4.4 million new businesses were created since lockdown began, far exceeding historical norms
Have you thought about starting your own business or creating a side hustle? If you have, according to the Census Bureau you aren’t alone. More than 4.4 million new businesses were created since the lockdowns began, and while an uptick during a recession is expected, this far exceeds historical norms. In January of this year alone, there were nearly half a million new business started. The side hustle went mainstream.
YouTube, Pinterest and Facebook are huge contributors to this surge. These platforms give entrepreneurs guidance, tutorials, and an advertising medium to reach consumers. Budding entrepreneurs at long last had time to study topics and tutorials they were eager to learn, but didn’t have the time for while working nine to five. Taking their hobbies online to bring in additional funds, they found there was a viable market for their artisan wares.
As expected during lockdown, food trucks and meal delivery services increased by a large percentage and are still on the rise over a year later. Yelp noticed consumer interest in psychics rose 74% over last year and astrologers by 63%. Notaries were up 52%.
As the lockdown continued, families reconnected across the country, and people realizing how burned out they had become working long hours plus added commute times, decided to make some adjustments. A shift began to take place and they looked for options to keep them out of the nine to five drudgery.
Simple medical visits shifted to a virtual experience, private therapy sessions took off and new personal delivery options popped up everywhere. Personal assistants, marketing, advertising, bookkeeping, and business coaching rose to a new level of not only working from home, but also in the creation of home-based businesses with new entrepreneurs consciously pulling themselves out of the workforce. This trend looks as if it’s here to stay leaving previous employee positions, vacant.
As the pandemic continues restructuring the U.S. economy, it’s difficult to peer into the future to see how this will round out, but it looks like the virtual office has taken root. Reports show consumers are making lasting changes to their every-day life to accommodate this, and with home office renovations up by 75%, this is a pace that doesn’t show signs of slowing.
One of the positions new entrepreneurs find themselves in, is investing in their own future. Working for an employer, employees take home a paycheck while the employer handles the taxes, 401k, medical, etc. For a bulk of these 4.4 million new business owners, these are unnavigated waters. Taking time to connect with a professional to map out taxes, investments, growth and retirement planning is essential, and the earlier the better.
Looking for a bit of guidance on this topic, we reached out to Homer Smith, Private Wealth Advisor Konvergent Wealth Partners and asked what trends he has seen over the past year and what possible next steps small business owners might want to look in to as they grow:
“One of the benefits we have seen over the last year was the comfort level that all generations have with technology. Many of these new startups as well as established players focused on information and tools that can be accessed from anywhere.
This includes a multitude of services aimed at providing access to financial tools that in the past were cost prohibitive for small business. Whether it is as traditional as PayPal for getting paid, Quickbooks for bookkeeping, or a more comprehensive platform like Gusto for payroll and benefits, there have never been more options.
After taking care of the basics and you now have excess cash flow to put to work for your long-term goals, making sure you are building a cash reserve is a minimum requirement to ensuring you maintain liquidity when you need it the most. As you create a foundation of profits and cash flow, it is time to consider how you will invest in your business to create sustainable growth as well as build longer term capital outside the business. These decisions become more complex with growth and may create the need to bring in more resources, whether they are internal or external, to support the fulfillment of your goals.”
Homer Smith is a Private Wealth Advisor with Konvergent Wealth Partners and is not affiliated with Basil & Salt Magazine.