In many ways, this is surprising. As Haltiwanger rightly points out, not only do recessions deter entrepreneurs, but subsidies to established players as well, which we have seen on a massive scale during the pandemic. After all, it’s hard to start something new when your competition is receiving massive government bailouts.
And yet, despite this, there have been three major trends encouraging more and more people to try their luck with their own business. Firstly, it has become a lot easier, especially for any kind of online start-up. Inexpensive and easily accessible cloud and payment services mean all infrastructure is available off the shelf. You just need to plug in the business idea, and you can be up and running in no time, and don’t even need a lot of capital.
Then the pandemic suddenly opened up many and many new opportunities. From delivering goods and services to people’s homes, to providing tools for working from the kitchen table, to broadcasting events and classes, there were suddenly thousands of spaces on the market. Established businesses were good enough to move towards these, but entrepreneurs are always better at understanding how the world has changed.
Finally, the massive scale of stimulus programs made this recession very different from previous ones. There was a lot of money available. All you had to do was find a way for people to spend it. Better yet, aid schemes may have actually encouraged business start-ups. Many of the millions of people on leave may have quietly plotted their own idea without working for their employer (which was technically against the rules, but damn it, who’s checking?).