Entrepreneurship has been skyrocketing since the start of the pandemic. According to the Census Bureau’s Business Formation Statistics, between January 2021 and November 2021 just under 5 million new businesses were launched, an increase of 55% compared to the same period in 2019.
In order to find out if the new year means even more new businesses, Digital.com surveyed 1,250 American adults to ask them about their entrepreneurial plans for 2022. Our findings suggest that the startup boom might just be beginning.
- 43% of Americans plan to start a business this year
- 55% of entrepreneurs will quit their current job within the next year
- One-third of 2022 startups come from first time entrepreneurs
- Popular industries for new businesses include retail, business & finance, and computer & IT
- 1 in 8 entrepreneurs have raised $100k or more for new venture; 1 in 10 have invested more than $100k of their own money
43% of Americans plan to start a business this year
According to our survey results, more than 2 in 5 American adults plan to start a business this year.
Of those who plan to start a business this year, 47% are currently employed but not self-employed, 34% percent are self-employed, and 19% are unemployed.
Whether or not these plans turn to action remains to be seen, but what’s clear is the exploding interest in entrepreneurship.
One-third are first time entrepreneurs
Thirty-two percent of people who intend to start a business this year have never launched a business previously.
The majority of individuals starting a business in 2022 have previously started at least one business before. More specifically, 36% have started one business, 23% have started 2-3, and 8.5% have launched more than 4 ventures.
According to Digital.com’s small business expert, Dennis Consorte, now more than ever, it’s a good idea to consider entrepreneurship.
“One of the drivers for The Great Resignation is that people want to feel a sense of purpose. Business ownership can give you the flexibility to pursue what matters to you in a way you believe will be most meaningful and impactful,” Consorte says.
Current health care, construction, education, finance industry employees are starting businesses
Those who plan to start a business who currently work for an employer are most likely to be employed in these industries: health care and social assistance (8%), construction (8%), education (7%), and finance and insurance (6%).
Twenty-six percent of employed and self-employed individuals currently work fully-remotely, and 40% work both remotely and in-person. Remote work may allow for more flexibility to simultaneously continue current work while beginning a new endeavor.
Desire to earn more money, be own boss, and pursue a passion drives entrepreneurs
Motivations for starting a new business are largely driven by a desire to earn more money with 62% of respondents choosing this answer. Additional reasons include wanting to be one’s own boss (48%), to pursue a passion (47%), and to have more flexible hours (44%).
Half of entrepreneurs plan to leave current job within the next year
Overall, 55% of individuals who are currently employed plan to leave their current job within the next year. More specifically, 27% plan to leave in less than 6 months. Another 16% plan to leave in more than one year, and 29% do not have plans to leave their current job.
Retail, business & finance, computer & IT, most popular industries for new businesses
Entrepreneurs plan to start businesses in a variety of industries. According to our survey, the most common industries for starting a business in 2022 include retail (15%), business & finance (11%), and computer & information technology (10%), personal care services (9%), and advertising & marketing (7%).
Female entrepreneurs are more likely to start a business in the retail and personal care services industries, with 16% and 14% choosing these industries respectively. Women will pursue business & finance ventures at the same rate as men (11%).
Entrepreneurs under 35 are most likely to start a company in business & finance (13%) or personal care services (11%). Meanwhile, entrepreneurs over 35 overwhelmingly plan to start a business in retail (18%).
Consorte isn’t surprised that retail is a focus for many entrepreneurs; however, the declining interest in skilled trades could create significant opportunities down the line.
“It’s not surprising that retail is at the top of the list. The product is tangible and easy to conceptualize, especially for visually-oriented people,” Consorte says. “On the other hand, it’s common knowledge that finance and IT are lucrative fields with broad appeal, which are easy for B2B companies to outsource to vendors. There’s been a steady rise in the demand for personal care services as health and wellness have shifted into the forefront of the zeitgeist of our time.”
“What’s interesting is that skilled trades only occupied a small percentage of respondents. Fields like plumbing and carpentry will be hard to automate, and we could see a labor shortage in these areas as demand rises, making skilled trades highly lucrative in the near future.”
32% of businesses will operate fully online
When asked how they anticipate their new business will operate, 45% of entrepreneurs said the business will be hybrid and operate both in-person and online. Thirty-two percent said the business will operate solely online, whereas only 22% said fully in-person.
“In addition, many aspects of our lives are becoming decentralized. Bitcoin, distributed ledgers, and blockchain technology are metaphors of our time. The internet and communications technology mean that many businesses are no longer limited to a single physical location and people can be connected in real time across thousands of miles. On the B2B side, this means that providing business services remotely can be highly lucrative while also fitting nicely into the work-from-home and hybrid models that are so prevalent today,” Consorte says.
1 in 8 businesses have raised $100k or more
To date, 13% of entrepreneurs have raised more than $100k for their new venture. Twenty-nine percent have raised more than $50k, 57% have raised more than $25k, and 87% have raised at least some amount of money.
Female entrepreneurs have raised slightly less money than men. Ten percent have raised $100k or more, 20% have raised more than $50k, 53% have raised more than $25k, and eighty-five percent have raised some amount of money.
1 in 10 entrepreneurs have invested more than 100k of their own money
Eighty-nine percent of entrepreneurs have put at least some money behind their new business, and 10% have invested more than 100k.
According to Consorte, it’s important to have skin in the game and money in the bank when starting a business.
“If you want to pursue a startup full-time, then it’s a good idea to have at least 6 months’ savings and to adopt a frugal lifestyle,” Consorte says. “Raising money can often help you move faster, but it can come at a high cost. Start with friends and family, and opt for models where you don’t have to give up too much equity in the beginning. You’re going to need it if you get to a point where you want to bring in institutional investors. One thing is certain: investors want to know that you have skin in the game. Putting a meaningful amount of your own money on the line before asking for outside funds is important to investors.”
All data found within this report was derived from a survey commissioned by Digital.com and conducted online by survey platform Pollfish. In total, 1,251 U.S. adults were surveyed on January 8, 2022. All respondents were asked to answer all questions truthfully and to the best of their abilities. For full survey results, please email [email protected]