Information Technology (IT) companies are outpacing businesses in other industries in most performance measures since the COVID pandemic hit in 2022. Biz2Credit analyzed 2021 industry trends among 30,000 small businesses, finds that IT firms had the highest average revenue ($955,793), the best credit score (658), and received the highest average amount of financing ($131,743) when they sought credit.
The Retail industry had the largest percentage (27.7%) of all funding issued to small businesses included in the study, while the most startups were in the Transportation & Warehousing (lowest amount of time in business on average).
Biz2Credit’s 2022 Top Small Business Industries Report examined the following metrics: Annual Revenue, Loan Approval Rates, Funded Amounts, Business Owners’ Credit Scores, and Age of Business.
- The sector with the highest average funding amount was Information Technology (IT) ($131,743), followed by Wholesale Trade ($107,576), Agriculture, Forestry, Fishing & Hunting ($94,333), Manufacturing ($83,700) and Administrative Support, Waste Management & Remediation Services ($67,801).
- IT business owners had the highest average credit score (658), followed by Real Estate & Rental Leasing (648), Manufacturing (645), Professional, Scientific, and Technical Services (633), and Wholesale Trade (629). Credit scores generally saw a decline as the savings rate began to fall following the end of most government-backed stimulus programs in mid-2021.
- Businesses in the IT sector had the highest average revenue ($955,793), followed by Manufacturing ($947,662), Wholesale Trade ($886,834), Retail Trade ($808,598) and Accommodation/Food Services ($725,243).
- The Retail Industry had the largest percentage (27.7%) of all funding issued to small businesses, followed by Health Care and Social Assistance (10.7%), Services except Public Administration (10.4%), Accommodation and Food Services (10.4%), and Construction (7.2%).
- Transportation & Warehousing was the industry with the youngest businesses (3.9 years), followed by Public Administration (4.6 years), Arts, Entertainment, & Recreation (4.8 years), Services except Public Administration (4.8 years), and Retail Trade (5.1 years). The longest tenured businesses on average were Information Technology (7.4 years), Manufacturing (7.1 years), Agriculture, Forestry, Fishing & Hunting (6.8 years), Health Care & Social Assistance (6.5 years) and Professional, Scientific, & Technical Services (6.5 years).
Demand for IT services continues to boom as more and more companies arrange for remote working in the aftermath of the pandemic. IT companies saw the highest average approval rates for financing requests. Although these companies did well overall, their clients are often larger firms that take longer to pay outside vendors. Thus, they wind up borrowing money to manage their available cash month to month.
Biz2Credit, a leading online funding provider to small businesses, analyzed the financial performance of over 30,000 applications submitted through the company’s online funding platform from January 2021 to December 2021. All companies included in the Biz2Credit study have less than 250 employees and less than $10 million in annual revenues.
The report covers small businesses across the country, from start-ups to established companies. In addition, this year’s report analyzed lending data based on the Small Business Administration’s database. The objective of the study is to identify the top industries for small businesses during the preceding year and to measure the performance of businesses based on their industry affiliation. To view the entire report, click here.
The report covers industries based on the NAICS classification system, including the following:
- Accommodation and Food Service: Restaurants and bars, caterers, hotels, motels, others.
- Agriculture, Forestry, Fishing and Hunting: Farms, ranches, dairies, greenhouses, nurseries, orchards, or hatcheries.
- Business and Professional Services: Accounting and tax preparation, bookkeeping, payroll services, as well as legal, marketing, and design services.
- Healthcare: General medical services, doctor’s offices, dentist’s offices, visiting nurse services, residential care facilities, physical therapist offices, mental health clinics.
- Information Technology (IT): Software developers, software consultants, high technology staffing firms.
- Manufacturing: Companies involved in the manufacture of both durable and non-durable goods.
- Personal Services: Salons, gyms, dance and yoga studios, laundry and dry cleaning, landscaping, cleaning services, and others.
- Retail Trade: Brick-and-mortar stores, ecommerce companies, clothing and fashion, florists, grocery stores, pharmacies, home furnishings, and others.
- Wholesale Trade: Food distributors, wholesale grocers, distributors of various durable goods.