Alabama experienced a post-COVID-19 boom in entrepreneurship across all demographic groups, but the trend is notably driven by rising numbers of Black- and women-led online microbusinesses. That’s according to new analysis from GoDaddy and the University of Alabama’s Center for Business and Economic Research.
A microbusiness is one with fewer than 10 employees, and it is distinct from a traditional small business, which may have up to 500 employees. GoDaddy estimates that there are approximately 45 million online microbusinesses in the U.S. with a discrete domain and an active website. These microbusinesses create an outsized impact. Venture Forward research found that microbusiness presence can reduce unemployment, create jobs and drive up median household income gains across communities.
Alabama’s microbusinesses are a great example, as they continue to be a driving force in economic mobility, local community development and advancement opportunities, especially among a diverse class of entrepreneurs supporting their local economies:
- Women account for 71% of solo microbusiness entrepreneurs in Alabama, and as overall microbusiness owners in the state, they outnumber men 61% to 38% as of January 2023. For context, women own 52% of all microbusinesses nationally as of February 2023.
- Online microbusinesses owned by Black entrepreneurs grew by 13% from pre-COVID to now, accounting for 30% of all Alabama online microbusinesses as of January 2023. Comparatively, Black-owned microbusinesses are 16% of all U.S. online microbusinesses.
- As they can be extremely agile, over a third of Alabama’s digital entrepreneurs require only a modest amount of capital – less than $1,000 – to start a new business. More than one in five earn over $5,000 in monthly revenue, and 31% contribute more than half of their household income from their microbusiness, acting as the “breadwinners.”
City-level data tells a similar story. Birmingham and Montgomery show a significant rise in diverse entrepreneurs creating positive economic impact in their communities. In both cities, women entrepreneurs are a driving force in the small business economy: 64% of Montgomery’s microbusinesses were women-owned. Additionally, Black entrepreneurs made up 63% of Montgomery’s microbusiness workforce and 43% of Birmingham’s.
At least half of all entrepreneurs in both cities generated revenues that contributed to at least $1,000 of monthly gross income to their household. Even an extra $1,000 per month in income from an online business can represent more than 20% of Alabama’s median household income.
Despite this growth and productivity, Alabama microbusiness owners still face significant hurdles. They are 1.5 times more likely to report difficulties in accessing capital to start or grow their businesses compared to microbusiness entrepreneurs nationally.
We identified meaningful steps entrepreneurs in Alabama can take to elevate their businesses, strengthen their skills and participate in professional development programs.
First, entrepreneurs should get involved in programs that provide access to resources, peer networking, grant opportunities and mentorship. In Montgomery, workshops like the Alabama State University’s Digital Marketing Course help entrepreneurs from historically underrepresented groups access tools that support small business operations and increase brand growth.
Additionally, with active programs in all 67 counties, Alabama’s Small Business Development Center (SBDC) network can be a game-changer. In 2022 alone, Alabama’s SBDC network trainees experienced an average of 25% in employment growth and 22% in sales growth in comparison to the statewide averages of 10% and 2%, respectively. Out of the 5,800 entrepreneurs SBDC locations served, 56% were leading minority-owned businesses, while 62% were women-owned. With initiatives like the Capital Access Program, SBDC offices are committed to ensuring the next generation of Alabama entrepreneurs is equipped to thrive and grow.
Finally, entrepreneurs should develop digital skills through training programs and workshops to grow their online brand identity. There’s been an explosion in e-commerce sales due to the COVID-19 pandemic, and post-pandemic, entrepreneurship will rely on digital skills and online brand savvy to remain competitive. Digital training courses like this Birmingham-based technical assistance program are just one of the many resources available.
Over a third of the surveyed Alabama entrepreneurs expressed a desire for local governments to help their businesses by providing access to capital. The good news: key players in government have established pilot programs to invest in Alabama’s small business economy. Last summer, Montgomery Mayor Steven Reed launched a $20 million initiative to increase access to capital for Black-owned businesses, and Gov. Kay Ivey announced the Innovate Alabama Supplemental Grant Program to support small business owners in the state.
Also crucial is affordable access to reliable broadband. State leaders should work with the Alabama broadband office and community anchor institutions to ensure recent federal funding is deployed to close the digital divide in urban and rural communities. Once access is established, the skills-training becomes an essential next step to making the most of the available connectivity.
There’s never been a more exciting time to be an entrepreneur in Alabama — that’s why local government, universities, private industry and nonprofits should partner with and invest in the next generation of small business owners that power Alabama’s economic engine.
Alexandra Rosen is the senior director of GoDaddy’s Venture Forward research initiative, and Dr. Nyesha Black is the director of demographics at the University of Alabama’s Center for Business and Economic Research.