The recorded growth in applications for new businesses has reached an unmatched high in recent history.
According to The Wall Street Journal, new applications for an employer ID reached over one million through mid-September in the US. That’s a whopping 12% increase from last year and the highest number since 2007. Interestingly, these figures still don’t account gig workers which means incorporating this particularity only furthers the already inflated number.
Inherently, the surge of applications can be linked to multiple factors, including small businesses around the country that have had to shut down because of the pandemic. Other documented factors include evolving consumer trends, a swelling in personal savings rates, and a boost in spending across the country as the federal tax-filing deadline was pushed back to July instead of April, its original date.
Interestingly, the present health scare is inducing an increase in business startups that’s reminiscent of the days before the Great Recession’s decline.
With all the available figures we have now, it’s only fair to ask if there was even a slump in startup creation, to begin with. Albeit not a wrong number, data suggests that before the novel coronavirus, stagnant population growth and the fear of going against corporate giants were the reasons startup creation wasn’t as rampant as it is today. What’s more, the recent influx of entrepreneurship stems directly from the government’s pandemic relief efforts which prioritize income protection versus job protection. As a result, more people are empowered to take on the risk of founding a startup.
According to the Bureau of Labor Statistics, the US economy experienced a jump in employment statistics with the country’s unemployment rate downsizing to 7.9% as of September this year. Still, the extent of permanent job losses escalated to 3.4 million from 534,000; encouraging more creatives to pursue a career in startup.
Still risky business
Although the figures are inspiring, founding a startup remains intrinsically challenging. So much so that the US Small Business Administration cites that roughly 50% of startups reach the five-year mark. Company failures vary, but Forbes reveals that 70% of US startups fail because of premature scaling. Additionally, business leaders note that their intellectual property isn’t a competitive advantage, as initially concluded.
For a lot of hardworking folks in the US, now is the best time to pursue passions and get creative to breeze through bills. That being said, it comes as no surprise that citizen developers are also growing in number. In context, the no-code industry is expanding, and a lot more visionaries are using this time to bridge gaps in a plethora of industries. For instance, we at MVP.dev have been doubling our efforts in developing Covid-19 survey apps.
Progressively, more entrepreneurs now consider founding businesses in tech despite the absence of a technical background. Since the advent of both no-code and low-code spaces, inexperienced tech-savvy business folk have been more confident in braving a world that used to be dominated only by software engineers and coders. As such, more professionals are taking advantage of the internet’s endless reach.
Empires in the making, CEOs are turning to gig workers and remote staff to actualize enterprises. If anything, the pandemic has only emphasized how much more possible it is to generate income from virtually anywhere in the globe.
Access to more talent
According to the Kauffman Foundation, the years between 1978 and 2012 were the lowest in terms of new business creation. Ironically, these were also some of the best eras to found a business. Airbnb and Uber are prime examples of great brands that were created as a response to evolving market demands. Today isn’t any different. Although it is devastating how today’s crises has birthed irreparable damage, entrepreneurs can use this period to grab once-in-a-lifetime opportunities—one of which is steadier access to a diverse pool of talents.
During boom intervals, design, engineering, sales, and product talents can be criminally challenging to recruit. Not only are competent applicants scarce, but the brilliant ones also come with a hefty price tag, proving futile when they’re unable to exercise their dazzle for an enterprise right away.
Today, numerous remarkable companies have laid off talent because of a decrease in market demand. And because of expanded market dynamics, competitive salaries have also decreased for once in-demand job titles. While one can argue that creatives and prospects have had to lower their asking rates, entrepreneurs can agree that job searchers are more abundant now.
Furthermore, the capacity to access excellent talent has become a tad evident this year. Several business leaders have also jumped on the chance to invite talent to work for them by offering alternative compensation strategies like equity and permanent work-from-home arrangements.
Do you have startup ideas you’d like to discuss? Give us a call, and we’ll help you out!