COVID Causes Boom In Business Startups
Would you feel comfortable starting a new business during a pandemic? Apparently hundreds of thousands of people were. Just in June 2021 alone, more than 440,000 businesses were formed. The period of March 2020 to June 2021 was a record high for business startups.
That may be surprising to you, as that was also the time we were dealing with the COVID pandemic. With so many businesses closing down, why were people eager to start their own business?
You may think that a recession would cause potential entrepreneurs to delay their business plans, but experts say that the opposite is actually true. Economic recessions can be the ideal times for people to consider entrepreneurship. In the case of the COVID pandemic, many people who were laid off suddenly had time and money (in the form of enhanced unemployment benefits and stimulus checks) to start their own businesses. On top of this, starting a business is cheaper and easier than ever.
In addition, minorities are increasingly seeing their businesses get off the ground. In 2020, 11% of new business owners were African-American, nearly four times higher than in recent years. Also, 49% of the business owners were women, a huge jump from 27% in recent years. However, this is not a coincidence. Women and minorities were most likely to get laid off during the pandemic in 2020, so they turned their layoffs into business opportunities.
Why are there so many businesses? Because starting on is easier than ever. While physical businesses have been booming, nonstore retailers account for the largest single sector of new business formation. Social media and other online services are allowing these companies to grow quickly.
Will These Businesses Survive?
While these statistics are uplifting, there are other statistics that show a different story. Approximately 20% of small businesses fail during the first year. Most business owners who have been surveyed feel they will fail within the next year or so without any more financial support from the government.
Many business owners used earnings from stimulus checks, grants, and loans from the Paycheck Protection Program to start their businesses. These sources of money are no longer available. It is unknown if stimulus checks will continue or if small business loans will be available again in the near future.
While the trend in new business startups is inspiring, it won’t continue without proper support. Women and minorities tend to struggle, so how can they get the financial aid they need to maintain their businesses and stay operational for years to come.
Learn More About Business Startups
Starting a business always comes with unknowns, and this is especially true during a recession. This was also the first time that the United States has dealt with a pandemic in the past century, so the stakes were even higher for business owners.
Starting and maintaining a business takes a lot of time, money, and effort. Orlando business startup lawyer B.F. Godfrey from Godfrey Legal can answer your questions and help you get on the right track for success. Schedule a consultation today by calling (407) 890-0023 or filling out the online form.