May 21, 2024

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Business startups had record year, Census Bureau to begin keeping official tally

The U.S. Census Bureau announced it will officially keep records on the number of business startups after a record number of business startups during the COVID-19 pandemic.

The Business Formation Statistics, or BFS, will be launched on Dec. 8, according to the bureau. The monthly data will focus on new business applications and business formations to help officials monitor economic activity across the country. The numbers will include seasonally and nonseasonally adjusted data. 

Bureau officials said they have experimented with keeping records as early as February 2018. 

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According to the Committee on Small Business, Americans filed paperwork to start 4.3 million new businesses in 2020 — a 24% increase from 2019 and the highest number in the past 15 years. 

“Many of these businesses didn’t look like traditional small firms,” the committee said in a news release. “As the pandemic drove commerce online, these new enterprises were primarily concentrated in the non-store, online retail sector.”

“Black and Hispanic communities lead the way in launching new companies,” the statement continued. “Young entrepreneurs dealt with a tough job market by pivoting towards entrepreneurship to develop businesses and products to serve their communities.”

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The committee believes there were multiple factors that led to the entrepreneurship boom including layoffs, favorable credit markets and federal stimulus efforts.

Major corporations are taking notice of the benefits of small businesses. 

In June, Neiman Marcus announced it was investing $500 million over the next three years in refreshing stores, speeding up deliveries and acquiring new technology. The plan includes a pact to purchase Stylyze Inc., a tech startup that recommends outfits for customers based on past purchases and browsing history.

But the COVID-19 pandemic has been a roller coaster for many small businesses. 

For a brief moment this summer, it seemed like small businesses might be getting a break from the relentless onslaught of the pandemic. More Americans, many of them vaccinated, flocked to restaurants and stores without needing to mask up or socially distance.

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But then came a surge in cases due to the delta variant, a push for vaccine mandates and a reluctant return to more COVID-19 precautions. Now, small business owners are left trying to strike a balance between staying safe and getting back to being fully open.

Navigating ever-changing coronavirus reality comes with a number of risks, from financial hardship to offending customers to straining workers. Those challenges could intensify as winter approaches and outdoor alternatives become limited. Still, small business owners say the whiplash is worth it to keep customers and employees as safe as possible.

“Just weeks ago, small business owners hoped that a return to normalcy would help jump start our recovery,” said Jessica Johnson-Cope, Chair of Goldman Sachs 10,000 Small Businesses Voices National Leadership Council and owner of a small business herself, Johnson Security Bureau in New York.

The Associated Press contributed to this report. This story was reported from Los Angeles. 
 

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