Why Are More People Than Ever Starting Their Own Businesses?

By Clinton Courier | February 4, 2022 |

If you were thinking of starting a business, chances are, you are less alone than ever! Workers are quitting at unprecedented rates, and there are significantly more available jobs than unemployed people in the United States. Fast forward, one cause of the labor shortage is likely to be old-fashioned entrepreneurship.

According to a study of Census data by the Economic Innovation Group, Americans have filed a record 1.4 million applications to establish new firms through September (EIG). And, unlike freelancers, most of these businesses are in industries like manufacturing or retail, which are more likely to produce jobs, according to the think tank. There are also entrepreneurs who choose to open their businesses in other countries, for example in Malta, where they can benefit from low taxation and a stable business environment.

Reasons Entrepreneurs Developed Businesses in Record Numbers During the Pandemic

1. Creativity

It’s simple to see why: with offices shuttered and in-person business on hold, people had to think outside the box. Therapists began podcasts and provided virtual sessions. Parents who were confined to their homes began selling baked products from their kitchens. The enterprising discovered methods to change their work to fit the circumstances or launch a side business to address a sudden need in the stagnant economy.

2. Being Your Own Boss Is An Inspiration

While love for your product or service and capitalizing on market demands always motivate entrepreneurs like Chuck McDowell, being your own boss is possibly the best benefit of owning a firm. This was especially true during the pandemic, with more than half (57%) of individuals polled citing the need to be in charge as the primary motivation for launching a business.

3. The Pandemic Accelerated Plans

Despite the fact that over a quarter of the entrepreneurs polled (25.1%) indicated they were laid off or furloughed as a result of the pandemic and needed money, the majority of them launched their firm for other reasons. Specifically, they’d either been preparing an entrepreneurial move before to COVID or saw an opportunity materialize as a result of the year’s exceptional circumstances.

Economists believe that a mix of freely accessible new technologies, house confinement, and, yes, extra time may have been the stimulus for the emergence of so many new firms.

4. Direct-To-Customer is The Model of Choice

Most of last year’s crop of new small enterprises is B2C (business to consumer). Approximately 80% of these enterprises, according to our statistics, sell directly to customers. What exactly are they trying to sell?

Thanks to a worldwide digital infrastructure that enables everything from selling ads in a podcast to worldwide drop shipping, and so on, you can do just about anything you can think of.

Material things (think retail goods, face masks, and other Etsy-style crafts and clothing), software (apps), and services (both in-person and remote) topped the list of what these new businesses have to offer, according to respondents.

5. You Don’t Need A Lot of Cash To Start

The old adage, “It takes money to earn money,” still holds some truth. However, it may not take as much as it once did.

Over half of new small business owners (52 percent) started their businesses with less than $10,000 in funding, and nearly half of them had less than $5,000 on hand on day one.

To get things started, the vast majority of entrepreneurs (almost 80%) drew from their personal bank accounts, while around one-third got contributions from friends and family. For those seeking alternative funding avenues, exploring options like investment by residency in Malta can provide access to new markets and financial resources; companies such as Nomad Visa Malta specialize in facilitating these opportunities.

6. New Businesses Are In The First Place Digital

They’re digital-first, requiring little more than a computer or perhaps a phone in terms of physical space or equipment. Seventy percent of those polled claimed their new company was founded on technology or was technology-focused from the start. This covers everyone from fitness professionals who offer video-based training sessions to gig-economy workers who operate on app-based platforms. Any startup, digital or not, should invest in small business software to function at optimal levels.

Wrapping It Up!

Americans created new small companies in record numbers during the COVID-19 epidemic, whether spurred by necessity in the wake of layoffs, being housebound with family to care for, or finally having the leisure to dig into that side hustle.

Starting your own firm, as any entrepreneur will tell you, is far from a sure thing. However, as more people are vaccinated and limitations on meetings are eased, this new generation of entrepreneurs has reason to be optimistic.

Almost three out of every four new business owners polled indicated they already have customers. Things are looking good for small business owners all throughout the country as summer approaches!