TRUiC 2022 Report on New Business Formations in the US
At TRUiC, we have been helping aspiring entrepreneurs start their business since 2009. During that time, we've come across (and amassed!) quite a bit of data on business formation. With a volatile economy and more people forming businesses now than ever before, we wanted to bring relevant market data and analysis to you.
World Leaders in Business Formation
The US ranks among the top 25 places in the world for fastest business formation. According to the World Bank, on average it takes a little over four days to form a business in the United States.
Number of Applicants Increase Every Year
Over the last decade, the US has seen a steady increase in the number of business applications each year. In 2011 we saw roughly 2.5 million business applications, and in 2019 that number was 3.5 million. Surprisingly, the COVID-19 pandemic coincided with a 25% increase in business formation between 2019 and 2020, with another major increase of 23% between 2020 and 2021. The total number of business applications in 2021 was over 5 million.
US Business Applications by State
The map below shows the number of business applications submitted in each state for the selected year. The darker the blue, the more applications submitted.
Below we can see the breakdown of new business applications in 2021 by their NAICS Sector. Retail trade continues to be the most popular sector to start a business in the US.
Each business sector’s size is proportional to the amount of revenue generated. Revenue is an important metric for determining industry profitability. A small business owner may want to consider an industry’s revenue, profit, and profit margin to determine how much capital they should invest into their company.
Click on a sector to see that particular sector’s:
Revenue: Total amount of money generated from that sector’s economic activity. Revenue = money earned
Profit: Total amount of money remaining after subtracting a sector’s expenses from its revenue. Profit = revenue - total expenses
Profit Margin: The expected percentage of profit generated per sale. Profit Margin = (Profit/Revenue) x 100
Example: A profit margin of 10% indicates that for every $100 of revenue made in sales, 10% or $10 is left as profit.
Number of Businesses: The number of businesses operating within the sector.
Employment: The number of employees within the sector.
Five Most Profitable Sectors at a Glance
Business trends are specific to an industry. In order to optimize your small business or company’s next move, you need big data to support your decision-making. Every part of your business, from marketing and social media to client satisfaction, can be improved by understanding the sector’s overall health. Below, we’ve broken down current business trends for the sectors with the highest profit margins.
The real estate industry’s high-profit margin makes it a lucrative sector for a new company. However, current business trends suggest that the COVID-19 pandemic’s effects on the economy and remote work have significantly altered the real estate industry as a whole. Key market indicators ensure that this industry is stable and meant to last, but urban flight (the process of moving from cities to more rural areas) and the hot homeownership market of recent years have introduced volatility indicating that the real estate sector’s revenue will likely decline in the coming years.
Market Revenue: $1.2 Trillion Profit: $571.4 Billion Profit Margin: 48.9% Number of Businesses: 4 Million Employment: 5 Million
Industry Revenue Trend
The following graph shows the real estate, rental, and leasing industry’s revenue since 2013. Additionally, a projection for the sector’s future revenue through 2026 is given. Market revenue is an important key indicator for understanding how much money is coming into a sector.
(This graph is interactive!)
Largest Players in the Real Estate Sector
The major players in this industry make up less than 2% of the industry’s total market. This suggests that the real estate, rental, and lending industry does not have a large monopoly and new small businesses are to effectively compete in this space.
(This graph is interactive!)
For a more detailed look at real estate trends, visit our Real Estate Trends guide.
B. Utilities
The economic downturn resulting from the COVID-19 pandemic has stalled growth in the utilities sector. However, as offices and facilities begin to reopen, the utilities sector is expected to see substantial growth. Revenue is projected to increase in the utilities sector due to rising electricity prices and recent economic trends. Analyzing key indicators of the utility industry allows both small businesses and corporations alike to determine industry health and predict future industry trends.
Market Revenue: $638.4 Billion Profit: $171.1 Billion Profit Margin: 26.80% Number of Businesses: 21,165 Employment: 671,000
Industry Revenue Trend
Market revenue is an important key indicator for understanding how much money is coming into a sector. The following graph shows the utility industry’s profit revenue since 2005. Additionally, a projection for the sector’s future revenue through 2027 is given.
