The landscape of entrepreneurship has undergone a remarkable transformation. The surge in new business formations in recent years speaks volumes about the evolving entrepreneurial spirit in the U.S. The total number of businesses started in 2023 represents a 56.7% increase over 2019, according to U.S. Census Bureau data. But what lies behind this rise, and what does it mean for aspiring entrepreneurs?
The catalyst for this surge in new business creation can be traced back to the COVID-19 pandemic. As people either worked remotely or grappled with unemployment, a paradigm shift occurred. The reevaluation of lives and careers led many to explore alternatives for income generation. The need for innovative solutions created fertile ground for excited entrepreneurs to step forward.
What distinguishes this surge from previous spikes in entrepreneurial activity is its sustainability. The continuation of elevated levels of new business formation indicates a fundamental shift in mindset. Americans have embraced the art of the side hustle.
For prospective entrepreneurs, strategic considerations are paramount. Starting small and validating ideas as side gigs offers a low-risk pathway to entrepreneurship. A key advantage of a side hustle is its ability to allow the owner to continue making money in their main job. This approach significantly reduces risk, as the initial income from the side hustle can be reinvested back into the business until it reaches sustainability. Unlike traditional startups that often require founders to leverage their savings or take out loans, a side hustle can be nurtured without profit pressures.
The internet has played a pivotal role in democratizing entrepreneurship, offering unprecedented avenues for individuals to create and scale their businesses. Platforms such as Amazon Marketplace, eBay and Etsy have revolutionized commerce with minimal barriers to entry. Furthermore, freelance marketplaces such as Fiverr and Upwork have unlocked opportunities for professionals to monetize their skills on a global scale.
This convergence of technology and entrepreneurship has unleashed a wave of innovation, fueling the rise of side hustles.
Examining the industries witnessing the most significant lift from new business starts provides valuable insights into emerging trends:
• Health care, propelled by an aging population and the demand for personalized home health solutions, stands out as a frontrunner.
• The construction sector is experiencing robust growth, driven by the pressing need for new housing and refurbishment projects.
• Professional services, including information technology, accounting and design, are also witnessing a surge, fueled by the proliferation of side hustles evolving into full-fledged businesses.
• Education, particularly online tutoring and instruction, represents another sector ripe with opportunities.
Embracing flexibility and agility, rather than fixating on perfect plans, is essential for navigating the uncertainties of entrepreneurship and changing market conditions. By maintaining a mindset of experimentation and iteration, individuals can continuously refine their strategies and offerings.
The rise of side hustles reflects a broader cultural shift toward embracing entrepreneurship as a career path. Whether it’s to achieve financial goals, gain more flexibility in your schedule, or pursue a passion, clarifying underlying motivations can provide a guiding light throughout the ups and downs of entrepreneurship. Aspiring entrepreneurs have unprecedented avenues for realizing their dreams.
By harnessing technology, exploiting their natural creativity and embracing a mindset of resilience, individuals can navigate the complexities of today’s economy and carve out their own paths to success.
Joshua Jones is chief revenue officer at Kapitus, a New York-based online lender that caters to small businesses.
