Source: Triangle Business Journal
Burned out American workers frustrated by their 9-to-5 jobs are launching side hustles and full-blown businesses — part of a dramatic change in the business ecosystem brought about in part by the Covid-19 pandemic.
That was a takeaway from Gusto Inc.’s new business owner survey for 2023, which included nearly 1,600 Americans who launched businesses last year.
The survey also found more women and people of color are forming businesses than before the pandemic, and that more people are starting these businesses because they are burned out or worried about the future. Census data showed that roughly 5 million new businesses formed in 2022, up from about 4.5 million in 2021 and far above the 3.5 million before the pandemic — a number that had slowly been in decline for decades.
And these elevated levels are not going away anytime soon, predicted Gusto Economist Luke Pardue.
“There has now been three years of evidence that these three years of entrepreneurship [are] not a blip,” Pardue said. “This is a fundamental shift in how these businesses have formed.”
About 27% of the business owners surveyed started their new businesses as side hustles, and they were driven primarily by financial concerns, with 57% of those starting side hustles doing so to supplement their household income or build financial stability.
But burnout is also a rising factor and many workers are simply ditching their regular job to launch their own business, with 49% saying they quit their job to launch a business in 2022 — up from 36% who did so in 2021.
Workers quitting their jobs entirely to launch their own business was highest among 25 to 34-year-olds at 55%, then 35 to 54-year-olds at 48% and 39% among workers age 55 and up.
“There’s this shift since the pandemic from trying to fit your personal life into your professional life to fitting your professional life into your personal life. A lot of people are seeing they are able to do that while by creating their own business,” Pardue said.
The survey also found:
- 63% of workers cited flexibility as a reason for wanting to start their business. That rose to 80% for Black new business owners.
- About 18% of those who were partially or fully disabled cited technology advances that lowered barriers to starting a business as a reason they launched theirs in 2022.
- The top concern for business owners across industries was an overall uncertainty about the future of the economy, followed by inflation and finding or retaining talent, according to the survey.
- Despite that uncertainty, most businesses have not taken significant action, although about 30% said they increased their cash reserves. Only 9% have reduced their investment in their business.
- But new business owners are also breaking the mold by leaning more into remote work, with about 22% of all business owners saying they were hiring fully remote employees, and another 26% said they were hiring hybrid employees.
Pardue said that while existing companies have mostly settled into their post-pandemic work patterns, new business owners are continuing to drive the growth in remote work. He said small businesses may not be able to compete with larger companies on pay or benefits but can offer workers the flexibility they want while saving precious capital on office space.
“New businesses aren’t starting with these preconceived notions of what it means to work in this business,” Pardue said. “As long as they are getting the job done, they are fine with wherever that person is located.”
But while Americans often imagine entrepreneurs as younger, such as startup founders, the new data shows that new businesses owners are older and more diverse than ever before, Pardue said.
“It’s becoming more diverse. Entrepreneurship is for everybody at all times,” Pardue said.