While there is not much positive to say about the economic devastation caused by the COVID-19 pandemic locally and nationally, there is at least one silver lining. And with what we have gone through, we’ll take it.
According to new economic data, new businesses are being formed at the highest pace in years, and if history is any guide, a substantial number of these new small businesses will grow and create jobs, helping to power the economic recovery that is so desperately needed.
What’s more, the Miami metro area has one of the naton’s highest levels of new business formation, so this trend could have a larger impact on our region’s economy.
Business formation nationally reached record highs in the first nine months of 2021, despite the spread of the COVID-19 Delta variant. The surge in new business formation began to take off in the middle of 2020, hitting record levels last year. Add to that the fact that monthly filings this year have remained well above historical norms, an indication of the trend’s staying power, according to New Economic Innovation Group’s Q3 analysis of Census Bureau data on new business applications.
Here are some of the findings:
- New business applications among likely employers through Sept. 2021 were the highest of any year on record. The nearly 1.4 million applications filed to form new businesses likely to hire employees so far in 2021 represent 409,000 more filings than at the same point in 2019, or 255,000 more than at this point in 2020.
- Business formation appears to be on a record-setting pace in 2021. The rate of filings in the first nine months of 2021 was 41% more than at this point in 2019 and 22% above the exceptional volume filed through September of 2020. The current year now claims six of the top 10 months for likely employer business filings on record.
- Industries highly affected by the pandemic showed the largest gains. Applications were up across all major industry categories except agriculture and mining relative to 2019, and nearly three-quarters of the gains over 2019 levels appear in just four sectors: accommodation and food services; retail trade; health care and social assistance; and transportation and warehousing.
The lack of strong new business formation in the wake of the Great Recession hindered the US and Florida’s economic recovery for years, but the economic resurgence from the pandemic is shaping up quite differently. However, it is important to note that while the surge in new business applications is certainly promising, it will be some time before the extent of business closures due to the pandemic can be tallied and we have a full picture of the net effect of the pandemic on the country’s business and entrepreneurial landscape, the report said.
Still, ensuring that many of these new business applications turn into successful businesses will be crucial for putting the U.S. and local economy on a durable path to post-pandemic recovery and helping eliminate the startup deficit that built up in recent years. Read more in the report here.
As our region’s economic recovery begins to show signs of live, keep turning to GrowBiz for advice and resources for growing your new or existing business.