According to predictions from QuickBooks, 2022 is on track to break 2021’s record for new business ID numbers, indicating that more people are entering into the world of entrepreneurship.
Although data for actual business formations is only available through 2019, this increase in business ID applications reveals a desire for self-employment and people chasing their entrepreneurial dreams.
New businesses during this era of labor and economic loss can make a huge impact on both representation and recovery. For instance, women, people of color, those with disabilities, or those without college degrees have an opportunity to create their own online businesses more than ever before.
In fact, research from web domain company GoDaddy shows that 57% of women started online businesses since March of 2020 compared to the 48% pre-pandemic. Additionally, 26% of Black Americans (an increase from 15% pre-pandemic) and 44% without college degrees (up from 36% pre-pandemic) founded companies.
“Sometimes our ideas aren’t listened to as thoroughly, so some people just take their own initiative, ‘Well I can do this better myself.’ And they do,” said Kimberly Blackmon, a Black woman who grew her skincare side hustle after quitting her job as an HR rep at the beginning of the pandemic.
The reasons for starting businesses have varied across the spectrum. Some workers felt unfulfilled in their day-to-day jobs, while others were furloughed from their positions which allowed them to focus on their passions.
Retail saw the highest increase in business applications, but transportation, warehousing, professional services (such as graphic design and accounting) also saw a significant spike.
While the entrepreneurial population is expected to continue blossoming in the next few years, it will also serve as a lesson for many first-time business owners.
“The failure rates are really high, but a small fraction grow really rapidly,” said John Haltiwanger, an economics professor at the University of Maryland economics professor. “And so the really interesting question will be, who emerges from this?”