How to be an Entrepreneur in the Pandemic
- 61% of entrepreneurs were employed somewhere else when they started their business.
- Entrepreneurs invested 22 hours per week, on average, to run their business.
- 88% of entrepreneurs were happy with their decision to start a business.
- Nearly 2 out of 3 entrepreneurs said they will continue to work on their business after 5 years.
The COVID-19 pandemic wreaked havoc on American businesses. Major companies from almost every sector – including J.C. Penney, Chuck E. Cheese, and Guitar Center – were devastated by plummeting profits and looming bankruptcy restructurings. As these multi-million dollar companies faced their untimely financial woes, the last thing on many people’s minds was plunging into the world of owning a business.
However, many across the country viewed their additional time at home and the universal push for remote employment as an opportunity to start their own company and be their own boss. In fact, over 4 million new American businesses were initiated during 2020 alone. This prompted many employees to ask themselves, “Is now the time to start my own company?”
For this study, we surveyed 510 entrepreneurs across the U.S. to uncover their prior employment status, their strategies for achieving success amid the pandemic, and their outlook on the future of their self-run business.
Are You Looking to Be Your Own Boss?
As businesses were forced to shut their doors in the early months of the pandemic, the hospitality industry was hit especially hard, with approximately 48% of employees losing their jobs from February to April. Clearly, the fire that inspired Americans to start their own business was ignited. So what kinds of people took this plunge?
Almost two-thirds (61%) were already employed elsewhere when they made this decision, with more than half now being self-employed. Many entrepreneurs shared that they have a side hustle in addition to an entirely different career, and women led the charge, with 34% working full-time while balancing a side hustle.
When leaning into entrepreneurship, the most common work opportunities included selling one’s own product (45%), providing a personal service (26%), and freelance work (21%). The pandemic also built the foundation for an array of new side hustles, including clothing consignment, food delivery, and online teaching.
Given that most future entrepreneurs indicated they were employed elsewhere prior to starting their own business, we wanted to understand why American employees are making the decision to work for themselves.
The most frequently reported reason was extra income (72%). Another large portion of respondents (32%) had found additional time in their day to dedicate to entrepreneurship, so they opted to take advantage of that prospect.
Putting in the Time and Shelling out the Cash
Running a successful business takes lots of effort and dedication. For entrepreneurs, this is especially true, as they are on their own when making strategic decisions.
Of those surveyed, most entrepreneurs reported clocking an average of 37 hours per week while working on their own business. Breaking it down by type of business, the most time was spent per week on personal service (27 hours).
A common hesitation when starting a business is uncertainty with how much upfront cash is required. Shelling out thousands of dollars is often necessary if you want to become an entrepreneur. Respondents shared that they invested over $6,700 in the past year alone. Businesses initiated prior to the COVID-19 pandemic required a higher dollar investment ($8,112) as opposed to during the pandemic ($3,824).
Finding Your Focus Amid the Pandemic
Amidst seemingly endless months of federally mandated quarantine, traditional in-person shopping became obsolete as customer priorities shifted. Business owners needed to remain agile as their methods shifted as well.
Entrepreneurs’ top two priorities when cementing their business concepts were focusing on networking (42%) and marketing (40%).
Given how many Americans were out of a job or no longer shopping in-person, entrepreneurship demanded flexibility and inventive new ways of doing things, such as increasing investments in social media and communicating virtually with potential customers.
Starting a website was the third-highest priority for business owners (31%). In fact, nearly half of entrepreneurs (43%) focused their attention exclusively online during the pandemic. Another 27% of respondents initially kept their business operations exclusively online during COVID-19. Finding methods to reach new customers while also retaining existing revenue during the pandemic was a key priority made possible by conducting business via the internet.
Was It Worth It?
Taking the leap into entrepreneurship can be downright terrifying.
Approximately 88% of surveyed business owners reported feelings of contentment with their decision to be their own boss. Often, the first year as an entrepreneur can be rocky and unstable, riddled with financial challenges and self-doubt. Nearly 90% of entrepreneurs said they plan to continue their side hustle journey over the next 12 months. Starting a business during the COVID-19 pandemic did not have a major impact on how business owners felt about the future success of their companies.
Interestingly, just 2% of respondents planned to no longer be working on their business within a year. From a long-term perspective, a large portion (64%) expected to still be working on their own business in five years. A major component of any job is financial stability, and just 27% of entrepreneurs did not believe they would be able to live entirely off their business in five years. However, only time will tell how the businesses of these entrepreneurs will develop, and if they will offer the flexibility and financial freedoms they are hoping for.
What’s Next for Entrepreneurs?
If you’re on the fence about transitioning out of a traditional career and pursuing entrepreneurship, there are many variables to consider prior to turning in your two-week notice. Ensuring priorities are set to creatively captivate customers and set your business apart from the competition is key. This is especially important amid the ongoing COVID-19 pandemic, as experts anticipate the situation will change very little moving into 2022. Entrepreneurs demonstrated impressive flexibility, agility, and overall resilience over the past 19 months, and many continue to experience positive results due to their unyielding efforts during these unprecedented times.
Methodology and Limitations
We surveyed 510 entrepreneurs using Prolific to explore entrepreneurship in the U.S. and how it was affected by the COVID-19 pandemic. Respondents ranged in age from 18 to 74. The mean age was 35 with a standard deviation of 12 years. 64% of our respondents identified as women, 32% identified as men, and 3% identified as nonbinary or preferred not to answer.
This survey’s data relied on self-reporting, which is liable to certain limitations such as telescoping, exaggeration, and selective memory. We did not weigh our data or statistically test our hypotheses. This is a purely exploratory study of the different aspects to starting a business in the U.S. today.
Fair Use Statement
As a small business owner or someone seeking to take the plunge into entrepreneurship, we hope that you find these insights and data points helpful throughout your journey. You are free to share this data with your friends, family, and peers for any noncommercial use. We ask that you link back to this article when sharing with others.