More American entrepreneurs are increasingly seeing more business opportunities despite the dramatic economic effects of the pandemic, according to new data reported in the Global Entrepreneurship Monitor’s (GEM) 2021/2022 Global Report: Opportunity Amid Disruption.
“Much like with crises throughout history, the COVID-19 pandemic crisis surfaced new opportunities for entrepreneurs around the nation,” said Babson College Professor Jeffrey Shay, one of the report co-authors. “While some of the United States’ entrepreneurs may have chosen this route due to economic necessity, many have done so because of opportunity and positive perceptions of starting a business and self-confidence in their skills and abilities.”
Data Shows Positive Perception
One key GEM measure is the level of Total early-stage Entrepreneurial Activity (TEA): the percentage of 18-64 year old adults actively engaged in starting or running a new business. While the country’s TEA declined in 2020, it recovered quickly in 2021, to the nearly pre-pandemic level of 16.5%. The new report shows Americans recognized a need for innovation and quickly acted to identify new opportunities. Moreover, some 66% of adults believe it is easy to start a business and 63% reported that the pandemic introduced good opportunities to start a business in their area.
In 2020, 36% of the US respondents intending to start a business soon said it was due to the pandemic, one of the lower rates among peer economies at the time. Now in the 2021 data, many entrepreneurs are seeing the COVID-19 era as presenting opportunities: 52.6% of TEA respondents see new opportunities as a result of the pandemic. Additionally, 60.8% of these respondents plan to use more digital technologies to grow their business in the next six months, indicating a willingness to adjust strategy and invest in the new consumer demands.
The Rise of Solopreneurship
A strong characteristic of COVID-19 era entrepreneurship is that it appears to be accelerating the rate of single-employee companies, known as “solopreneurship,” a trend that started a few years earlier.
In 2021, the rate of US adults expecting to remain as the only employee in their business was up by nearly 20% from 2020. Like entrepreneurship more generally, some of these solopreneurs start their business out of economic necessity, but many do so out of opportunity. This means business opportunity, or the opportunity for more flexible work arrangements, became more essential during COVID-19.
Implications for Policymakers
In the United States, federal and state policymakers could consider these factors in crafting policies. While many are looking to push employers to classify contractors as benefit employees, policymakers could instead assist these solopreneurs by providing decent options for health care, savings and other benefits. More Americans are revealing their preference for flexible work, but current policies disincentivize these potential entrepreneurs.
Entrepreneurship Trends from Around the World
In 15 out of 47 economies, more than half of those starting or running a new business agreed that the pandemic had led to new business opportunities. In 2020, this had been the case for just nine out of 46 economies.
In 2021, more than 50% of entrepreneurs agreed that starting a business had become more difficult in 18 of 47 economies. In 2020, almost twice as many (33 out of 46 economies) had 50% or more of their would-be entrepreneurs agreeing that this was the case.
In 22 of the 47 economies, more than one in two adults agreed their household income had decreased.
Read more: ceo-mag.com