As crazy as it sounds, the pandemic is proving to be a great incubator of notions about starting a business. And few business experts really know precisely why.
Consider that during the heyday of the Silicon Valley, decades before COVID19 came along, the overall number of new businesses inexplicably slumped. The same thing happened, predictably, during the last economic recession as entrepreneurs struggled to find funding, per a February article in the New York Times.
Given these trendlines, logic would suggest that a global pandemic wreaking havoc throughout the business community would reduce startup activity to nothing. But that’s where things get wacky. According to research conducted by the Peterson Institute for International Economics, Americans started 4.4 million businesses in 2020, a 24 percent increase from 2019 and by far the biggest increase on record.
Researchers can’t pin down exactly what was inspiring so many to go out on their own, especially considering the millions of ventures going belly-up all around them. Some theories suggest many startups were little more than side hustles that may or may not survive another year. But the fact that people took that leap – and at this particular point in time – suggests the old rules for entrepreneurism are changing right along with the pace of technology and its transformative power in the workplace.
“Firms have been reborn after investing in digital applications,” suggested PIIE senior researchers Simeon Djankov and Eva (Yiwen) Zhang. “Workers have learned how to use remote databases and reach their customers over social media. The office was becoming virtual even before the pandemic and may remain so post-Covid-19 in some sectors of the economy.”
The lightning that’s juicing this fly-in-the-face-of-conventional-thinking likely comes down to one word: data. As Entrepreneur magazine suggested this summer, digital transformation has been accelerated by as much as seven years due to the pandemic.
"The health crisis has created an almost overnight need for traditional brick and mortar shopping experiences to regenerate into something altogether more adaptive and remote,” wrote Dmytro Spilka, founder of Solvid and Pridicto. “While some businesses are finding this transition toward emerging technology a little tricky, it’s proving to be a significant opportunity for entrepreneurs in the age of the ‘new normal.’"
Among these advantages, Spilka writes, is having ready access to the largest pool of data that’s ever been, as well as tools that allow entrepreneurs to apply data in decision-making and stay out in front of the marketplace. He also noted as consumers increasingly demand instant satisfaction around the clock, online intelligence is about the only thing that can truly keep up.
Of course, merely learning the ropes of Big Data isn’t enough to succeed; starting a business has never come with a money-back guarantee and it never will. As Heather McGough writes for Lean Startup Co., fortune favors not only the bold but the innovative, those who can meet challenges from a unique solution angle.
“Companies that hope to lead in this new world should ask these fundamental questions and then translate them into quantifiable experiments,” she writes. “How will your customers get their needs met as we head into a post-crisis new normal? How can you create engaging interactions with customers you will never meet in person? How will you create resilience in your business model, without tying up more capital? How will you bring out digital products or prototypes in days or weeks?
“[The] ability to imagine new ways of operating will be crucial for companies. Those that succeed will help define the new reality, and establish standards that become a baseline for doing business.”
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