Aside from being a global health crisis, the Covid-19 pandemic has likewise had a massive impact on businesses everywhere. Following the widespread lockdowns, numerous companies eventually decided to permanently close their doors. Others have scaled down on their operations. Both scenarios have resulted in the unemployment of many.
Interestingly, however, observers are pointing out that there has been a noticeable rise in the number of new startups established during the pandemic.
In the United States, for example, business startups increased from 2019’s 3.5 million to 2020’s 4.4 million – a hike of 24%. Similar trends have likewise been noticed in countries as diverse as Chile, Turkey, and the United Kingdom.
So what actually contributed to the rise of new startups? And how are surviving businesses thriving amid the whole Covid ordeal? There are actually several contributing factors.
1. Learning that remote working works
A Forbes article has described remote work as “the biggest legacy” of the Covid-19 pandemic. As companies began to adapt to a new normal, existing workplace policies have been overhauled to allow full-time employees to perform their tasks from their own homes.
Despite the challenges that the new location-independent work arrangements have presented, companies have also come to see the many advantages of remote working. Business owners have recognized that it is helping them save money. Instead of maintaining costly office spaces, some have decided to reduce their expenses by simply getting a single office for rent , according to TheFarmSoho.
Employers have clearly understood that remote work can be just as effective and now startups are taking advantage of this type of arrangement as well. Some are running their businesses entirely online from their own living rooms or basements while others are renting a small, flexible space as their base of operations. Either way, it is becoming increasingly easier for startups to chase their entrepreneurial dreams without the burden of risky long-term investment posed by conventional office rental.
2. Redundancy forced many to build their own business
The surge in redundancy has also become the impetus for professionals to finally try their hand at launching their own startups. Instead of job-hunting and applying for another 9 to 5 position, some have opted to dive into entrepreneurship for the first time in the hopes of providing for their families while working for themselves.
Taking the big leap has proven to be daunting yet rewarding for some. While it is never easy to start and run a business, it has given them a way to earn and carry on through difficult times.
3. People have lost confidence in corporate businesses and the government
It’s no surprise that some victims of pandemic-driven company cut-backs have developed deep feelings of mistrust towards corporate businesses. In addition, there has been a marked increase in displeasure towards the government for confusing policies, misinformation, and perceived lack of support for workers in the middle of a crisis.
Still, resilient entrepreneurs are bravely pushing forward in their quest to establish a stable business despite all the uncertainties in today’s world. Once they’ve experienced the autonomy of self-reliance, for many there is no turning back.
4. No need to travel to meet investors
In the past, startups typically had to attend in-person meetings to obtain funding from potential investors. The pandemic has changed all that. The internet has become useful not only for tracking investors but now also for interacting with them.
Despite global economic challenges, many investors are looking for growing businesses that deserve additional funding – and many are willing to meet with startup owners virtually. Zoom and Google Meet video calls have become the place where pitches are presented and negotiations are finalized. Entrepreneurs no longer need to leave the comfort of their homes to secure funding for their businesses.
From the looks of it, this current trend will likely continue since it presents a more convenient option for investors and startup owners alike – and it’s no longer unproven ground.
Many are also tapping online crowdfunding resources as a way of securing funds for their enterprises. Companies such as Fundable and WeFunder are specifically designed for connecting startups with eager investors. GoFundMe and Kickstarter can also be great alternatives.
5. Growing communities of startup businesses supporting each other online
Meanwhile, the internet has also become a powerful source of support for startups trying to navigate their way through the unfamiliar territory of entrepreneurship.
Online communities such as Founders Network, Growth Mentor, Lean Startup Circle, and Startup Nation are places where new and aspiring entrepreneurs can find expert mentors and expand their networks. Many of these resources invite their members to exclusive Slack channels and social media groups where they can ask questions and gain valuable advice. Virtual webinars and mentorship opportunities are also more widely available.
Similarly, customers have shown an increasing preference for using the internet when it comes to buying products or availing of services. This behavior was boosted by necessity during the lockdowns but has now become habitual.
6. Outsourcing work abroad
As mentioned above, companies are focusing their efforts on the internet more today than ever before – and that includes the hiring process.
Instead of exclusively relying on local applicants, a lot of startups have started setting their sights on an international pool of workers. Talented virtual assistants from different countries are proving to be a great way to beef up the workforce without breaking the bank.
Case in point, companies can likely save up to 70% on their labor costs by hiring virtual professionals from the Philippines, according to a post by Outsource Accelerator. This valuable overseas resource can allow business owners to find competent workers while growing their startups at the same time.
Overall, experts are forecasting that startups will continue to multiply even as countries battle with different variants of the virus. The current crisis has definitely exhibited the strength of entrepreneurs – and the trend is unlikely to change anytime soon as there are still countless innovative ideas to explore and new problems to solve, therefore presenting more opportunities to grab.
As Dell Technologies CEO Michael Dell summed it up in a letter he wrote during the early months of the Covid-19 pandemic:
“We are all navigating this new normal together. As we lock arms virtually and try to help one another in the ways we can, our vast world suddenly feels a little smaller and a lot more connected. And for that, we are grateful.”