The Swyft Filings State of the Industry Report provides an examination of business formation trends by looking at the number of newly-created businesses by industry type between 2018 and 2019. Swyft Filings, which helps tens of thousands of companies with filing and compliance in all 50 states each year, is uniquely positioned to monitor which industries and states are seeing the most significant volume of new business formations on a year-to-year basis.
In our third annual report, we’re taking a look at the Growth Rank and Volume Rank of each industry tracked in the Swyft Filings database, as well as industry growth in U.S. states with the largest volume of new business formations in 2019.
Below, we’ve included a breakdown of these findings, as well as factors propelling or, in some cases, hindering the growth of new businesses. Additionally, we also surveyed business owners who’ve filed with Swyft Filings to better understand what has made the greatest impact on business health and expansion.
YoY Growth %: Percent change in new businesses formed in 2018 vs. the number of new businesses formed in 2019.
Growth Rank: #1 has the largest percent increase in new businesses formed in 2019 compared to 2018.
Volume Rank: The overall volume of businesses formed in 2019 (#1 having the largest volume of new businesses formed).
Growth Rank:#10 (38%) Volume Rank:#16
After ranking #1 for YoY growth in 2018, the accommodations industry lagged behind other industries tracked by Swyft Filings in 2019. While the percentage increase remained relatively stagnant (it was 39.5% YoY growth in 2018), the year-over-year business formation increases among other industries proved more significant.Major trends impacting the accommodations industry in 2019 widely circulated around new uses of technology to customize and simplify guests’ experiences. The ease in which travelers can book and organize rentals through companies like Airbnb and Vrbo (often never even having to interact with hosts) has pushed hotels to take similar approaches in making accommodations as easy as possible. Many hotels, for instance, are adopting remote check-in and check-out and mobile room keys. A December 2018 Statista report showed that 95% of companies in the travel and tourism industry were likely to adopt the “internet of things” to create seamless visit experiences for guests via technologies such as these mobile integrations.Vacation rental companies have also spurred home and property owners who rent their spaces to incorporate their business. Forming an LLC, for instance, enables property manAgers to decrease personal liability and receive tax incentives for their rentals.
Growth Rank:#11 (37.4%) Volume Rank:#2
While ranking 11th for year-over-year business growth, the construction industry saw the second largest volume of new businesses in 2019 compared to other industries tracked by Swyft Filings.According to economists who spoke with ForConstructionPros.com to provide their expectations for the construction industry in 2019, many agreed that favorable investment and activity were ahead. Supporting those predictions, those who own construction businesses reported benefitting from continued and increased demand this past year. Of the Swyft Filings customers surveyed who own businesses in the construction industry, 73% said word-of-mouth marketing was one of the strongest drivers of growth for their company in 2019, while 37% cited increased demand for their service.
Growth Rank:#8 (41%) Volume Rank:#3
In 2019, the consulting industry ranked in the top half of industries tracked by Swyft Filings for growth, an increase from a Growth Rank of 15 in 2018 and 2017. It also continues to hold a Volume Rank of 3 for the second year in a row.While our database shows a significant number of new consulting business formations last year, growing an existing consulting business was cited as the main challenge among Swyft Filings customers in the consulting industry. According to our survey, 36% of business owners in the consulting industry found that scaling their business was one of their greatest business challenges in 2019, while 34% of those surveyed reported that it was obtaining financing.
Growth Rank:#14 (30.5%) Volume Rank:#6
The entertainment industry saw a 30.5% increase in new business formations in 2019 vs. 2018, and continues to rank in the top-third of industries for overall volume of new business formations. Encompassing television, streaming content, music, motion pictures, video games, and more, the U.S. entertainment industry is the largest in the world.Streaming content, and making entertainment easier to access and market in general, has massively changed the ways in which businesses share content and how consumers enjoy it. For instance, our customer survey results showed that 56% of entertainment business owners found that social media was one of the largest drivers of their company in 2019. A late 2018 report from Pepperdine’s Institute for Entertainment, Media, Sports, and Culture had predicted that social media would fuel the growth of the entertainment industry through digital distribution of content via social platforms.
Growth Rank:#4 (43.7%) Volume Rank:#14
The finance industry held on to a Growth Rank of 4 after securing that rank in 2018, with a 43.7% year-over-year increase in new business formations. In the Swyft Filings database, banking, asset management, venture capital, accounting and tax services, and private equity businesses fall within the finance categorization.One of the main changes in the finance industry is its digital transformation, such as the rising popularity of mobile banking, mobile pay, and automated wealth managers. These new apps and programs have provided greater transparency for individuals and have largely decreased the need to ever step in a bank.
