New businesses are being started at a faster rate during the COVID-19 pandemic than they have been in years, a Wall Street Journal (WSJ) report says.
The report cites applications for employer identification numbers, saying they’ve passed 3.2 million this year, as opposed to just 2.7 million in 2019. That number includes gig-economy workers and others who struck out on their own after layoffs — but even excluding those people, new filings for people who intend to employ others were up 12 percent through mid-September. It’s the most since 2007, WSJ writes.
People just seem to feel it’s a good time to start a business, given the number of them that closed down this year — there were more businesses closed in the first three months of the pandemic than are usually closed during an entire year, according to George Washington University economist Steven Hamilton, quoted by WSJ.
PYMNTS reports that restaurants were particularly hard-hit, with over 26,000 closed by July, with around 60 percent of them being permanent. The rate of permanent business closures shot up 14 percent between June 15 and July 10, with particularly heavy concentration around cities with strict lockdown orders.
So the void needed to be filled for various things people need and want. That was where new businesses came in.
WSJ quotes Haviland, Kan.-based Madison Schneider, 22, who opened a coffee shop called Lela’s Bakery and Coffeehouse just this month. Schneider said it “just felt like the right thing to do.” Other examples cited included Miami, Fla.-based Danielle Payton, who started an online fitness program called Kuudose, and Wisconsin-based Ian Oestreich, who started a bike mechanic business.
Small businesses aren’t feeling all doom and gloom in September — PYMNTS reports that many of them are feeling better about their chances of survival now. In a survey of 500 businesses, PYMNTS found that 54 percent feel confident they’ll be able to make it through, up from just 42 percent in March. That comes from the fact that 24 percent of them have reported improved financial situations since the early weeks of the pandemic, and 65 percent say their finances are around the same.