Pandemic? No Shortage of Startups
Written by CMG News Contributor, Doug Carleton
Thousands of companies are failing or going out of business. Thousands of people are losing jobs, with many of those jobs not returning even as the economy begins to claw its way back. So an automatic reaction might be, “Who in the world would want to start a business in this kind of environment?” Well, it turns out that many people want to start a business. According to the U.S. Census Bureau, applications for employer identification numbers needed to start a business have passed 3.2 million for the year compared with 2.7 million at the same point in 2019.
Different factors come into play here that have facilitated the rise of new businesses aside from the fact that so many people have lost jobs and are looking for new opportunities. One is that personal savings rates since the start of the pandemic are three times higher than during the last recession, and some of these savings are used to start new businesses. There has also been a more sustained shift in consumer behavior than in previous downturns, wiping out revenue streams for some businesses but opening up new markets for upstarts. So here are a few examples of people starting new businesses:
A young woman in New York loved bookstores. At one point in her career, she worked for the Strand Bookstore in New York – a New York legend that advertises carrying over 2.5 million books. Later on, when she lost her most recent job, she decided to go for it and open her book shop using her savings and help from her friends. When people questioned her about whether it was the right time to open a retail store, she said, “I may as well do something crazy and follow my dream, and if it doesn’t work, when will it?”
A nursing home activity director quit her job because she and her husband had no one to watch their three-year-old son, who was home from school because of the pandemic. So because her grandmother taught her to sew when she was little, she started making masks for her family. It began to expand outside the family, so she opened an Etsy shop and now has her own website making customized masks for a local hotel.
A sous chef lost his job when his employer had to close his restaurant. He and his brother decided to start a meal kit delivery service offering fresh pasta dishes that arrive with instructions on reheating a restaurant-quality meal. They initially launched on Instagram with friends as their first customers, and have now created a website as their business has grown.
A fitness trainer at a gym knew that his days were numbered. He had a knack for fixing bicycles, so with $1,000 of his savings and spreading the word on social media; he launched his bike repair business operating out of friends’ backyards. He was soon putting in 10-hour days and fixing as many as 18 bikes a day. When he was offered his old job back, he declined.
The American entrepreneurship dream is alive and well. Opportunities are everywhere. “I’ve got a problem with my bike. Do you think you can fix it?” Aha! “Wouldn’t you like to have your hotel name on masks to give to your customers?” Aha! And on and on.
This blog entry is a slightly edited excerpt from Doug Carleton's 'The Daily Life Of A Small Business Owner' series. Doug was a mentor with SCORE, Startup Virginia, and Lighthouse Labs, and has 25+ years of experience in small business finance including 12 years in SBA lending. To contact Doug directly, please email him at sbaloanspecialist@comcast.net.