Published by linker 5
Posted on February 10, 2021
According to reports, the pandemic has had a surprising effect – there has been a significant increase in new businesses being formed in the world’s strongest economies. There have been immense societal changes, and many entrepreneurs are reacting to it. Furthermore, there have been many lay-offs and, as a result, many individuals have decided to form their own businesses.
Some of the countries who have witnessed the most new business registrations are the United States, UK, France, Germany, and Japan. The US stands out as seeing the most growth with business formation applications in 2020 up 82% from 2019 in the three months heading up to September. In the UK, there was also a 30% spike in business corporations in the four weeks leading up to mid-December compared to the same period in 2019.
France saw 84,000 new businesses registered in October 2020 which is a 20% increase from October 2019. This number is the highest that has ever been recorded. Germany also saw increased numbers of business registrations in late 2020 compared to the same period in 2019 – this is despite a big decline in the beginning of the pandemic. In Japan, there were 10,000 new business registrations in September which accounts for 14% more than September 2019.
Of these countries, the US and the UK stand out as being the most popular with new businesses.
According to the US Small Business Administration, in 2020 there were 31.7 million small businesses in the US with 60.6 million employees. Small businesses accounted for 99.9% of all United States businesses, and 47.1% of all United States employees. The US Census Bureau reports that in the fourth quarter of 2020, there were 1,115,984 business applications.
The Center for American Entrepreneurship reports that San Francisco, San Jose, and Los Angeles are part of the list of the top ten cities which venture capitalists look favorably upon. California especially is well-known as being the state which has the largest number of small businesses. In fact, they have 4.1 million small businesses there. Texas comes in second with 2.8 million small businesses, and Florida comes in close third with 2.7 million. Following Florida, New York has 2.2 million and Illinois has 1.2 million small businesses.
Statistics show that new business registrations in the US are focused on e-commerce, but also information services and logistics. It’s been seen that many of the businesses being formed are created without dependent employees. This surge in new applications can be attributed to the fact that many people lost their jobs and started their own businesses because there weren’t other options.
However, there has still been an increase of new businesses which plan on hiring employees. In fact, that number is also up 52% from 2019. Low interest rates and new consumer needs have opened up novel opportunities for employers and employees.
Indeed Brexit will have some negative effects, yet the attractiveness of the UK and it’s offshore jurisdictions (BVI and others) remain substantial. The new businesses are being created as a response to a changing world – especially a society which is now socially-distanced. Industries which stand out as being more popular because of this are technology, digital wellness and fitness, and food and drink production. Reports indicate that these new businesses were started as entrepreneurs realised that starting an online business had the potential to be very profitable – startup costs are very low, and online shopping has never been more popular.
According to reports by Guidant Financial, 78% of small businesses in the US are profitable. It is also very easy to start a business in the US – an LLC (Limited Liability Company) can be started in five simple steps. There are very few costs involved, and an LLC offers personal liability protection to its owners, as well as pass-through taxation.
Trends to look out for in 2021 are mostly related to online shopping. The third annual Digital Consumer Study found that 50% of consumers relayed that they did shopping-related activities on their mobile phones within the previous. three months.
Guidant Financial reports that 55% of small business owners formed their own company so that they would not have to answer to someone else, and 25% of small business owners started their own business because they were unhappy with corporate America. The next logical question might be – where do all the companies open their bank accounts? As Luigi Wewege, a private banker points out: “Global companies will naturally look at opening bank accounts in multiple jurisdictions to facilitate tax efficiency and ease of business”.
Suggested resource: If you’ve decided to start your own business, it’s a good idea to evaluate several business bank accounts to find the most suitable option.
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