The U.S. has always been regarded as the land of opportunity. Small businesses have been the backbone of the United States economy for many years. Most businesses that are started begin with someone’s dream, an ambition and passion they have, which then quickly turns into a small business.

Alabama is no stranger to small businesses; in fact, compared to the state’s population, there is an incredible number of small businesses currently thriving within the state.

The Yellowhammer State is a big contributor to the United States’ incredibly strong economy. Over the past several years, Alabama’s support for small businesses is evident with the state’s pro-business approach, which has in return helped many small businesses thrive in the current climate due to the abundance of free development centers and business support networks.

Number of Small Businesses in Alabama

So, how many small businesses are there in Alabama? There are 401,717 small businesses in Alabama, according to the latest figures (2020) from the SBA.

It is not just Americans and Alabamans starting small businesses in Alabama; the state is also attractive to foreigners investing in the state. There were 12,670 immigrant entrepreneurs in Alabama in 2018 that accounted for 6% of all self-employed Alabama residents.

The following bar graph shows the number of small businesses in Alabama in 2016, 2017, 2018, 2019, and 2020.

How many small businesses in Alabama?

Of the 401,717 small businesses in Alabama in 2020, there is a wide array of different enterprises from small, one-person sole proprietorships or LLCs to much larger businesses with several hundred employees. If you want to join the 400 thousand-plus small businesses in Alabama, it is fairly easy to register a business in Alabama.

To be a small business in Alabama, you have to qualify as one. So, to operate as a small business in Alabama, you must have a company with less than 500 employees.

Let’s take a deeper dive into the number of small businesses in Alabama by looking at the top industries, business owners, employees, and more!

Small Businesses in Alabama 2020 overview

  • Small businesses equate to over 99.4% of all businesses in Alabama.
  • There are 802,920 small business employees in Alabama, which is 47.5% of the states’ employees.
  • In 2019, Small Businesses in Alabama added 23,841 new jobs!
  • Small businesses employing fewer than 20 employees created the most job gains – 14,913 new ones!
  • There are 46,916 self-employed minorities in Alabama demonstrating the diversity in the state.
  • Trade is huge for many businesses, and there are 3,386 small business exporters in Alabama.
  • There are more construction small businesses in Alabama than any other type – 47,222.
  • Administrative, Support, and Waste Management firms make up the 2nd largest number of small businesses in Alabama – 43,405.

Top 5 small business industries in Alabama

How Many Small Businesses in Alabama?

Over 400,000+ is a lot of small businesses to be registered in any one state, especially with the 24th most populous one! However, they do say in Alabama “It’s blowin’ up a storm”, and it sure is with regards to small businesses. Compared to the rest of the U.S., the total number of small businesses in Alabama is 1.27% of all U.S. businesses. There are 31.7 million small businesses in the U.S.

The number of small businesses in Alabama has been growing over the past several years. In 2017 there were 388,850 small businesses, which increased to 392,939 in 2018, representing a 1.05% increase. In 2019 there were 396,432 small businesses in Alabama, 3,493 more than the state had in 2018, representing a 0.88% increase.

From 2019 to 2020, the number of small businesses in Alabama rose again, to 401,717. This is the second-largest increase in percentage terms over the past five years (1.33%) and is evidence as to why Alabama’s economic strength has been building exponentially over the past several years.

We hope this information is useful for those interested in starting a company in Alabama, marketing your company to other small businesses in the Yellowhammer State, or expanding your business in the state.

Alabama has much to offer employers, employees, companies, and entrepreneurs, which is why many continue to flock to the state due to its constantly improving business environment, which in return has provided an abundance of fruitful opportunities for everybody. With access to massive consumer markets, a respectful “go local” approach to community-driven businesses, a multitude of local resources, and a healthy labor market, it is clear to see why.

If you would like to download the latest 2020 Small Business Profile on Alabama from the U.S. Small Business Administration, Office of Advocacy, the Profile can be downloaded here.