(This graph is interactive!)
Largest Players in Utilities
Major players in the utilities industry make up roughly 12% of the sector’s total market. Exelon, the largest player in the industry, accounts for almost 5% of the utilities market. This suggests that small businesses and new businesses may have to work harder to establish themselves in the utilities sector.
As the economy continues to recover from the COVID-19 pandemic, interest rates are expected to rise, and the demand for loans is projected to increase. Both of these factors (higher interest rates and increased access to credit) combined with current worldwide economic gains indicate that the finance and insurance sector is projected to see growth in the coming years. When analyzing the finance and insurance industry’s key indicators, the sector’s remarkable profit margin and market value suggest that the finance and insurance sector is exceptionally lucrative. As long as current business trends continue to show overall growth in the world economy, it’s likely that the finance and insurance industry will continue to remain highly profitable.
Market Revenue: $5.3 Trillion Profit: $1.4 Trillion Profit Margin: 26.8% Number of Businesses: 983,000 Employment: 8 Million
Industry Revenue Trend
The following graph shows the finance and insurance industry’s revenue since 2002. Additionally, a projection for the sector’s future revenue through 2027 is given. Market revenue is an important key indicator for understanding how much money is coming into a sector.
(This graph is interactive!)
Largest Players in Finance and Insurance Sector
Major players in the finance and insurance industry make up roughly 11% of the sector’s total market. UnitedHealth Group Inc, the largest player in the industry, contains over 5% of the finance and insurance market. This indicates that small businesses and new businesses may have to work harder to establish themselves in the finance and insurance industry.
International trade disputes and the COVID-19 pandemic have added extra volatility to the agriculture, forestry, and hunting sector. Over the last five years, the agriculture sector has seen declines in revenue. Price changes and concerts surrounding inflation may contribute to sector growth, but factors will further complicate the industry and can result in long-term issues. Nevertheless, the agriculture industry is large and prominent. Given the world’s dependence on this industry for survival, the agriculture, forestry, and hunting sector innovations will likely contribute to future growth.
Market Revenue: $465.6 Billion Profit: $86.6 Billion Profit Margin: 18.60% Number of Businesses: 2 Million Employment: 4 Million
Industry Revenue Trend
Market revenue is an important key indicator for understanding how much money is coming into a sector. The following graph shows the industry’s profit revenue since 2003. Additionally, a projection for the sector’s future revenue through 2027 is given.
(This graph is interactive!)
Largest Players in Agriculture, Forestry, Fishing, and Hunting
Major players in the agriculture industry make up roughly 11% of the sector’s total market. Tyson Foods, the largest player in the industry, accounts for 7.5% of the agriculture, forestry, fishing, and hunting market. The prominence of Tyson Foods in this industry suggests that small businesses and new businesses may have to work harder to establish themselves in the agriculture sector.
(This graph is interactive!)
For a more detailed look at agriculture trends, visit our Trends in Agriculture guide.
E. Information
The COVID-19 pandemic’s effect on the global economy stunted the growth of the information sector. Overall, sector revenue declined during 2020 but is expected to grow in the upcoming years as the worldwide economy begins to recover. Industries that relied on in-person services, such as movie theatres and various venues, suffered the most from the pandemic. However, increased remote work resulting from the pandemic created a boon for telecommunication services as well as data storage services. The growing acceptance of remote work is projected to further contribute to sector growth due to increased demands for these services.
Market Revenue: $1.9 Trillion Profit: $267.6 Billion Profit Margin: 13.80% Number of Businesses: 469,000 Employment: 4 Million
Industry Revenue Trend
The following graph shows the information sector’s revenue since 2013. Additionally, a projection for the sector’s future revenue through 2026 is given. Market revenue is an important key indicator for understanding how much money is coming into a sector.
(This graph is interactive!)
Largest Players in Information
Major players in the information industry make up roughly 32% of the sector’s total market. AT&T Inc. and Verizon Communications, the two largest players in the industry, account for 16% of the information market. Given the hold that major players have on the information industry, it may be more difficult for new businesses to establish themselves as a competitor in the information industry.
