The COVID-19 pandemic has presented a myriad of challenges for small business owners from lockdowns stopping business altogether to additional costs for safety and sanitation equipment. With all of these roadblocks, one would expect entrepreneurs to flee from opening traditional small businesses, but according to a new survey by JustBusiness, many entrepreneurs are rising to the challenge and are starting new businesses.
These new entrepreneurs are called Pandemic Founders because of their grit and determination to found new enterprises in the midst of a pandemic. According to the survey, three of the most common industries entrepreneurs are founding business in are Food and Accommodation, Retail Trade, and the Arts. As odd as it seems, food service and retail, arguably some of the hardest hit industries, are seeing the most new business growth.
JustBusiness’ study found 1 in 5 respondents to their survey didn’t have plans to start a business before the pandemic but do now. In addition to that, nearly 70% of surveyed entrepreneurs said the pandemic altered their business plan or forced them to make changes. This just shows that despite its terrible effect on businesses across the country, the pandemic has inspired many entrepreneurs with new ideas or caused them to make changes to existing plans.
These new businesses won’t be purely online, as you might expect. When asked where the business will be located, online or in-person, “38.5% said the business would have a physical location, 32.1% said they’d operate both in-store and online, and just 29.3% said their venture would be entirely virtual.” One would assume that new business owners would be worried about physical locations being shut down again during a second wave or a future epidemic, but Pandemic Founders clearly don’t scare easily and are willing to take the risk with physical locations.
To finance these new businesses, 58.4% of respondents said they’d use personal savings for funding, 55% said they’d utilize business loans, and 19% responded saying that they’d use angel or venture capital. Most businesses will use multiple funding sources to launch new ventures.
Another interesting fact from the survey is that many surveyed entrepreneurs are optimistic about the pandemic not lasting too much longer. “41.4% of respondents think it will be a year or more until the U.S. economy begins to rebound in full. Another 34.5% think it will be at least six months. Just 16.2% say it will take only three to six months, and 7.9% say only one to three months for the economy to bounce back.”
For many of these business owners, this will be the first business they found, either due to being laid off or because they recognized an opportunity linked to the pandemic. 51.2% of respondents said they identified a new business opportunity, 32.9% said they identified a new opportunity relating to changes in the market due to COVID-19, and 26.8% said they were laid off from a job.
Recessions or periods of economic uncertainty often prompt entrepreneurs to create businesses and the economic uncertainty of 2020 seems to be no different as entrepreneurs surveyed are excited to make their new businesses a reality.
JustBusiness’ new survey is accompanied by an infographic highlighting the key statistics you should know. The survey’s findings are a promising sign that small business is bouncing back from its COVID-19-caused downturn.