Small businesses have long been significant job creators vital to the U.S. economy. However, as highlighted in a Wall Street Journal article, new businesses have decreased the number of jobs created.
The pandemic has significantly influenced this trend. Although the number of new business startups surged during the pandemic, the average number of employees at these startups dropped sharply.
The graph below shows the trend in employee numbers at new businesses, which peaked around 2000. Since then, there has been a steady decline in the average number of employees per new business, with the current average now just over four employees per startup.
The number of people taking initial steps to start a new business surged during the pandemic and remains high, as COVID-19 created new opportunities and prompted shifts in priorities and available time.
There are several reasons these new businesses tend to be smaller. For some, pandemic-related challenges have slowed hiring. For others, entrepreneurs have intentionally kept their operations small to maintain a better work-life balance.
However, the reduced staff sizes also reflect deeper changes. The rise of remote work, the growth of the gig economy, and the availability of various software tools have made it easier for entrepreneurs to run their businesses with fewer employees.
While new business activity has declined from its peak during the early pandemic, it remains elevated, according to monthly Census Bureau data through July, which tracks applications for employer identification numbers—a key early step in starting a business.
It is still too early to determine how many of these nascent startups will become ongoing businesses, which will fail, and which might grow into significant employers.
So, what does this mean for you? If you’re working a 9-to-5 job, is it time to consider joining the thousands of individuals who are riding this wave of new business startups? And what type of business could you launch?
We specialize in helping people like you find those answers. Whether you’re suited for a traditional business or better matched with a franchise opportunity, there’s never been a better time to explore your options.
Give us a call or schedule a 15-minute introductory conversation on my calendar. Let’s start exploring your future together.
#startups #pintsizebusiness #smallbusinesses #startabusiness #markettrends #businessstats
