In lots of ways that is surprising. As Haltiwanger rightly points out, not only do recessions deter entrepreneurs, so do subsidies to established players, which we saw on a massive scale during the pandemic. After all, it is hard to start something new when your competitors are getting massive bungs from the Government.
And yet, despite that, there have been three big trends encouraging more and more people to take their chances with their own business. First, it has become a lot easier, especially for any kind of online start-up. Cheap, easily accessible cloud and payment services mean that all the infrastructure is available off-the-shelf. You just need to plug in the business idea, and you can be up and running in no time, and don’t even need much capital.
Next, the pandemic suddenly opened up lots and lots of new opportunities. From delivering goods and services to people’s homes, to providing tools to make it possible to work from the kitchen table, to streaming events and classes, there were suddenly thousands of spaces in the market. Established companies were pretty good at pivoting towards those, but entrepreneurs are always better at working out how the world has changed.
Finally, the massive scale of stimulus programmes made this recession very different from past ones. There was lots of money available. All you had to do was work out a way for people to spend it. Even better, the support schemes may have been effectively encouraging business creation. Many of the millions of people on furlough may have been quietly plotting their own idea while not working for their employer (which technically was against the rules, but heck, who’s checking?).
Originally Appeared Here