NEW YORK (AP) — The number of Americans looking to start their own business is on the rise as the coronavirus pandemic creates opportunities for some would-be entrepreneurs.
People start businesses for a variety of reasons: some lost their jobs during the pandemic and decided to make side hustle their main occupation. Others have reassessed their priorities and decided to leave the corporate world. Some have taken advantage of the flexibility of remote working and lower commercial rents.
According to the US Census Bureau, 5.4 million applications for corporate tax ID numbers were filed in 2021, surpassing the previous peak of 4.4 million in 2020. In 2019, before the pandemic, there were 3, 5 million new business applications. The apps don’t necessarily mean businesses were started, but the numbers show people were considering starting businesses despite the impact of the virus on the economy. Some economists attribute part of the country’s labor shortage to an increase in the number of people who have recently gone to work for themselves.
Now these new owners are also dealing with the issues that the pandemic has posed to many established businesses: changing guidance from health officials, difficulty reaching customers, problems in the supply chain and general uncertainty about the future.
Darin Mays of Minneapolis had been a healthcare software manager for 15 years when the pandemic hit and the project he was working on ended. Mays could have accepted another assignment but decided to leave instead.
While living off his severance package, he made a table that wraps around a patio heater for a neighbor, who quickly hosted a barbecue. “Everyone said this table is awesome, you should check it out on Etsy.” He did and sold his first about a week later.
Mays, 38, has a patent pending for his table designs, and he also sells other woodwork through his Etsy shop, Urban Wing Co. The shop achieved six-figure sales in 2021, a- he declared, and he plans to expand.
“The pandemic, while terrible, has been an opportunity for innovation,” he said.
The rise in entrepreneurship over the past two years is very different from what happened after the last downturn in 2008-09, when weak consumer spending and a housing bubble hangover weighed on on the economy and the creation of new businesses has plummeted.
People who start their own business are considered government employees, which lowers the unemployment rate. But they are not included in the government tally of the total number of salaried jobs. As a result, the number of new jobs added each month may be underestimated as more Americans are going it alone. The Ministry of Labor publishes its latest employment report on Friday.
For Kelly Van Arsdale, 32, a pandemic-related move and a chance stroll past a conveniently located storefront were keys to starting her own business.
Van Arsdale was a freelance web developer in San Francisco when the pandemic hit. He and his wife decided to move to Seattle in August 2020, where they could afford more space and be closer to his parents.
While in San Francisco, Van Arsdale and his brother made chocolate in their garage and gifted bars to friends and family. While walking through his North Seattle neighborhood in April last year, he came across an unoccupied storefront that had space for chocolate production. He rented the space, built it, and founded Spinnaker Chocolate in October.
His neighbors were the first customers. But reaching a wider customer base online has been more difficult.
“The pandemic has pushed a ton of businesses online and it’s now more expensive than ever to run any amount of advertising,” he said. “Overall, the most difficult challenge has been building awareness of our brand.”
Freelance designer Emma Gage, 26, was initially overwhelmed when she lost her job just after the coronavirus hit New York. But with pandemic unemployment aid coupled with savings, she soon had the budget to try and start her own fashion label. Her brand, Melke, is fluid and uses natural materials.
“I already had a name and a logo and I also knew the general philosophy of the brand,” she said. “The next steps were to start sourcing and sewing. As I had time, I decided why not?
The label has taken off and she is planning a show at New York Fashion Week in February. The biggest problems so far have come from shipping issues.
“Overall, being a new business owner is tough,” Gage said. “I learn every day that there are a million things I don’t know.”
In New York, the pandemic has wreaked havoc on the restaurant industry. But it has also created new opportunities for some people who previously worked on the fringes of the food industry.
Elyssa Heller has worked in the food and beverage industry for 10 years and was working for a vegan snack company at the start of the pandemic, but wanted to try her own concept focused on Jewish comfort food.
Heller, 32, first had success with a pop-up bagel at popular pizzeria Paulie Gee’s in Brooklyn in 2020. The pop-up concept has flourished in many states as the pandemic has forced limited seating or completely closed dining areas.
She eventually opened a sandwich counter in March 2021 and a full-fledged restaurant, Edith’s Eatery & Grocery, in January.
“The New York food scene has always been very exclusive,” she said. Before the pandemic, “there were no vacant units and affordable rent options. Someone like me who didn’t have a name in the restaurant space wouldn’t normally have access to the talent I was able to hire.
Its biggest challenges now are what any restaurant faces: keeping diners safe and comfortable eating out and dealing with ever-changing pandemic rules.
“It’s just a problem-solving day every day, it’s just a new reality,” she said.
AP Economics Writer Christopher Rugaber in Washington contributed.
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