Burnt out and feeling the pain of inflation, Americans turned to a classic capitalist tradition: Starting their own businesses.
People in the US launched about 5 million businesses last year, according to a new survey of 1,600 entrepreneurs from Gusto, an HR and payroll platform. Although that’s down from 2021, since the pandemic broke out three years ago Americans have created 15 million new businesses, compared to 10 million in the three years before the health crisis, said like In the early stages of the pandemic, many people started new businesses out of necessity amid a flurry of layoffs and company closings.
“I can’t even take a lunch break”
Among the new business owners is Kiana Smith, 28, of Greensboro, North Carolina, who started a mobile dog-grooming business last year after working at a pet salon.
The salon “would overbook me, so I had to answer the phone with a dog on the desk,” Smith recalled. “I want to give the dog my full attention, but I can’t give myself time and attention – I can’t take a lunch break.”
Kiana Smith
After saving money, Smith said she took the leap last year and started Pretty Dog Clean, buying a trailer and turning it into a mobile dog-grooming station. She now drives to clients’ homes for appointments, and says she makes more money than at the salon while having more flexibility in her schedule to pick up her children, ages 6 and 8, from school.
Kiana Smith
“For the most part the pandemic has made this business a good business because people prefer to stay in their homes,” he told CBS MoneyWatch. “I was getting reservations every day, people were calling every day, and I was like, ‘it’s working’.”
Why start a business?
A shift visible in the flood of new businesses since the pandemic: more women, Gusto research shows. About 47% of new businesses last year were started by women, compared to 29% in 2019, before the pandemic. People of color also started more businesses – 27% last year compared to 23% in 2019.
“We’ve seen women and people of color driving this entrepreneurship since the pandemic,” said Gusto economist Luke Pardue. Girls are “encouraged to be flexible,” in part as school interruptions continue to be an issue for families.
The desire to generate more income amid the highest inflation in 40 years is also driving many people to form businesses, including side hustles, Pardue said. About 41% of people who started a business last year said they were motivated by a desire for financial stability or the desire to increase their household income, up from 24% last year. , Gusto saw.
About half of the people who created new businesses last year worked full-time in their new gigs, suggesting that 2.5 million people were effectively drawn from the country’s wider labor pool. . And because many of the new businesses are hiring, it increases the competition for workers, Pardue said.
Economic development
Among them are Zero Cho and Alexander Lee, who met while working at the trading app Robinhood and started their new business, called Iago, last year. Inspired by their own experiences of learning languages through immersion — such as watching movies and TV shows — they created a Chrome extension for learning Japanese through Netflix, YouTube or Disney+ movies.
“The job market is tough,” Cho said, but he added that people are interested in their project and they are getting contractors.
Currently the pair is working on raising more money for their business, but noted that the collapse of Silicon Valley Bank earlier this month made the climate more conservative. The company plans to expand into more languages, such as Korean, which has become popular because of K-pop and K-dramas, they said.
The pace of new business creation will be good for the economy in the long term, Pardue said.
“It’s an incredibly encouraging trend to see this entrepreneurship change in the economy,” he said. “They’re changing, and so it’s going to raise our standard of living.”
