Why millions of people started a business during the pandemic

During the pandemic, entrepreneurs opened their own businesses more than twice as fast as before the pandemic, thanks to government support programs and improved remote technology unavailable during other economic downturns like the Great Recession.

Andre Smith, a 26-year-old living on Long Island in New York, found himself without a steady source of income at the start of the pandemic last year after the construction company he worked for “dried up” from March to June. With plenty of free time and a need to start earning money again, he was able to do something he’s wanted to do since immigrating with his family from Jamaica in 2007: start his own business.

“I said to myself, ‘This is the perfect time to learn something and use this time wisely,'” he told NBC News.

After spending five months researching online and reading notes he’d made on his iPhone over the years, Smith decided to start a loungewear clothing brand at a time when it was the uniform of the world. At the end of March he came up with the name: Loungefit.

“From that moment on, I’m going full steam ahead. Every day I do something for the brand to help it grow,” he said.

Andre Smith wears lounge fit clothing.Courtesy of Andre Smith

Since its official launch in August 2020, Loungefit has made $35,000 in sales and gained over 105,000 followers on TikTok. In November, Smith released a “how-to” video for those looking to start their own clothing brand. The post helped generate $3,000 in sales in one day and now has 370,000 views and almost 65,000 likes.

“Honestly, it’s been an absolute rollercoaster ride,” Smith said. “But honestly, I wouldn’t trade it for anything because coming from where I’m from and building something like this is a dream for a lot of people.”

Business applications of all sizes nearly doubled in the first few months of the pandemic last year, according to data from the US Census Bureau, rising from 234,362 in April to 558,688 in July 2020. They remain high, well above the pre-pandemic level of 427,842 last year Month. This is in stark contrast to the Great Recession, when business applications stayed below 250,000 a month from 2007-2009, according to the Census Bureau.

That’s partly because fixed costs are now lower, said Leila Bengali, an economist at the UCLA Anderson Forecast. Additionally, the availability of broadband, better internet speeds, and tech know-how mean it’s much easier to get a business online.

When the cost of starting a new business is lower, “you can expect more and more people to start doing it,” she said.

Almost two million sellers joined e-commerce platform Etsy in 2020, a 62 percent increase from the previous year. New shop creations at shopping service Shopify in the US grew by 79 percent in 2020 compared to 2019.

According to Facebook’s new Global State of Small Business Report, released last week, 69 percent of small and medium-sized businesses around the world said digital tools have had a positive impact on their business during Covid. 86 percent of respondents indicated that they expect to use at least some digital tools for their business activities in the future.

Image: Raven Silas founded the homemade candle company Breathe Enlight Co. after being fired from her job as a marketing manager.
Raven Silas founded the homemade candle company Breathe Enlight Co. after being fired from her job as a marketing manager.Take Bold’s photograph

Raven Silas, a 27-year-old from New Orleans, found inspiration for her new business on social media. After being fired from her job as a marketing manager early in the pandemic, she said her newfound anxiety prompted her to experiment with different coping mechanisms, including affirmations she discovered on TikTok. Now the positive statements are being used as the basis for her handcrafted candle brand, Breathe Enlight Co., which she launched last October.

“I decided to combine the affirmations with the actual candles and people really liked it,” she said. “Something kept pushing me to keep going, so I just went for it.”

Like Smith, Silas turned to TikTok to help market her brand. A post late last year that went viral helped bring in a few hundred orders in three days, she said. Until then, Silas said she only received orders from people she knew.

“I opened my phone and my video had a million views and I was like, ‘Wow!’ I didn’t expect that to happen,” she said.

Although many fledgling companies have benefited from digital tools during this time, not all have experienced virality. For some it took longer.

Sherri Mitchell, owner of Chef Sherri Sauces, said she only saw growth in social media this summer, a year after starting her business, when she was able to start meeting customers at in-person events like farmers’ markets.

“I’ve been focusing on my social media and trying to share as much as possible, but again, that audience is building from the ground up,” she said. “This year has been amazing to be able to lean on all the other relationships I’ve built.”

Since June, Chef Sherri Sauces’ Instagram reach has grown by over 450 percent. Mitchell said sales are up 300 percent since she started setting up the store in person.

Adaptability amid unpredictability was essential for Mitchell’s small business, especially given the changing nature of the pandemic and the resulting financial and logistical challenges.

The 48-year-old health and wellness expert began developing Chef Sherri Sauces in March last year after a cooking class she was taking at the Johnson and Wales University campus in Denver was suspended. Rather than wait until she graduates to start the company, as she originally planned, Mitchell decided to jump right in.

“I was like, ‘This is life,’ right? They revolve with life. If you’re not sure what’s going on, make the best of it,” she said.

Like many companies new and old, Mitchell has seen its fair share of supply chain struggles over the course of the pandemic. She drove through her home state of Colorado last summer to stock up on glasses in preparation for Christmas orders.

“You couldn’t find her anywhere. I’ve been on numerous waiting lists to be notified when they’re back in stock,” she said.

While this year has brought unexpected circumstances and challenges for many new business owners, Silas said the pandemic has allowed her to see this new path as one she “should walk.”

“Owning a business was not on the cards before Covid,” she said. “But I see it as sustainable.”

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