new businesses mean new business

 

some are side hustles that flourished. seven lessons for accountants.

by 卡塔尔世界杯常规比赛时间 research

new businesses are burgeoning. last year, 5 million new businesses entered the market, according to a survey from the gusto company. entrepreneurialism is 42 percent higher than it was just before covid-19 hit.

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every one of these new businesses – and they include full-time leadership as well as part-time side hustles – is a potential client for  a cpa practice. but the demographics – and thus the marketing strategies – are quite different from the historical white males who used to comprise most of the entrepreneurial cohort.

the takeaways for accountants

the results of the survey can help guide accounting practices that are crafting new marketing strategies. some points to consider:

1. more new business leaders are female.
2. blacks and women need more help with financing.
3. many new companies developed out of side hustle work.
4. more remote work must be accommodated.
5. younger leaders are optimistic, driven and energetic.
6. older leaders are recovering from burnout.
7. inflation and financial pressure are big concerns.

last year, in a radical surge, women founded 47 percent of new businesses, a slight dip from the 48 percent of 2021 but far above the 29 percent of 2019.

entrepreneurialism among blacks also has dipped, from 9 percent in 2021 to 5 percent in 2022, but it’s still well above the 3 percent of 2019.

the percentage of asian american and pacific islander (aapi) entrepreneurs also is increasing, up from 12 percent in 2019 to 14 percent in 2022.

it’s the economy

the gusto survey attributed the recent growth not to fertile economic conditions but to economic challenges – inflation and financial instability. of the 1,590 respondents, 41 percent said they started a business or side hustle to supplement household income or out of concern for their financial future.

for the most part, these weren’t workers who lost their jobs during the pandemic. these were workers who quit. the percentage who abandoned employment to start something new soared from 36 percent in 2021 to 49 percent in 2022.

among the young who quit – workers 25-34 – the objective was to earn more than they were getting from their employers. among older workers, 46 percent said they were burnt out from their corporate roles.

the characteristics of the new businesses may reflect lessons learned during the pandemic. while larger, more established companies are trying to get their remote workers to come back to the office, 48 percent of new businesses that have hired full-time workers in 2022 allowed remote or hybrid work, up substantially from 35 percent in 2021.

many started on the side

over a quarter of new entrepreneurs – 27 percent – started their business as a side hustle.

• among new accounting practices, 54 percent started while employed elsewhere.
• 37 percent of new non-profits grew out of side hustles.
• a third of those going into health care and social assistance started on the side.
• just under a third of those going into the food/beverage industry, retail, education or the spa/salon industries got their start with side jobs.

putting the capital in capitalism

there’s nothing like capital and investment to support a new business. unfortunately, even as more women and blacks are launching new enterprises, they are finding fewer financial resources. last year,

• men received private investment capital 2.3 times more often than women
• white business owners saw capital investment rates 2.5 times those of black owners
• 63 percent of all entrepreneurs had to rely on personal savings to get started
• 23 percent of all new businesses, and most individual demographic groups, needed no funds to launch their businesses
• 16 percent of blacks founded enterprises that needed no funds to start out

burgeoning benefits

new business owners are surprisingly, and increasingly, generous with benefits. a third offered employees some kind of benefits. of benefits offered,

• 71 percent were in health coverage, way up from 59 percent
• 60 percent consisted of flexible schedules, a drop from 67 percent
• 47 percent were in retirement plans, up from 32 percent

the survey suggested that the generosity reflected the reasons the new owners had quit their previous employment. the leading reason was “i believe it is the right thing to do,” cited by 86 percent.

posted on june 19, 2023