Small business creation rose post-pandemic; expansion remains key challenge
The number of small businesses in the state expanded rapidly in the post-pandemic period, a new Wisconsin Policy Forum report finds. The number of establishments in the state with fewer […]
Black News 
The number of small businesses in the state expanded rapidly in the post-pandemic period, a new Wisconsin Policy Forum report finds. The number of establishments in the state with fewer than 500 employees surged 20.2% between 2020 and 2025, far outpacing their growth in the prior decade.
While this increase may signal an entrepreneurial upswing, growth has not been consistent across business sizes, industries or geographies. The number of micro-businesses with fewer than 10 employees has grown rapidly, but the number of establishments with 100 or more employees has increased much more slowly.
Recent Forum research found that small businesses play a vital role in local economies by driving job creation and growth, fostering innovation and entrepreneurship, and contributing to local philanthropy and community identity. Wisconsin relies more on small businesses to create jobs than does the nation as a whole: small businesses accounted for about 95% of Wisconsin’s net job growth between 2010 and 2025. Nationally, they accounted for 72% of net job gains during the same period.
At the same time, Wisconsin’s rate of small business employment growth has lagged the national rate since 2010. This is likely due in part to the state’s limited supply of available workers, which is influenced by relatively slow population growth, an aging population, and a low unemployment rate.
Wage and payroll growth among Wisconsin small businesses has been strong, particularly in the 2021 to 2023 period of high inflation. This dynamic suggests that the labor market has tightened and become more expensive for small business owners, which may have pressured their margins.
Our analysis also reveals small business trends related to industry and geography. Wisconsin’s strength in manufacturing remains a defining asset. But its below-average job concentrations in higher-wage, knowledge-intensive sectors suggest room for diversification.
Madison and Milwaukee serve as Wisconsin’s primary engines of business formation and employment, while other regions of the state show more mixed or declining trends in these areas. The Eau Claire, Madison, and Sheboygan areas had the highest concentrations of small businesses per capita in 2024.
Our findings suggest several priorities for policymakers, economic development entities, and business support organizations. They include improving access to capital and strengthening capital readiness, particularly for newer establishments and those seeking to expand, could help more businesses move beyond the micro stage.
Place-based and sector-specific strategies will be essential. Since business conditions vary significantly across metropolitan areas and industries, a one-size-fits-all approach is unlikely to produce strong statewide results.
Lastly, workforce development strategies should continue to align with both Wisconsin’s leading sectors such as manufacturing, and high-growth sectors like health care, while also strengthening pipelines into higher-wage, knowledge-intensive industries.
This information is provided to Wisconsin Newspaper Association members as a service of the Wisconsin Policy Forum, the state’s leading resource for nonpartisan state and local government research and civic education. Learn more at wispolicyforum.org.