Growth Rank:#2 (56%) Volume Rank:#9
The food service industry saw a 58% year-over-year increase in new business formations, ranking in 2nd for growth and in 9th for overall volume of formations.This growth is in line with the National Restaurant Association’s projections for 2019, in which it estimated the industry to reach $863 billion in sales, driven by “an expanded economy and elevation consumer sentiment.” Surveyed Swyft Filings customers who own food service businesses agree with these driving influences, as 33% reported increased demand as one of the strongest factors for business growth in 2019.One way that those in the food service industry have set themselves apart amongst this increased demand is by carving out their niche. Alyssa Case, who formed Graze with Swyft Filings, for instance, took advantage of the increasing desire to capture and share beautiful images by creating Instagram-worthy cheese, charcuterie, and accoutrements boards.
Growth Rank:#12 (33.7%) Volume Rank:#8
Ranking in 12th for year-over-year growth, the healthcare industry saw a 33.7% increase in new business formations, and ranked 8th for total volume of new formations compared to other industries tracked in the Swyft Filings database.In July 2019, it was reported that health care was one of the healthiest sectors in the stock market, with healthcare companies expecting to see double-digit increases in sales compared to the year prior. An aging global population is often cited as one of the main reasons the industry is seeing such promising growth. According to surveyed Swyft Filings customers, 37% of those who own healthcare businesses were able to obtain financing that drove their business’ growth in 2019.
Growth Rank:#17 (18.5%) Volume Rank:#17
Coming in 17th for Growth Rank (as it also did in 2017), the insurance industry saw an 18.5% year-over-year increase in new business formations. The U.S. is home to the world’s biggest insurance market, and it’s seen continuous growth for the past couple of years. 2019 was boosted by a strong 2018, in which net income for the industry increased 66% to $60 billion U.S. dollars. This was largely due to a 10.8% rise in net premiums written. Some of this rise can be attributed to the Tax Cuts and Job Act of 2017, which prompted changes in reinsurance purchasing strategy. P&C insurers, however, are also growing premium volume by raising rates.
Growth Rank:#5 (43.5%) Volume Rank:#15
The manufacturing industry came in 15th for Volume Rank for the third year in a row, and new business formations increased 43.5% year-over-year. Despite a strong increase in new manufacturing business formations in 2019, the industry itself found itself in recession during the second half of the year. Between 2017 and 2018, nearly half a million jobs were added to the sector, but manufacturing employment stalled in 2019.Excessive use of tariffs and trade wars have been cited by analysts as the the largest restraint on the industry, especially in regards to the production of smartphones and motor vehicles.
Growth Rank:#9 (39%) Volume Rank:#7
With a 39% increase in new business formations from 2018 to 2019, the professional industry, came in 9th for Growth Rank. Additionally, the sector held a Volume Rank of 7th for the third year in a row. Professional services include occupations that require special training in the arts and/or sciences. This can include engineers, lawyers, and management consultants.Creating and improving a business’ website was the highest-reported challenge for growth that businesses in the professional industry faced, according to professional service business owners surveyed by Swyft Filings. With many services firms recording the highest profits in a decade in 2018, the industry became increasingly competitive and dominated, making it especially difficult to rank and drive traffic organically to a new or upcoming business website in a crowded digital space.
Growth Rank:#16 (23.3%) Volume Rank:#4
Continuing to hold a Volume Rank of 4th for the third year in a row, the real estate industry fell slightly in Growth Rank (from 12th in 2018), with a 23.3% increase in new business formations year-over-year.According to surveyed Swyft Filings customers, obtaining financing was reported as the most-common hinderance for growth for real estate business owners in 2019, with 57% of respondents in the industry facing this challenge. When The Counselors of Real Estate identified emerging issues expected to affect real estate in 2019 and 2020, challenges with obtaining finances are pointed to as a result of capital market risk, especially regarding climate-related risk and infrastructure.
Growth Rank:#6 (43%) Volume Rank:#12
The rental and leasing industry saw a 43% year-over-year increase in new business formations, and came in at a Growth Rank of 6th after only ranking 17th in 2018.Increased activity in construction and more disposable income have been cited as the top supporting drivers in growth for this industry. Rental and leasing businesses have been shown to benefit when other industries are thriving. According to a 2019 IBIS World commercial leasing industry report, demand for leasing has increased over the past five years in conjunction with businesses increasing production and inventory.
