The period from 2020 to date has probably been one of the most difficult when it comes to small business success — perhaps ever.
As CNBC highlights, 33.8% fewer businesses remained open by the conclusion of 2021. Despite this, wonderful creativity and application of business acumen have enabled many young businesses to remain open. Indeed, many actually grew and continue to grow.
This sort of experience cannot be underestimated in terms of its long-term benefits. Indeed, a few key indicators and industry trends show just how upwardly mobile new businesses are in the modern economy.
Greater Rates of Incorporation
More and more businesses are making the jump to have full incorporation.
This is a huge step for businesses. For example, running an informal digital service can be done without going through the process of moving to become an LLP. However, it does mean that the business owner is entirely exposed to financial liability.
Incorporation can be difficult, too. The process can be made easier through the growing number of service providers including Northwest Registered Agent, LegalZoom, and Harbor Compliance. However, it can still be a treacherous process to make the jump from an enthusiast’s operation to a formally assigned entity.
Nevertheless, small businesses are taking that step.
Figures analyzed by the Economic Innovation Group indicate that over 5.4 million applications were filed for incorporation in 2021. That’s a figure bigger than any on record and a 53% increase over previous years. It shows that a huge number of young entrepreneurs are making the move. They are looking to turn their businesses into a permanent part of their lives.
In addition to showing the intent of business owners, this is providing protection from financial liability. That’s an important factor in another major industry trend showing the rise of businesses.
The pandemic saw big tech as the big winners. However, the smaller players at the table still had opportunities for plenty of gains.
According to Bloomberg, Q3 2021 saw a record surge in corporate profits. That number includes corporations of all sizes. Smaller businesses benefited just as much as the larger ones did. With that surge came a greater amount of revenue to plunge into growth.
Of course, as profits grow, so do the risks.
Larger investments carry a larger chance of losing it all, and that’s why incorporation has protected many startup owners. This is a promising trend. It shows that new business owners have the money and engagement with the market to try out new things, and to take risks in the pursuit of growth.
Growth of Gaps
In addition to the undoubted monetary success of many businesses, there are wider trends in the economy. Several of these trends nod towards even greater opportunities over the coming years.
According to US News, the pandemic has created a range of openings for startups. These developed where older businesses have either shuttered or consumer demands have changed. These gaps provided a way that smaller, flexible companies now have a greater role to play.
Where problems have arisen stem from a lack of industry knowledge. US News reported that they highlight the issues many entrepreneurs have faced due to their inexperience in the world of business. They have an excellent product but struggle to meet consumer expectations.
Tangling with the realities of the current convenience-driven consumer culture is understandably difficult. However, new tools are once again giving young entrepreneurs benefits that they might not have had previously in the world of business.
The best businesses work on collaboration — whether that be within their sector or outside, or whether with friends or competitors.
The past few years have seen business collaboration become much more visible, chiefly through branding partnerships. According to Bloomberg, these types of partnership have been extensively beneficial for businesses, especially those looking to rapidly expand their profile.
What about expertise, though?
There is a strong argument for collaboration being the foundation for widespread business success from the smallest right through to major operators. Indeed, the Harvard Business Review is of the opinion that collaboration between large businesses and small can help to entirely renovate several highly dysfunctional industries, including healthcare.
The flexibility, agility and determination of small businesses are a potent foil to the expertise and industry connections of larger institutions. That can be a winning formula for wider industry shakeups.
Smaller businesses are rapidly becoming the lifeblood of the new economy. They provide individual creativity and a willingness to embrace change that those larger businesses simply cannot provide.
They lack in some areas — chiefly, the concern of workplace and business environment experience. However, bigger businesses can easily help bridge these gaps. In turn, that will further push the fortunes of small businesses and enable them to make a real impact in the world.