US business boom starts in pandemic shows normal new development
The pandemic shut down much of the U.S. economy in 2020 and may have driven hundreds of thousands of businesses to failure, but for North Carolina entrepreneurs, it sparked a wave of activity.
Healthcare CEO Dana Allison left one startup to create another; restaurateur Eric Scheffer capitalized on demand for alfresco dining at a new oyster restaurant with a large patio area; hotel owner Himanshu Karvir launched a new Westin Element by leveraging Asheville’s appeal as a small town with an outdoor culture; Axie Blundon has pivoted his cannabis business to add hand sanitizer under a separate brand.
“When the pandemic happened, the world kind of came to a halt. It doesn’t mean our minds have stopped, ”said Lincoln Walters, director of family life at a local church, explaining why, in the midst of a global shutdown, he committed $ 75,000 to convert an old store. from stoves near Black Mountain to a lockout space for local equipment manufacturers. , centered around a beer garden and a beer garden.
“Retail is changing. What can you do that is different, physically, to create a space that people want to be a part of? Build a community… People might not need a climbing harness every day, but they might need a beer to tell the story of their climb, ”Walters said.
It may be a leap in a world where physical retail is under pressure, but companies like the new WNC Outdoor Collective have helped start businesses in North Carolina and the United States at record levels. in 2020 with another record probably in 2021. This is a development that surprised economists and is still not fully understood. According to census data, new employer identification number filings jumped 57% in 2020 from the average of the previous 15 years, and are on track for a similar jump this year.
This entrepreneurial dynamic has been hailed as a potential return of American dynamism that could fuel productivity, innovation and job creation. It could also be one of the reasons why some large companies are struggling to find workers and the quit rate is at an all time high.
For organizations like the Federal Reserve, this is among the new dynamics that need to be studied in more detail to understand how the economy may have changed as a result of the pandemic.
As a larger force, it could last long. New businesses often fail, and it can take several years to determine what the wave of pandemic business creation means. Some of the sectors where business applications have grown the most, such as retail and warehousing, may be the most vulnerable if the economy and spending slow down or if another recession hits.
Still, “the numbers matter,” University of Maryland economist John Haltiwanger said in a presentation of early research into pandemic business start-ups that he sees as part of an inevitable reshuffle of the world. work in the post-pandemic world.
“COVID-19 has changed the way businesses interact with their workers and the way businesses interact with consumers. This has provided plenty of opportunities for businesses to form, ”with many new businesses concentrated in industries like online retail and personal services that have been stressed by the pandemic, he said.
“A FORM OF LIBERATION”
Statistics from local state secretaries and interviews with entrepreneurs, government officials and business development agencies indicate that new businesses have the potential to boost future growth and employment, but also appear to be strongly linked to self-employment. – and empowerment.
Brittany Hart of Jackson, Mississippi, quit her job as an ambulatory care planner at the hospital before the pandemic, convinced it was a dead end, and had taken a part-time position as a waitress to pay the bills as she was preparing to open a salon, Halo ‘d Beauty and Braiding Bar.
She was still working on the living room space in March 2020 when the pandemic hit, and “I spent many nights crying about it… I didn’t have a job, I couldn’t take clients.
“When life opened up a bit, people wanted to go out, have their hair done,” she said. “At the time, you think you made the worst decision of your life. But now that I’m in a good groove, I’ll never go back. The pandemic was the perfect time to put our feet on the ground. “
Analysis by the Atlanta Fed and Haltiwanger concluded that many of the new businesses are likely to remain “employer-less” businesses – effectively one-person stores for people entering self-employment. But the number of companies with a “strong propensity” to create jobs has also increased, according to the study. Census data shows that these high-propensity business deposits increased by more than 18% in 2020 compared to the previous average and by more than 7% in 2021 through September.
Some of the filings may reflect simple record keeping. Local lenders and business development experts say that in some cases, people already active in different businesses filed the necessary paperwork to qualify for payroll protection program loans, a fact that could have inflated the number. total of pandemic business start-ups.
But they also agree that something has changed in 2020 as people, out of necessity due to job loss or a desire to control their own hours and work environment, have taken on new risks.
“Owning a business is in many ways a form of liberation. How do I break away from being paid what they want to pay me? Said Tim Lampkin, managing director of Higher Purpose, a Mississippi nonprofit business development group.
Among the poorest states in the country and with a large black population, Mississippi has seen its business start-ups more than double in 2020 from the average since 2006, and again so far in 2021, according to data from the census, one of the largest increases in the country.
Kenesha Lewis of Greenville, Mississippi used to make edible fruit arrangements in her spare time away from home, but during the pandemic demand increased for these and also for the smoothies she and her husband had started offering. . In November 2020, ahead of the vaccines and in the midst of a new wave of national coronavirus infections, she quit her job as a bank lending specialist to focus on the business.
Kay’s Kute Fruit now has a storefront in downtown Greenville and has hired 11 people.
“The pandemic for some people got the most out of it. We got married during the pandemic. Our product actually played during the pandemic, ”because of the combination of healthy food and delivery, said Jason Lewis, who retained his job as assistant manager at local Lowe’s. “It wasn’t easy but at the same time it really made us fight a little harder.”
ALL ABOUT ADAPTATION
In North Carolina, Assistant Secretary of State William Toole said that when monthly business returns began to rise in 2020, “the assumption was that these were desperate returns from people who lost their job and didn’t know what else to do. Mom and Pops. Squeaking. I was wrong on all points.
Follow-up surveys conducted to understand the trend found only a small number, around 12%, of respondents who said they had lost their jobs, while 85% said they had identified an opportunity, many in areas like trucking. or maritime transport which saw soaring demand because of the health crisis.
“Maybe that explains why you don’t see people rushing to become waiters and housekeepers,” he said, linking the increase in company records to the current record number of job vacancies. .
Asheville business owners have said the pandemic, for them, is about adaptation – in the case of Health Officer Allison, seizing the opportunity to start a new business around telehealth; for Karvir navigating the confines of the pandemic to reorganize the staffing, cleaning and other protocols of his new hotel to match the available workers.
Longtime Asheville restaurateur Scheffer was developing his Jettie Rae’s Oyster House when the pandemic struck and said despite the slump in restaurant sales “it didn’t make sense to stop. It made more sense to understand how you open up in the midst of COVID? “
This led to a new paved patio, outdoor heaters, a rain tent, flattened staff who had waiters, hosts, foodrunners and others swapping chores – and what is now a crowd reserved for reservations.
“We literally wake up in the morning and adapt to the news,” Scheffer said as the pandemic unfolds.
Source: Reuters (Reporting by Howard Schneider; Editing by Andrea Ricci)