Small Business Creation Accelerates to New Level – Graphic of the Day

New Business Applications 04-21

Despite a global health crisis and one of the most impactful economic disruptors in recent history, records indicate an explosion in new businesses.

This is based on the number of applications for an employer-identification number (EIN) to the Internal Revenue Service. This is typically the first step taken by an entrepreneur in the creation of a business.

A business at the application or EIN stage does not necessarily lead to a business formation. In some cases it may never begin operating.

Nevertheless, the number of EIN applications are widely used as a strong indicator of startup activity and trends related to small business formations.

These applications came at a time of great insecurity and vulnerability — not only from a health perspective, but financially too. Quarantine, shuttered businesses, furlough, wage cuts, and soaring job losses meant many people were left with little, or no, income.

While the pandemic was a big stressor, many also saw it as an opportunity. The psychological change that occured was that economic uncertainty brought about a sudden perspective shift. That threw entrepreneurs into action.

For a more detailed review of the reasons for small business formations, the impacts of a surge in new businesses and the resulting “Noisy and Complex Recovery”, go to this article from Alliance Virtual Offices.


This page is an extract from an article written by Jo Meunier of Alliance Virtual Offices.