by Joshua Jones, Chief Revenue Officer of Kapitus
In the wake of unprecedented global challenges, the landscape of entrepreneurship in the United States has undergone a remarkable transformation. The surge in new business formations witnessed in recent years, as highlighted by the U.S. Census Bureau, speaks volumes about the evolving entrepreneurial spirit in the nation. The total number of businesses started in 2023 represents a 56.7% increase over 2019. But what lies behind this rise, and what does it mean for aspiring entrepreneurs navigating today’s market environment?
The catalyst for this surge in new business creation can be traced back to the tumultuous period of the pandemic. As people found themselves confined to their homes, either working remotely or grappling with unemployment, a paradigm shift occurred. The reevaluation of lives and careers led many individuals to explore alternative avenues for income generation. The need for innovative solutions, from PPE to remote tutoring, created fertile ground for excited entrepreneurs to step forward and fill the gaps in the market.
What distinguishes this surge from previous spikes in entrepreneurial activity is its sustainability. While the initial surge may have been born out of necessity during the pandemic, the continuation of elevated levels of new business formation indicates a fundamental shift in mindset. Americans have embraced what can be termed as the “art of the side-hustle,” integrating it as a standard component of their economic equation.
For prospective entrepreneurs navigating today’s market environment, strategic considerations are paramount. Starting small and validating ideas as side-gigs offers a low-risk pathway to entrepreneurship. One of the key advantages of a side hustle is its ability to allow the owner to continue making money in their main job, creating a safety net while exploring entrepreneurial ventures. This dual-income approach significantly mitigates financial risk, as the initial income from the side hustle can be reinvested back into the business until it reaches a benchmarked level of sustainability. Unlike traditional startups that often require founders to leverage their savings or take out loans to cover living expenses, a side hustle can be nurtured and grown organically without the pressure of immediate profitability.
The internet economy has played a pivotal role in democratizing entrepreneurship, offering unprecedented avenues for individuals to create and scale their businesses. Platforms like Amazon Marketplace, eBay, and Etsy have revolutionized commerce, empowering individuals to become sellers 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.
The popularity of platforms like Airbnb, VRBO, TaskRabbit, and Thumbtack has further expanded the horizons of entrepreneurship. Homeowners can now become rental hosts, while contractors and laborers can leverage their skills on gig platforms to supplement their income. This convergence of technology and entrepreneurship has unleashed a wave of innovation, fueling the rise of side hustles across diverse industries.
Examining the industries witnessing the most significant lift from new business starts provides valuable insights into emerging trends:
- Healthcare, 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 IT, accounting, and design, are also witnessing a surge, fueled by the proliferation of side hustles evolving into full-fledged businesses.
- Education, as mentioned before, particularly online tutoring and instruction, represents another sector ripe with entrepreneurial opportunities.
Embracing flexibility and agility, rather than fixating on perfect plans, is essential for navigating the uncertainties of entrepreneurship. The dynamic nature of the business landscape requires entrepreneurs to remain adaptable and responsive to changing market conditions. By maintaining a mindset of experimentation and iteration, individuals can continuously refine their strategies and offerings, positioning their side hustle for long-term success.
Looking ahead, the future of entrepreneurship in the U.S. appears promising. A vibrant startup culture combined with the transformative power of the internet bodes well for continued innovation and growth. As more individuals recognize the potential of side hustles as vehicles for financial independence and personal fulfillment, the entrepreneurial landscape is poised for further evolution.
The rise of side-hustles reflects a broader cultural shift towards embracing entrepreneurship as a viable career path. Whether it’s to achieve financial goals, gain more flexibility in your schedule, or pursue a passion, clarifying your underlying motivations can provide a guiding light throughout the ups and downs of entrepreneurship. With the democratization of access to resources and opportunities, aspiring entrepreneurs have unprecedented avenues for realizing their dreams. By harnessing technology, exploiting your 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. Even the best businesses sometimes fail, it’s important that you’re able to dedicate yourself to your business’ success and never stop trying even if this one fails.
Josh Jones is Chief Revenue Officer at Kapitus, one of the most reliable and respected names in small business financing. Kapitus provides growth capital to small businesses and has provided over $5.5 billion to over 50,000 small businesses since 2006. Kapitus offers multiple loan products to small businesses, including SBA loans, revenue-based financing, equipment financing, cash-flow based factoring, revolving lines of credit and invoice factoring.
