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Small Business Openings Reach All-Time High

Small businesses demonstrated their ability to persevere despite labor shortages, high inflation, supply chain challenges, and other challenges over the past year. According to a new report issued by Yelp, business openings reached an all-time high in 2022, with new business growth exceeding pre-pandemic (2019) levels in 86% of states. An all-time high of more than 637,000 new businesses was opened in 2022.

This rapid growth was primarily driven by new home and local services business openings (40%), while new nightlife, restaurant, and shopping establishments lagged behind pre-pandemic levels– dropping 7%, 9%, and 12%, respectively.

Other notable gains included the local services industry, which experienced a 30% rise in business openings in 2022 versus 2019. Similarly, hotels and travel, as well as automotive services, witnessed 28% and 25% increases, respectively.

Still, new business openings exceeded pre-pandemic levels in almost all US states – especially in southern states, which faced the highest amount of new business openings.

Mississippi (62%), Alabama (54%), South Carolina (48%), Louisiana (37%), and Georgia (37%) were the top five states with the biggest percentage gains in new enterprises compared to 2019.

These top states experienced strong growth from new home and local services businesses, with Mississippi experiencing the biggest increases in both categories. There, home services grew by a whopping 126%; meanwhile, local services followed close behind with a rise of 116%.:

Additionally, even states which did not surpass pre-pandemic business opening levels only fell short by a slim margin. New Hampshire, for instance, only fell by 5%; meanwhile, Oregon and California both saw decreases of just 4%. Colorado and New York nearly broke even as well, witnessing small business openings just 3% lower than pre-pandemic levels.

While home and business services reached new levels in the south, hotels and travel businesses reached new heights in the top metro areas throughout the country.

Los Angeles, California, and New York City came out on top in this sector with the largest percentage gains from 2019 to 2022. Los Angeles witnessed a nearly four-fold increase in hotel and travel business openings during this period– rising from 16% to 63%.

New York City claimed the second spot, experiencing hotels and travel business opening gains of 35% in 2022. Although this is not quite as large as Los Angeles’ sector rise, New York City still significantly surpassed 2019 levels of 21%.

Another notable metro that experienced gains included Miami, Florida, which saw a 41% increase in hotels and travel from 2019.

Dallas, Texas, and Houston, Texas, were major metros that also saw hotel and travel business openings increase. Dallas saw a 56% increase, and Houston saw a 50% increase

On the flip side, Atlanta, Georgia, also saw a severe drop-off of business openings in this sector– with hotels and travel businesses plummeting from a sky-high of 135% in 2019 to 42% in 2022.

Regardless, virtually no metro areas have seen hotel and travel business openings enter the negatives– signifying that the post-COVID-19 travel and tourism boom will continue to grow considering the loosening of travel restrictions and rules.

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