Companies that want to overcome the talent shortage will have to face a formidable rival in the years to come: freelance work.
“When workers have that option, they’re able to demand more of their employers,” says Luke Pardue, an economist at Gusto, which manages payroll and provides benefits to 200,000 small businesses.
Many who started their businesses in 2021 were inspired by new business opportunities, with 25% of founders who started in the last year citing this as the reason, according to a recent study by Gusto in its Survey of New Business Owners. company. 36% of entrepreneurs said they started their business after voluntarily quitting their job.
“The hurdles to starting a business have never been lower,” says Pardue. “If you were opening a bakery or a restaurant, you had to find space to rent. It disappeared overnight. People can open a hair salon in their garage or a retail store that makes jewelry in their living room. »
The research offers an interesting window into the future of entrepreneurship in the post-pandemic environment. Here are some key trends:
Women and entrepreneurs of color are flocking to entrepreneurship. Founders of new businesses were much more likely to be black, Hispanic, and female in 2020 and 2021 than in 2019. In 2019, 28% of new business owners were women, compared to 49% in 2021. And in 2019 , black or African-American entrepreneurs represented less than 3% of entrepreneurs; by 2021, this share had tripled to 9%.
“If there’s one thing the pandemic has shown, it’s that its previous operating system didn’t work for much of America, especially women and workers of color who had other demands in their lives,” says Pardue.
Professional services are hot: 42% of new businesses launched in 2021 were in professional services and 48% of entrepreneurs who left their jobs started businesses in this sector.
The shortage of childcare plays a role. 28% of women with children at home started a business because of their childcare needs.
Access to capital remains a challenge: Whereas 11% of all new business owners were able to fund their startup with a private business loan, only 8% of Hispanic entrepreneurs and 6% of black entrepreneurs received this funding. The private loan approval rate for Hispanic entrepreneurs was half that of white entrepreneurs. In this context, one-third of black entrepreneurs and one-quarter of Hispanic entrepreneurs took on side jobs in order to cover business expenses.
LGBT-owned businesses are thriving. Gusto estimates that there are 1.4 million LGBT-owned businesses that bring in $1.7 trillion every year.
With entrepreneurship attracting so many Americans — 5.4 million new businesses registered in 2021 alone — this increasingly popular job option is likely to shape the debate about getting back to the office for years to come. come. The debate will be moot if workers simply refuse to interview for a job and create their own work instead.
“A company may want to see me back in the office, but I can get away, work when I want, and not be subject to the back-to-office mandate,” Pardue notes. “If there is a general theme, it is that the pandemic has caused a collision between the need of workers to have flexibility and the needs of the system to work a 9 to 5 schedule and to have people going to the office.
“That’s one of the reasons why we have 11 million never-before-seen job openings,” he adds. “Entrepreneurship has been a great outlet for the economy, creating jobs and economic opportunity while meeting the work needs of these former employees.”