Steve King from Small Business Labs reports that, though April, new business applications—meaning people applying for a federal tax I.D.—continue to be at historically high levels, according to the U.S. Census Bureau.
There’s an average of about 420,000 new business applications per month, and King says that while this is below the all-time high we saw in 2020, applications are 40% higher than before the recession.
About 70% of the applications, King says, are from businesses that aren’t likely to have employees, “such as freelancers, independent contractors, and other types of solopreneurs.” Not surprisingly, the share of solopreneur applications has steadily increased over the past decade.
Leading the surge—retail continues to be the industry with the most applications, which has been the case since the startup surge began in 2020 when the COVID-19 pandemic first swept the globe. Professional services come in second, also consistently hanging on to their standing since the pandemic began.
All these applications don’t necessarily become actual businesses—Small Business Labs reported earlier this year that only about 20% of applications for tax I.D.s result in a new business starting. And King says they “expect to see business applications continue to decline over the next year.”
But still, the continuing surge means there will be “a corresponding surge in new employer small businesses, and solopreneurs.”
This is not only good news for cities and towns, many of which are still recovering from the pandemic, which decimated more than a few Main Streets across the country. But it also brings a hopeful outlook for businesses that serve startups, like accountants, lawyers, graphic designers, website developers and designers, consultants, etc.
And I’m sure we all agree—there’s no such thing as too many startups.