By: Kellen Gracey 
Sr. Data Scientist, Venture Forward 

Venture Forward, GoDaddy’s research initiative that quantifies the impact 20+ million online microbusinesses have on their local economies, recently launched a new metric for understanding the microbusiness landscape in the United States: the Microbusiness Activity Index (MAI).

Through years of research, Venture Forward has uncovered the outsized impacts of microbusinesses. However, the MAI adds a new way to understand them by looking at their activity and the economic outcomes driven by that activity.  

MAI is comprised of 3 subindices: engagement, participation, and infrastructure.

• Engagement provides a way to compare how a community’s microbusinesses are functioning by looking at factors like how built out the online microbusiness is, how much traffic it generates, and what economic footprint it makes, among other characteristics.
• Participation describes how concentrated microbusinesses, and their everyday entrepreneurial owners, are in the community and the extent to which that concentration has changed over time.
• Infrastructure gives a look at how prepared the community is to support microbusinesses, in terms of human capital, internet connectivity and access to home computers.  

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More information on the component variables by a community can be found by exploring the data. To download the full MAI data set visit the Microbusiness Data Hub. 

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Communities have found the MAI useful in measuring where they stand in their efforts to unlock the potential of microbusinesses in their area. Part of the problem is that communities often have very little, if any, information on their microbusinesses. While community leaders know they exist and are increasingly realizing they have a substantive impact on economic outcomes, they don’t know how to engage with microbusinesses, what they need, or what the overall constellation of the microbusiness community looks like. MAI helps to fill these gaps by providing actionable insight into which levers community leaders need to pull to maximize economic outcomes. 

One way to do this is through case studies of cities where microbusiness engagement and participation are high and/or growing. Venture Forward recently updated the MAI data to include Q1 2022. Let’s take a look at the cities that are seeing the most improvement in engagement and participation subindices, the two subindices that directly describe the microbusinesses and their owners. For similar population comparisons, we split America’s cities into three groups by population: micropolitans under 50,000 people, mid-size metropolitan areas under 500,000 people, and the largest 100 metro areas with more than half-a-million people in them.  

Micropolitans 

The top five gainers in engagement in Q1 2022 were located in the Midwest and the South, growing between roughly 9 and 12 percent. Deming, New Mexico is an example of a city where there has been a relatively lower number of microbusinesses until recently. By the start of 2022 it was a top micropolitan in terms of growing microbusiness participation, seeing their score grow more than 11 percent. At the same time, their engagement score is creeping up slowly as well. Their infrastructure score of 78.7, significantly below the national micropolitan average of 98.8, is potentially holding the city back: while they are seeing important growth in the concentration and activity levels of microbusinesses, the city must also explore what resources are needed to build the infrastructure foundations that help microbusinesses succeed. 

Clarksdale, Mississippi is a city where MAI could help identify where assets and resources are best deployed to improve microbusiness conditions. At the end of Q4 2021, Clarksdale was the fastest growing micropolitan in terms of change from Q3 to Q4 2021 in participation. In Q1 2022, they left the list of gainers in participation and joined the list of top gainers in engagement. In Q1 2022, however, Clarksdale saw most of those gains in participation lost, which led its overall composite index score to drop more than a point to 88.4 – well below the national average among micropolitans of 99.1.

Clarksdale is an example where a focused effort to raise both scores simultaneously would have a significant impact on the overall local economy. An in-depth look at local economic policy could reveal why these swings are occurring in Clarksdale, and what might be done to soothe the volatility in these measures.  

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Mid-sized Metropolitans 

There are newcomers to the mid-sized cities top gainers lists in terms of both engagement and participation: none of the mid-sized cities currently on the list for Q4 2021 – Q1 2022, were on the list for Q3 – Q4 2021. New Philadelphia-Dover, Ohio metro area stands out, however, by the sheer magnitude of the gains it experienced in engagement over the past quarter. At the same time, the region saw a dip in participation causing its overall composite score to remain around 90, well below the national metro average of 101.7.  

What can be learned here?

The overall approach to building out the microbusiness community must be two-pronged: get pre-existing businesses online if they aren’t already, while also encouraging innovation and entrepreneurialism in the area to create new businesses. Communities must ensure that the microbusinesses they already have are performing well and have the resources they need, but they also need to encourage new development and growth.

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Largest 100 Metropolitans 

Finally, the largest category of cities, the top 100 largest metropolitan areas, provides us with one particular case that could potentially serve as a model for other cities. The Columbus, Ohio metro area has been experiencing unprecedented growth, both in terms of microbusinesses as well as the overall economy. The region is well-situated for economic success far into the future. The composite MAI score in Columbus grew from 105.8 to 115.1 in just one quarter, an incredible amount of growth. Much of this is due to an explosion of engagement, while also maintaining growth in participation.

Columbus is opening new businesses every day, while providing the resources they need to sustain themselves and realize their goals. A more nuanced, in-depth understanding of the economic policies being utilized by Columbus in this space could be valuable in learning how to effectively navigate their situation.

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To Wrap

Having looked at the cities where growth is occurring, we now know that there is no simple one-size-fits-all approach to developing and sustaining a robust microbusiness community. Communities must strike a delicate balance between assisting already existing businesses while also encouraging new ones to form and operate.  

An additional insight gleaned from this quarterly update is that the larger the city, the more difficult it is to move the needle in a meaningful way. While the top five gainers in participation scores among micropolitans saw between five to 11 percent growth, participation scores for the top 100 metro areas only moved between point six to two percent: a fraction of the growth, with the notable exception of Columbus, Ohio. This also implies that there is more opportunity in the microbusiness approach for smaller communities, in terms of the overall impact they’ll have on those cities.  

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Explore. Share. Download the MAI data set on the Microbusiness Data Hub here. 

Interested in learning how Venture Forward data can support decision making in your community?