In 2020, business owners faced mandatory shutdowns due to COVID-19, which severely limited their level of operations. Not surprisingly, these shutdowns were especially hard on small businesses, at least at the beginning of the pandemic. Statistics from the U.S. Census Bureau indicated that applications for new businesses significantly decreased in the early stages of COVID-19 but surprisingly began to surge in the second half of 2020 continuing through the next year (National Bureau of Economic Research).
Why is Business On The Rise Post Pandemic?
When the pandemic began, the restrictions that followed were detrimental to many small businesses. No one would have guessed that there would be a post-pandemic boom in business start-ups. What led to the rise in new business formations?
Two Possible Reasons to Consider
A couple of factors that economist John C. Haltiwanger theorized in his paper “Entrepreneurship During the COVID-19 Pandemic: Evidence from the Business Formation Statistics” include:
- A continuing increase in nonemployer businesses as a means to supplement income or a stopgap job. Interestingly, “In the pandemic, the surge in new business applications has been especially large for likely nonemployer businesses with the surge four times larger than the increase in the Great Recession” (Haltiwanger).
- A shift towards ecommerce businesses as small businesses find it more profitable to sell goods and services online over running a brick and mortar location. Haltiwanger pointed out that this was a pre-pandemic trend and states that “from this perspective, the pandemic may be accelerating ongoing trends and the surge in business applications is part of this process.”
Entrepreneurs’ Perception is Pro Business
A March 2023 survey of entrepreneurs indicated that aspiring franchisees are ready to leave the pandemic behind. Notably, “55.6% of survey respondents either agree or strongly agree that ‘now is a good time to start a business’” and “53.7% of entrepreneurs surveyed say they are ‘more likely to launch their startups than three months ago’.”
Source: Franchise Insights by Franchise Ventures
The aftermath of the pandemic has been surprisingly optimistic for the business world. Aspiring business owners should consider taking advantage of this post-pandemic boom.
Interested in Franchise Ownership?
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