By Hank Russell
A recent report from the New York State Comptroller’s office found that the rate of growth of small businesses in New York lagged behind the rest of the nation, while the number of small business closings exceeded the nation’s.
According to the report, in 2023 — the most recent year in which data was available — New York’s small business firms grew 0.70%, which is less than the rate at which small business firms grew across the rest of the country (1.05%).
Over the long term, small business growth in New York has lagged the nation: between 2001 and 2023, the number of small business firms grew 9.5% in New York compared to 14.2% in the rest of the nation, ranking 22nd compared to other states. The pandemic played a role, with a net decrease of 7,350 small businesses in 2020 and 11,600 small businesses in 2021. In contrast, the net number of small businesses in the rest of the nation grew in both 2020 and 2021. Those industries affected by the pandemic shutdown were leisure, hospitality, and retail services.
Between 2020 and 2021, the number of new companies being created fell, while the number of closings surged, the report stated. Firm closings increased by 5% in 2020 and 5.5% in 2021, but firm creation dropped more significantly, declining 20.1% in 2020 and an additional 8.8% in 2021. The number of small business closures hit its peak in 2021 when 36,143 small businesses shuttered. This downturn resulted in 422,176 jobs being lost.
In July 2024, the National Federation of Independent Business (NFIB) Research Center released the 11th edition of their survey report, Small Business Problems and Priorities. This survey asked small business owners to assess the severity of 75 potential business problems. Among business owners in the state and the nation, the two biggest challenges were the cost of health insurance for employees and the cost of supplies and inventories. The No. 3 challenge for NYS business owners was state taxes on business income, while nationwide, the third biggest challenge was economic uncertainty.
“Small businesses are the foundation of New York’s economy, stimulating economic activity in our cities and towns, spurring innovation across industries, providing a variety of employment opportunities, and enriching our communities,” Comptroller Tom DiNapoli said. “However, growth in small business jobs and new startups lags the rest of the nation. New challenges, like tariffs, have forced owners to make sacrifices and difficult choices. The state and local governments should continue to look for ways to support small businesses by easing their entry into markets and helping them thrive in New York.”