Covid-Era Businesses Are Flourishing-and Driving Job Creation

(US) The Covid-19 pandemic forced at least four million existing businesses in the U.S. to close. But according to one new report, the pandemic was a great time to launch a new one.

High-growth businesses created during the pandemic hired an average of 15 new employees in their first two years—compared to 13 average hires by businesses created pre-pandemic—which added approximately 336,000 jobs to the U.S. economy, a new report by payroll and benefit platform Gusto says.

"The smartest business owners used the problems caused by Covid to help their local areas. Because of this, their companies grew very fast." the report said.

These pandemic-era companies have continued to grow during their third and fourth years, albeit more slowly, adding two more employees over those two years on average, per another Gusto report.

"We've been worried about money matters for four years, but the truth is ... we're doing pretty well" , says Gusto economist Nich Tremper. "We now have many new companies and lots of people starting their own businesses. This leads to even more people wanting to start businesses too."

To qualify as high-growth in Gusto's analysis, businesses with more than 10 initial employees had to increase their headcount by 25 percent in the first two years. Smaller businesses had to add seven people in the same timeframe. Tremper says Gusto focused on this cohort  because they're the "most dynamic" and "create the most jobs."

So how exactly did pandemic-era economic conditions facilitate growth in these new businesses?

As "our relationship with work" changed during Covid, Tremper says, people became more open to starting a small business or working for one. Plus, he says, interest rates were at historically low levels: "[Entrepreneurs] had financial security, they had access to the labor force, they had access to capital, and they took advantage of that." 

"Covid taught us how to help businesses do well." Tremper says. "We can use what we learned now, without waiting for another big problem to happen."

Source: Adapted from an article about "Startup" posted on inc.com. https://www.inc.com/annabel-burba/covid-era-businesses-are-flourishing-and-driving-job-creation/90985528