Americans are starting new businesses at record levels. The U.S. Census Bureau found that business applications are clocking in at 420,000 a month—40% higher than before the pandemic.
No one knows exactly why so many people are feeling the entrepreneurial itch. Some of the founders are women seeking work-life balance during the pandemic, but there are plenty of other people joining the trend.
Interestingly, the industry seeing the most applications is retail, with more than twice the number we had before the pandemic. Perhaps, in addition to the e-commerce boom, we’ll be seeing a resurgence of our downtowns and malls (and none too soon).
Clearly, all of the talk about inflation and recessions isn’t dampening some people’s enthusiasm for starting a business, and there’s no telling where this surge of business applications will lead.
I’d like to think that some of these founders are planting the seeds for tomorrow’s middle-market stars. Many of America’s most famous companies, including Amazon, Apple and Disney, started small—in the founders’ garages and dorm rooms. It’s gotten easier to scale than ever before, thanks to the digital technologies that are now available to the average person and the ability to find capital through sources like crowdfunding.
But this trend does pose a challenge for employers. Clearly, many people who joined the Great Resignation have a need to earn a living, but they’re choosing to do it in a way that gives them more control over when and where they work. Employers who have embraced work-life balance will have an edge in competing not just with other employers but with their former employees themselves. Those who fall behind on this front may find themselves grappling with the worker shortage for a long time.
Then again, some of these businesses are a lark, unlikely to last very long—for example, “fairytale” farms run by people drawn by the dream of raising goats or selling pasture-raised meats (it’s not for me, but that’s what makes horse racing, as they say). Once they experience the hard work, sounds and smells of farm life, they may change their minds about how romantic it is. Farming is notoriously hard work. So is running any business, as most of us know!
Nonetheless, I applaud the big thinkers in all their guises. It takes courage to try something new, and it beats sitting on the sidelines. Marcum is always ready to roll out the welcome mat for entrepreneurial clients. I’ve watched many businesses grow from “startup to grownup,” and some are now in the hands of the second or even third generation owners as part of their succession plans.
Entrepreneurship is the foundation of the American Dream. It’ll be interesting to see what forms it takes in the next 10 or 20 years—probably some that truly stretch the imagination.
In a bold but perhaps late attempt to stem the recent spike in inflation, the Fed raised interest rates by .75% on Wednesday. The stock market (which is not the economy) initially rallied that same day on the news, but by 10 AM yesterday, as I was writing this column, the market was again trending down. And the average 30-year mortgage hit the highest rate since 2008 (5.78%). As with all things, higher rates benefit some (people with money in the bank) and hurt others (borrowers). The big fear is a recession.
Most people forget that our last recession was in 2020, just two years ago, caused by the shutdowns resulting from the COVID pandemic. The 2020 recession was short-lived and most—not all, but most—businesses rebounded quickly. Let’s hope if another recession is headed our way it’s a short one and we recover as quickly as we did two years ago.
I’d be remiss without acknowledging that Sunday is Father’s Day, one of my favorite days of the year. I’m fortunate enough to be spending the day with Tracy and our five children. Nothing better! Happy Father’s Day all.