Growth Rank:#3 (44.4%) Volume Rank:#1
With a 44.4% increase in new business formations in 2019, the retail industry ranked 3rd for year-over-year growth and came in 1st for largest volume of new business formations. Though this is not the first time retail has come in first for Volume Rank, it is the highest Growth Rank the industry has seen since the inception of the Swyft Filings State of the Industry Report two years ago (see 2017 and 2018 ranks).Among the Swyft Filings customers surveyed, 74% of those with retail businesses cited social media as one of the main drivers of business growth in 2019, followed by word of mouth (62%), and paid advertising (38%). As of 2019, it’s been reported that 3.4 billion people are active social media users, and 90% of brands utilize social media to increase awareness of their business.Katie Rogers, owner of The Mermaid Sealon, leveraged Instagram (https://www.instagram.com/mermaidhairxo/) to draw the attention of women all over the country with her promise of making mermaid-like hair a reality for anyone who wants it. “Social media has changed the game tremendously,” Rogers told Swyft Filings in a Q&A last fall. “We are so fortunate to be alive during this time you can promote your business for free, build your own brand and platform… It’s free marketing so use it to your advantage!”
Growth Rank:#18 (17.7%) Volume Rank:#11
After ranking 2nd in 2018 for year-over-year growth, the Social Assistance industry came in last place (18th) for growth compared to other industries in 2019. Despite the decrease in rank, the industry still comes in 11th for largest volume of new businesses, and saw a 17.7% increase in new business formations in 2019 compared to 2018. Encompassing services pertaining to vocational rehabilitation, child daycare, relief, emergencies, and food and housing, the social assistance industry is rooted in helpfulness, which is never out of demand.Despite the necessity of such organizations and businesses, 30% of Swyft Filings customers with Social Assistance businesses cited obtaining finances as one of the biggest challenges they face in growing their businesses.
Growth Rank:#15 (27.3%) Volume Rank:#10
With a 27.3% year-over-year increase for new business formations, the technology industry came in 15th for Growth Rank and in 10th for Volume Rank.In year’s past, we’ve cited extreme competitiveness and businesses taking their tech in-house (rather than working with third-party providers) as the main reasons this industry doesn’t see quite as strong year-over-year growth for net new business formations as other industries tracked in the Swyft Filings database. However, the ongoing and ever-increasing demand in this space also makes it ripe for opportunity. 56% of business owners in the technology industry surveyed by Swyft Filings said that increased demand for their service and product was the largest driving factor for business growth in 2019.
Growth Rank:#13 (30.6%) Volume Rank:#5
After two years of coming in 3rd for Growth Rank, the transportation industry has fallen to 13th out of 18 industries for year-over-year growth of new business formations. The Volume Rank of 5th, however, is holding its place for the second consecutive year.A growing trend that’s proven challenging for the strength of the transportation industry is broken infrastructure in the U.S. due to an influx of natural disasters, including hurricanes and wildfires, affecting ports and major highways. Meanwhile, a large volume of new transportation businesses are still being formed, which coincides with increases in the retail industry, prompting demand for the transportation of goods.
Growth Rank:#7 (43%) Volume Rank:#18
Coming in last for Volume Rank, the volume of new businesses in the warehousing industry is still smaller than other industries tracked in the Swyft Filings database. That said, the industry still saw promising year-over-year growth, with 43% more new warehousing businesses formed in 2019 than in 2018.Directly impacted by the transportation and retail industries, the warehousing industry is largely influenced by performance in other sectors of the U.S. economy. The biggest waves in the warehousing industry are being formed by the “digital supply chain,” which is essentially the software, automation, and communications efforts to enhance warehousing efficiency. This is especially critical as consumers (largely thanks to Amazon) are becoming accustomed to one and two-day delivery.
Growth Rank:#1 (67%) Volume Rank:#13
While the total volume of new business formations in the wholesale industry is relatively modest compared to other industries tracked in the Swyft Filings database, it proved to see the strongest year-over-year growth of new businesses, coming in 1st for Growth Rank with a 67% increase.
According to IBIS World, the wholesale industry has enjoyed steady growth between 2014 and 2019, as this sector is also largely influenced by the overall state of the economy. Much like the warehousing and transportation industries, wholesale can continue expected growth alongside growth in the retail industry, as well as agriculture and manufacturing
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