The number of small businesses in the state expanded rapidly in the post-pandemic period, a new Wisconsin Policy Forum report finds, but data shows they face challenges scaling up.
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. 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.
“Wisconsin entrepreneurs are succeeding in starting businesses but often face difficulties scaling them into larger, more sustainable enterprises,” the report finds.
Wisconsin also relies more on small businesses to create jobs than does the nation as a whole, even as its rate of small business employment growth has lagged the national rate since 2010.
Wisconsin’s strength in manufacturing remains a defining asset. But the state’s 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.
Wisconsin is particularly reliant on small businesses to drive job growth, as 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, small business employment has grown more slowly in Wisconsin than nationally. This is likely due in part to the state’s limited supply of available workers.
From 2010 to 2025, small business employment rose 17.8% in Wisconsin compared with 23.9% nationally. Job growth was particularly weaker in Wisconsin for small businesses with at least 100 employees.
In recent years, there has been particularly strong growth in the number of health care and social assistance small businesses. This sector also has contributed heavily in terms of job creation. From 2010 to 2024, small health care establishments added 38,640 jobs, accounting for roughly two-thirds of net small business job growth across all sectors.
Meanwhile, the share of Wisconsin small business employees working in manufacturing was 1.78 times higher than the national share in 2024. Several smaller metro areas in Wisconsin remain heavily reliant on manufacturing, which represents both a strength and a potential risk.
The report was commissioned by the Office of Business and Entrepreneurship at the Universities of Wisconsin, with financial support from the Wisconsin Economic Development Corporation. Click here to read the report.
