When economies turn down, entrepreneurs turn up, as observed after the Great Depression, 9/11, and other economic slumps. Similarly, COVID-19 has led to a massive increase in entrepreneurial activity. Researchers at the Peterson Institute for International Economics noted that Americans started 4.4 million businesses in 2020 which is a 24 percent increase from the year before. It is by far the biggest increase on record. That pace has further accelerated in 2021- there has been an enormous rise in the number of businesses launching. In fact, some 1.36 million new companies were started in the first quarter of this year. I’m certain that those numbers will continue to grow as more and more people exit the traditional 9 to 5 landscape and make their startup dreams come true.
Over the past two years, we’ve also witnessed existing business owners regroup and pivot as other fledgling entrepreneurs emerged as products of the pandemic. Because so many employees were furloughed or laid off during COVID, many turned to entrepreneurship to take control of their earnings, livelihood and lives. Additionally, a multitude of aspiring entrepreneurs have now had plenty of time to plan for and launch their businesses and further shape the post-pandemic economy, and we’ll continue to see these new startups emerge.
The Great Resignation
And, we are now on the verge of the great resignation. Many employees are being lured back to the office and are not happy about it. They’ve gotten used to more freedom, flexibility and the ability to work from home. I had dinner with a few friends last week who were talking about how they got “the email” that it was time to return to the office and they were not very excited about it. They were plotting ways to stall or otherwise thwart their returns (and many other workers are right there with them).
Further, employees who remained in their positions during the pandemic have been left with more on their plates, lower salaries and are now experiencing extreme burnout as a result. This decreased job satisfaction will also push many towards entrepreneurship in order to better balance their lives.
A Changing Business Landscape
The enormous potential for democratizing entrepreneurship and creating new entrepreneurial role models (those that others will more easily identify with) will also have a long-term impact on the business landscape. This shift could inspire additional non-traditional entrepreneurs (minorities and women) to embark on entrepreneurial endeavors and start their own businesses.
There are also many new holes and gaps to fill in the morphing marketplace, and startups can adjust to these changing needs quicker than their larger corporate counterparts. We can also expect that those groups that have been more adversely impacted by COVID in the corporate world will continue to turn to entrepreneurship as a way to have greater control over their professional destinies.
Factors That Will Ignite This Growth
The persistent rise and future impact of entrepreneurship will carry on post-pandemic fueled by issues such as lower thresholds for people starting their own businesses, many turning to entrepreneurship out of dissatisfaction with the corporate world and its response to COVID-19, and the prolonged growth of the gig economy. There will also be many emerging entrepreneurial opportunities that new and inspiring entrepreneurs can take advantage of by reacting to shifting consumer demands, morphing industries and new market opportunities.
As you can tell, our entrepreneurial outlook is bright with many new founders soon joining the startup pack. It will be interesting to see what will happen to the business environment in 2022 and beyond!