 4.1 million people are employed by small businesses across the state of New York. That’s 49.1% of all employees in the state.
The unemployment rate in the city is 4.7%, which is somewhat lower than the national average. This creates a competitive environment for the top job prospects. To confront this problem, small firms are creating more appealing salary packages and other employee incentives in order to better attract, acquire, and retain the best employees.
The state minimum wage increased to $12.50 per hour by the end of 2020, up from $11.80. Of course, the minimum wage in certain towns and cities is significantly greater. Businesses in New York City, for example, are required to pay employees at least $15 per hour.
3. New York small business statistics by industry
The professional, scientific, and technical services sectors employ a total of 282,393 people and account for 339,914 of the total 2.3 million small businesses in New York. This makes them the largest industries in the state.
New York is not well known for its natural resources and thus, the mining, quarrying, oil, and gas extraction sectors make up the smallest number in the total small business tally with just 847 firms.
4. New York small business ownership by ethnicity
New York is a populous east coast state with a reputation for its cities and economic activity. As a result, the state has become a melting pot of people from diverse races and cultures from all over the world.
Below are statistics on how small business ownership is distributed across the various ethnic groups in New York State:
- White/Caucasian — 1,551,785
- Asian — 309,737
- Hispanic — 265,133
- Black/African American — 223,015
- Veteran — 63,743
- American Indian and Alaska Native — 5,672
- Native Hawaiian and Other Pacific Islander — 1,500
5. New York small business ownership by gender
A total of 1,256,693 small businesses in New York are owned by men, while 757,816 are owned by women. There are also 80,141 small firms that are owned by both parties.
6. How COVID-19 has affected small businesses across New York State
Small businesses in New York have repeatedly reported negative effects from the COVID-19 pandemic at rates that surpass the national average. According to a report from the office of the New York State Comptroller, by the week ending October 17, 2021, 70% of small businesses in the state reported a negative effect as a result of COVID-19 compared to the national rate of 67%.
7. New York small business financing
In 2019, before the COVID pandemic, banks in New York gave $4.8 billion in loans to New York firms with less than $1 million in sales. Total reported new lending to companies was $7.2 billion for loans of $100,000 or less, while total reported new lending to businesses for loans of $1 million or less was $16.1 billion.
During the height of the pandemic, the Empire State Development Corporation (a department of the New York state government) issued grants, tax credits, and technical assistance programs for businesses affected by the COVID-19 Pandemic as follows:
- $800 million in funding for small businesses—including for-profit arts and cultural institutions that were impacted by the COVID-19 pandemic
- $100 million in grant funding to support the rehiring of workers by COVID-impacted tourism businesses
- $25 million in grant funding to help support the return of conferences, meetings, and trade shows that generate significant tourism-based economic activity through overnight stays, dining, and other tourism-related activities
- $25 million in grant funding to support restaurants that provide meals to distressed and under-represented communities
- $100 million in tax credits to jumpstart the entertainment industry and support tourism activity in New York City
- The New York State Council on the Arts (NYSCA) will administer $100+ million in funding to assist New York artists and nonprofit arts organizations.
8. Taxes, taxes, taxes
The comparatively high taxes in New York State are a major source of concern for many small business owners. New York is well recognized for its complicated and expensive company tax law.
The state’s business income base tax is 6.5%, while certain enterprises may qualify for a lower 5.5% rate. A capital base tax or a set dollar minimum tax may also be imposed on enterprises. Generally, state law mandates companies to pay the greatest amount.
9. What challenges plague small businesses in New York
Apart from high taxes and stringent regulation, New York is plagued by myriad other challenges including a very high cost of living that translates to higher compensation for employees, very expensive real estate (average office rent in New York City was $85.56 per square foot in 2020), and competition from other businesses within the same niche.
10. New York Small business marketing statistics
Some of the proven marketing strategies for small businesses in the state of New York include the following:
- Pay-Per-Click (PPC) campaigns
- Community partnerships and Corporate Social Responsibility (CSR) campaigns
- Customer referral programs
- Social media advertising
- Automated email conversations
- And customer referral programs
The Final Word
The statistics mentioned above should assist any aspiring entrepreneur in the state of New York to understand the ups and downs of doing business in the state.
Starting a business in the state might not be an easy feat, with competition around every turn in a metropolis of more than eight million people. While this might be difficult, it also fosters a strong sense of invention, and New Yorkers are known to be hardy, tenacious, and creative.
Before you take the next step in your business journey, have a look at our review of the best registered agents in New York, and find your preferred registered agent to help you with your business formation process and keep your business in compliance with the New York Secretary of State’s office.
- New York State Department of Financial Services
- New York State Comptroller’s Office
- US Small Business Administration
- US Census Bureau
- The New York Post
- SI Live