While COVID-19 triggered major economic downturns, high unemployment rates, and a collective push towards digital transformation for surviving businesses, “COVID-preneurs” pushed on with their dreams of becoming their own bosses at a record pace. According to the Peterson Institute for International Economics (PIIE), the number of new business applications (or applications for new Employer Identification Numbers —EINs — via the IRS Form SS-4) in the US shot up by 23% from January to September of 2020 compared to the same period of 2019.
To break this down even further, the US Census Bureau reported that there were 1,559,950 new business applications submitted from July to September 2020 alone. Compared to the 859,345 new applications submitted during the same period in 2019, this 82% increase in 2020 was the largest year-over-year spike ever recorded. While these numbers might seem perplexing, there are several reasons why entrepreneurship was on the rise during the height of the pandemic — and continued to be well into 2021.
In this guide, we will uncover why digital entrepreneurs across the country continue to reach for their dreams despite the current economic climate. In addition, we will take an in-depth look at what you should consider before starting your own online business this year, as well as ways you can prepare for success in our digital-first economy.
Why digital entrepreneurship is on the rise.
Easy access to consumers.
According to a survey conducted by Statista Research Department in February of 2021, 46% of respondents said they spent five to six hours each day on their mobile smartphones. This means that not only are consumers theoretically available to marketers for a significant portion of the day, but marketers are right there in consumers’ pockets. In other words, customers are easier to reach than ever, especially for resourceful digital entrepreneurs that can use social media and mobile-commerce (m-commerce) platforms to their advantage.
What’s more, e-commerce sales continue to increase, driving more entrepreneurs to sell their goods and services online. From April to June of 2021 alone, e-commerce sales as a whole in the US reached $222.5 billion, which was an increase of 3.3% from the first quarter of 2021. And in the projected future, m-commerce sales alone are estimated to reach beyond $432 billion, which is up from $148 billion in 2018.
Reassessing the meaning of work and life.
Remote work flexibility.
The rise in remote work flexibility during the pandemic was a stepping stone to digital entrepreneurship for many. Some people likely found that more time spent working from home allowed them to commit more time toward developing a business plan. In addition, many people who were able to work from home for the first time quickly realized it was their preferred way of working.
According to surveys from Morning Consult, 81% of employees in the US say they enjoy working remotely, 74% of remote workers say they are more productive, and more than 3 in 4 adults would rather apply for jobs that offer remote work options. Additionally, in a May 2021 survey of 1,000 US adults, 39% said they would consider quitting if their employers weren’t flexible about remote work. When looking at millennials and Gen Z respondents, that number was 49%.
5 things to consider before starting an online business.
01. Understand consumer demand.
02. Gather funding.
03. Deal with failed developments or investments.
04. Have access to the right technology and tools.
05. Learn to be a leader.
Becoming a digital entrepreneur might be more than becoming your own boss: it also could mean developing into a business leader. This is especially true if you need to build out a team of employees (including freelancers or contractors) or collaborate with partners or investors to move forward with your plans and reach your goals.
Outside of having a specific vision and being able to articulate it to employees or stakeholders, it’s important to view your work or ideas as pieces of a larger puzzle. That is, entrepreneurial success often includes collaboration with other people. Always be open to listening to new ideas or feedback from those helping you on your journey, and stay committed to helping your employees develop and grow. It’s also important to maintain transparent communication chains with all parties involved with your business.
How to start a business online: Preparing for success.
Adapt to new business models.
Focus on digital marketing.
Leverage existing marketplaces.
Make smart investments.
As we’ve learned throughout the COVID-19 pandemic, making smart investments upfront is key to future-proofing your business for unexpected economic downturns. Fortunately, the push to all things digital has left many opportunities for new entrepreneurs to avoid costly expenses and make better investments.
For example, as remote work continues to gain a foothold in our economy, small business owners have access to a larger, more diverse talent pool — especially non-salaried freelancers and contractors. Consequently, businesses won’t have to invest in expensive office rentals or equipment for remote employees.
With the explosion of e-commerce, new entrepreneurs can also turn their attention and investments towards digital marketing channels, rather than solely focusing on traditional marketing efforts that might not generate a positive ROI. With digital marketing strategies like email, PPC, and content marketing campaigns, small business owners can more accurately track customer behaviors and touchpoints and adapt accordingly—saving them major marketing dollars in the long run.