“High propensity to succeed” is the category assigned to businesses that apply to the IRS for an employer identification number and are identified by the U.S. Census Bureau as being highly likely to turn into businesses with payroll.
I am sure every applicant would like to think the Census Bureau would give them this label of encouragement as best positioned to survive and thrive. The numbers in that category are a significant predictor of whether the economy may be closing in on the end of a recession or pandemic disruption. Business applications in the third quarter of 2020 were record setting.
Activity Surge
“This pandemic is actually inducing a surge in employer business startups that takes us back to the days before the decline in the Great Recession,” John Haltiwanger, a University of Maryland economist, told The Wall Street Journal.
The 77% increase in applications in the third quarter of 2020 over the first quarter of 2020 marks the highest quarterly level on record. No other rich-world country is experiencing the same rise in entrepreneurship.
Some of the stats may represent people trying to claim stimulus funds, and a backlog of unprocessed applications that were left on desks during the complete closures. Nonetheless, the numbers reflect a rise in American ingenuity and signal that the labor market may recover more quickly from the pandemic financial crisis than after previous recessions.
Contrast to Last Recession
High-propensity business applications fell off the cliff after the last recession and new business creation has been on a downward spiral for decades, according to the U.S. Census Bureau data.
Researchers offer two reasons that startup creation had been slowing: stagnant population growth and established corporate powers making it difficult for new business ventures to enter the marketplace.
But with the pandemic shining a light on the cracks in the dams of big business and the government relief efforts prioritizing income protection over job protection, people gained both the need and means to take the leap into the entrepreneurial world.
These newbies will address a need and fill a gap. Some are new entrants into an existing industry with just a “pivot” to meet the new need. Others are truly resourceful and the business activity was not around prior to COVID.
Need for Support
But all will need to build a support system and network that will help them create the web that will catch them if they fall, springboard them to success in communicating within their sectors and neighborhoods, and be there to represent them even when they don’t know it is happening on their behalf.
The Unpolished Startup will walk through the doors of its local chamber on Main Street to ask for help. Will your doors be unlocked?
The Lucky Startups will have a neighbor or friend who had a positive experience at the chamber tell them to call you. Will you be answering the phones?
But the truly wise, educated and informed Entrepreneur who had known already the chamber is an asset to their area—because they had witnessed the chamber championing business formation for a stronger community, being a resource tool as a catalyst to the success of the local businesses, and acting as the convener in leading change and progress in their city—that business startup already had their chamber standing by their side and supporting them in every step toward success and in seeing their front doors open.
Sheree Anne Kelly at ACCE reminds us that our missions “must be clear, impactful and community focused. If we are solving the greatest challenges facing our communities, and optimizing our opportunities, then our value proposition is undeniable.”
She further says, “Your mission is the passion that drives your work and your community impact. Whether your focus is economic development, workforce and talent, public policy and advocacy, inclusive and equitable growth, or other high-level purposes, all your work must be driven to accomplish goals tied to this mission.”
Being Prepared
The success of our chambers in trial comes from being prepared. We can better manage the disaster for our own corporation, all the while helping everyone around us, if we have the pillars in place to support the structure while under a little duress.
Position your chamber now to better weather the next storm and be ready to assist the startups that arise from opportunity. The field is ripe for a harvest. Are we prepared to assist those entrepreneurs to go from startup idea to high-propensity business owner?
The statistics paint the picture. Chambers should be flooded with new members as we usher in the exciting times for startups and possible additions to communities that will eventually assist in job creation, economic stability and community vibrance.
Just like Lori Mattson’s (Tri-Cities Regional, WA) dad told her, as quoted in the September Insider, “Always expect the unexpected.”
Who expected third quarter data to tell us that right now people want to be engaged in small business for themselves? But what an unexpected opportunity it has presented to chambers and the country.
Do you believe the Census Bureau would consider you a “high propensity” chamber that is already best positioned to survive and thrive?
Jill Rowland-Lagan, ACE, is CEO of the Boulder City (NV) Chamber.