More than 16 million individuals in the US are out of work, and an increasing checklist of businesses have actually declared insolvency. In addition to that, the country’s GDP dropped 32.9% in the 2nd quarter of 2020– perhaps the most dramatic decrease in over 70 years. Considering these events, to claim that the COVID-19 outbreak has led to a large turmoil would be an understatement.
However, the U.S. Census Bureau data reveals that COVID-related layoffs triggered a surprising startup boom despite the recession and the unfinished pandemic crisis. Although applications for new business plummeted when the coronavirus first struck, the figures began to grow in just less than two months later, delivering the highest number of applications on record in the third quarter of 2020. The largest portion of the pie is occupied by online retail.
From crisis to launchpad
When the state ordered businesses to shut down in the spring, many Americans who formerly worked at salons, gyms and restaurants were laid off. It is difficult enough to cope with being laid off in a pandemic and the daily rejection of work for which you feel you will be ideal is a separate form of emotional pressure. Such situation forced a growing percentage of people to transition to self-employment by using their skills to start companies of their own. While the coronavirus took away jobs, it also produced entrepreneurs.
A split recovery in the economy is evident since the spring, with some Americans prospering while many others struggle to survive. New entrepreneurs have entered into a variety of service businesses, including home renovation, food, beauty and fitness. All of them are working out on how to communicate with others who have made a quicker turnaround or have never lost money.
During the pandemic, interest in freelancing also soared. Fiverr International Ltd. reports that new U.S. freelance registrations on its website grew 48 percent year-over-year from July-through-September. These freelancers specialize in graphics and design, digital marketing, writing and computer programming, and affirm that they had higher earning in 2020 than in previous years on average.
Reality of enterprises born by COVID-19
When a recession destroys jobs, people will most likely turn to self-employment, but new business growth was slow during the financial crisis due to tight credit and the loss of household wealth from the collapse of the housing market. On the other hand, the Covid-driven crash made an entirely different impact because people have a clear discernment on whether they’re gonna get their jobs back or not.
Some entrepreneurs made more income than they did previously, but others continue to face many obstacles. Although some entrepreneurs have found success by forming direct relationships with repeat clients and using their expertise as their primary source of income, they are still battling challenges. Major disadvantages include lack of access to employer-provided health care, workers’ compensation, paid sick leave and eligibility for unemployment insurance. Problems on some skirt health and safety regulations, as well as taxes and license fees, functioning much like the “informal economy” in emerging-market nationsgenerating adequate revenue are also among the significant drawbacks setbacks faced by COVID-born startups.
Key Takeaways
While self-employment has long been part of the U.S. economy, Covid-era entrepreneurship is distinct. There’s no question that local businesses compose the backbone of our economy. As stated by the Small Business Organization (SBA), 31.7 million small businesses in the U.S. employ 47.1% of the labor force.
Individuals who are looking for useful tips and tricks on starting or expanding their enterprises can visit Uptrend Credit and Counseling’s website and join our public Facebook group – Uptrenders Community. The Blueprint Mastermind also actively participates in ClubHouse every Monday, Wednesday, and Friday, at 3:00PM regarding topics on credit, investment, and personal and business finance.
Keep an eye out for more worthy reads to keep you up to date and motivated in your entrepreneurial and financial freedom journey.
