If you’re trying to operate a business in this environment, you may be rightfully concerned. The pandemic and the associated economic downturn have made things tough for many going concerns.
Surprisingly, however, these events have spelled opportunity for those with the right attitude and products or services. In fact, the Census Bureau says that over 1.5 million startups filed applications for Employer Identification Numbers (EINs) in the third quarter of 2020. That was a 77.4% increase over the second quarter.
Moreover, it’s a big increase over last year’s numbers. In fact, new business applications topped 3.2 million for 2020 in late September. Caveat: These applications do not translate directly into new businesses; they’re just filings by people considering starting up.
It’s important for business startups to understand that over half of new employee businesses fail within the first five years — and that’s in a regular economy. The chances for failure are real and can be greater during a recession.
That said, there are some good points to starting a business in 2020:
- The cost of borrowing is extremely low, with the Fed dropping the interest rate banks use to lend to one another down to near zero.
- Great employees are available, as many terrific assets nevertheless lost jobs this year.
- There’s a lot less competition. You can stand out all the more in an environment with fewer players.
The opportunity is there for those who can cater to the needs that have arisen during the pandemic. Can your business pivot toward meeting those needs?
If you’re not sure, talk to an experienced business attorney. Your business lawyer can analyze your project, look over your business plan and help you estimate your funding needs. There is a lot to think about if you want to become a “COVIDpreneur.” Be sure you get solid advice.