According to the U.S. Census Bureau, 5.4 million applications for business tax identification numbers were filed in 2021, a million more than the previous peak in 2020. In fact, there were only 3.5 million new business applications filed in 2019, before the onset of the pandemic.
The rise in entrepreneurship in the last two years contrasts sharply with what occurred during the previous crisis in 2008-2009, when the economy was pulled down by sluggish consumer spending and the lingering effects of the housing bubble, and new business formation dropped.
It is important to note that the number of applications aren’t necessarily the same as the number of businesses launched. However, the applications demonstrate the number of people that were heavily considering starting their own businesses despite the virus’ effect on the economy.
Americans are launching their own enterprises for a number of reasons: some who were laid off of their job because of the pandemic leaned into the idea of making their “side hustle” their full-time career. Increased time at home prompted others to rethink their priorities and step away from the corporate world. Some people who enjoyed the flexibility of working remotely were enticed by lower commercial rents.
That said, these new entrepreneurs are struggling with the same frustrating issues that the pandemic wrought for many established businesses: shifting health-care recommendations, trouble contacting clients, supply-chain snags, and overall uncertainty about what lies ahead.