Start-up boom during the pandemic has been a phenomenon to behold. So many people lost their jobs and switched up their livelihoods.
It was only natural for them to explore other entrepreneurial pathways.
Start-Up Boom In Pandemic – Companies Registered?
As a result of the pandemic, there has been a huge surge in the number of start-ups. The statistical data shows many people turning to entrepreneurship for financial stability.
Let’s find some stats that help us understand the scope of this start-up boom.
– In the USA in July 2020, the number of applications for starting a business rose to 55,165,700. It is a 95% increase as compared to 2019. This report is by Census Bureau.
– In France, as per McKinsey, 84,000 new startups registered in October 2020. It was an increase of 20% from 2019.
– Japan registered 10,000 new startups in September 2020, an increase of 14% from last year.
– UK had registered 30% more companies by November and December of 2020, as per National Statistical Office. This was a double increase since June 2020.
– In America, in 2020, almost 4.3 million businesses filed their paperwork, as per Census Bureau. That is a 24% increase from 2019.
It was by far the highest rate of increase in business filings since the Bureau started tracking it. This can be due to many factors:
– Easy access to capital
– More people getting into freelancing and other self-employed jobs
– Increased digitization of businesses
– More focus on diversifying income sources
The start-up boom in the pandemic has been a sign of resilience that many economies have shown.
Which Industries Had The Most Boom In Startups In the Pandemic?
Almost all industries saw an influx of start-ups during the pandemic. However, a few sectors had a particularly high growth rate.
Let’s discuss which industries had the most start-up boom during the pandemic.
– There was a 20% increase in most sectors, such as utilities and wholesale.
– Retail rose to 58.2% in the case of start-up registrations.
– Transportation and warehousing had a 34.6% increase as last year.
– Health care and food services also surged 20% in terms of startups.
– Technology and manufacturing also had a 20% increase in startups during the pandemic.
– Mining and real estate saw the least growth in startups.
– The IT sector also saw a spike of 20% in startups due to the boom in digital industries during the pandemic.
The pandemic has disrupted many businesses and economies. But it has also presented an opportunity for entrepreneurs to create new businesses.
Startups have been able to innovate and fill the gaps left by larger corporations.
Retail Trade – Highest Boom:
Regarding the hottest startup sectors, retail trade has seen the highest growth.
This is due largely to the need for companies to move their services online. More people have shifted to shopping from their homes.
E-commerce has witnessed high growth rates as well. It accounted for only 11% of all retail sales in 2019. However, as per Annual Retail Trade Survey, e-commerce sales rose by 43% in 2020. That makes up $244.2 billion from last year.
– In 2019, the sales were $571.2 billion
– In 2020, the sales were $815.4 billion
It is because people are more engaged with online shopping than ever before. The pandemic has made it difficult for people to shop in person. In addition, businesses are actively taking their products and services online. This has led to a big boom for
Why Has The Start-Up Boom Occurred?
The pandemic has caused a major shift in the way businesses get operated. The need for entrepreneurs to find innovative solutions has never been higher.
This has led to a surge in start-ups. Entrepreneurs are looking for ways to capitalize on the current situation.
The need for digital solutions and services is also increasing. This leads to more online businesses.
With this increase in demand, there will inevitably be an influx of startups. They will seek to create innovative products and services to meet these needs.
More investments start flowing into startups due to the pandemic. It’s become easier for entrepreneurs to launch their businesses.
Investors are willing to take risks in this uncertain climate. Startup founders have more capital than ever. They can use it to drive innovation and growth within their companies.
Unemployment In Pandemic
The pandemic caused a huge surge in unemployment. Many people unable to find work during the pandemic turned to entrepreneurship.
– The unemployment rate tripled in the second quarter of 2020. It rose from 3.6% to 13% as per Current Population Survey (CPS). This is the highest level of unemployment recorded by CPS.
– In the third quarter of 2020, the unemployment rate dropped to 8.8%.
– It fell 6.7% in the fourth quarter of 2020. That means 10.8 million people were unemployed in the United States during that period.
– This rise in unemployment has led to a boom in start-ups. Many people are starting their own
This unemployment rate has led to a surge in start-ups. Many people are starting their businesses, some with almost no capital or savings.
Almost 30% of entrepreneurs who started businesses in 2020 were unemployed. This shows that the start-up boom directly results from the high unemployment rate.
Can Startups Help the Economy?
Start-ups have the potential to help the economy recover from a recession. In 2021, the startup funding crossed $600 billion, which broke all previous records.
Some start-ups are creating innovative solutions to the problems caused by COVID-19. These start-ups can provide much-needed jobs and help get the economy back on track.
Start-ups can spur new industries, such as renewable energy and artificial intelligence. They can help usher in a new era of economic growth.
In addition, start-ups can help spur competition and innovation. They can provide consumers with better and more affordable products and services.
The COVID-19 pandemic may have put economic growth on hold. But the startup boom is here to stay.
Aid To Small Businesses During The Pandemic
Many governments have provided aid to small businesses in response to the pandemic. This has been through loan guarantees, grants, and tax relief programs.
US Congress 2020 enacted Coronavirus Aid, Relief and Economic Security (CARES) Act. It helped small businesses to stay afloat and protected jobs amid the pandemic.
It marked $2 trillion in economic aid to companies, individuals, etc.
The relief included:
– Paycheck Protection Program (PPP)
– Economic Injury Disaster Loans (EIDLs) and Emergency EIDL Grants
– Tax Credits and Deductions
– Stimulus packages
These measures gave small businesses the financial backing to stay alive. They could develop new opportunities amid the pandemic.
Consequently, this has led to a startup boom.
Thousands of new businesses have been created in the last year alone. Many entrepreneurs used this time to start their businesses and leverage new opportunities.
Risks With Startups
However, some risks are there with startups that boom significantly. Many of these businesses rely on additional stimulus money and other government programs.
Many businesses could find themselves in financial trouble if these measures stop.
Also, these businesses may not have had time to develop a business plan or financial strategy properly. It makes them vulnerable in the long term.
Another risk is that the market may become oversaturated with similar products or services.
This can reduce the demand for certain services. It can make it difficult to differentiate between offerings.
Finally, startups may not have the resources or leadership to scale up quickly. They could not keep up with demand and sustain profitability.
It’s important for new businesses entering the market to mitigate risk and ensure long-term success.
Some ways to do this include:
– Creating a business plan that outlines your strategic vision. It should provide detailed, actionable steps to achieve it.
– Developing a financial strategy. It must have short-term objectives and long-term goals. Budgeting for resources should be a part of it too.
– Researching the market to identify opportunities, competitors, and potential customers.
– Utilizing digital marketing strategies to reach and engage customers.
– Investing in customer service. It meets customers’ needs in an efficient and timely manner.
– Staying up to date on industry trends, changes, and regulations.
It is essential for startups during this time to remain agile, flexible, and creative.
The startup boom in the pandemic directly results from high unemployment rates. It’s an inspiring reminder that people are resilient.
They can find creative ways to make ends meet even in the hardest times. It also stands as a testament to how far technology has come.
It has enabled us to start businesses with minimal capital and resources. Now more than ever, it’s time to unite and support those leaping into entrepreneurship.
Startups can be successful and innovative businesses with the right guidance and resources.
Last Updated on 1 year by Shahzaib Arshad