Americans enduring a feeble economy and high unemployment because of the coronavirus pandemic are creating start-up companies at a record pace.
The drive is favored by very low interest rates, banks that are eager to lend and people with money saved up — both because no one goes out anymore and because of government stimulus aid.
“It is not as surprising as you might think,” said John Dearie of the Center for American Entrepreneurship. “People are starting new businesses because they lost their jobs. And because they have capital to start those businesses.”
Around 1.6 million companies were created from July to September, by far a record, according to the Census Bureau. Never before had more than a million start-ups emerged in one quarter in America.
“The pandemic has definitely spurred interest among young people and adults to launch new businesses. The reason, we believe, is very simple. People are losing jobs,” said J.D. LaRock, the head of the Network for Teaching Entrepreneurship, which is active in 12 countries.
“And people are recognizing that the world is changing, and that there are new needs,” he said.
So people are proposing business concepts that stem from the pandemic, or finally acting on business ideas they have had for a long time but never had the opportunity or incentive to bring to fruition, said LaRock.
Such is the case of Leeland Lambert, 38, who in June was laid off as operations director for a non-profit day care center and lives in Salt Lake City, Utah.
With no short term prospects for a new job, he created a personal coaching company he had been mulling for years.
“I’ve always had a dream of helping people become their best selves,” Lambert told AFP.
Lambert went back to school for six months to polish his skills, and does not rule out getting a part-time job if his business does not get up and running quickly.
Since the start of the pandemic, 22 million Americans lost their jobs as the economy largely shut down for months.
Half of them remain out of work, and 8.4 million are receiving unemployment benefits. And then there are those who are working but have seen their income drop drastically.
While some sectors like hospitality and tourism are still suffering, for some people the only way to make a living these days is to start their own business.
It is hard to know which sectors are witnessing such job creation because official figures do not give a breakdown.
But Dearie said many are being created in relation to the pandemic, such as food delivery through services such as Uber, which requires its drivers to start their own companies.
Delivery of goods purchased online — via companies like Amazon, for instance, which also requires drivers to start their own companies — also has a bright future, said John Haltiwanger, who teaches economics at the University of Maryland.
“I think what’s going on in part is that Covid-19 is accelerating trends that were already ongoing in the economy,” he said, such as online retail sales as people are stuck at home.
“Some of this transition will be more permanent and businesses that can help facilitate that, I think will do well,” he said.