According to a survey by Startup Genome, 74% of startups have had to lay off full-time staff since the beginning of the Covid-19 pandemic. 39% of all startups had to lay off 20% or more of their staff, and 26% had to let go 60% of employees or more. More layoffs can be expected in the coming months as the global economy enters a covid sparked recession.
As a result of the Covid-19 pandemic, uncountable companies have folded and many have lost their jobs. Perhaps the silver lining here is how the situation has resulted in the birth of more entrepreneurs offering solutions to problems created by the pandemic.
Business creation is at an all-time high
Globally, more company registrations have been recorded in reaction to worldwide trends of layoffs and big companies closing. In Singapore, there was a 40% year-on-year increase in new business incorporations between June and September 2020, compared to the same four months in 2019, according to ACRA.
In the United Kingdom, new business creation is at an all-time high. During the third quarter of 2020, the UK’s Companies House saw growth that was higher than pre-Covid-19 levels. If the current trend persists, this will result in a 12% year-on-year increase in the number of new business creations, the largest rise since 2011, as revealed by data provided by Companies House. In the US, as of mid-September 2020, applications to start new businesses across the country are up 19% compared to last year according to the US Census Bureau.
According to SHL, sectors experiencing the highest growth in new businesses include e-commerce (up 88%), clothing (up 55%), and retailers of medical goods (up 176%). Most of these sectors’ growth can be attributed to the pandemic and its lateral effects.
Meanwhile, Hong Kong entrepreneurs have modified their operating models during the pandemic and are more receptive to adapt to the changing needs of their consumers. This allows them to gain a competitive advantage over bigger corporations, as they can benefit from emerging opportunities. Findings from a survey jointly conducted by KPMG China & Alibaba Entrepreneurs Fund revealed that 34% of entrepreneurs have witnessed higher demand for their goods and services amidst Covid-19, as opposed to 19% of bigger firms.
3 Key Reasons for the Entrepreneurial Boom
Covid-19 has introduced a host of trends, from working from home and social distancing to increased the share of e-commerce. These unprecedented times have also brought about the emergence of new and innovative trends, with entrepreneurship and side gigs being one of them. In 10 years everyone could be a business person in one form or another.
Here are three main driving factors that encouraged entrepreneurship:
Grim Job Market
Having the prospect of a layoff hanging over you can be very stressful but it also provides motivation to find back up plans and alternative forms of making a living. Side-gigs and micro-businesses have become such an alternative. If the recession continues and you do get laid off, the side-gig would provide support during your job search or, who knows, it might even grow into a full-time business.
Government support through grants and policies can reduce barriers to entry for entrepreneurs and provide the right incentives to start a company. The UK introduced the SME-friendly Bounce Back Loan, and Pay as You Grow schemes. The Hong Kong government has waived business registration and annual return fees till end of 2022. Australia’s $500 million Business Support Fund awards $10,000 grants.
In Singapore, the government gave SMEs access to lower-cost loans. Programs that existed before Covid-19 have also become more relevant and have seen increased uptake with schemes available for newly incorporated companies like the Start Digital Pack under Infocomm Media Development Authority’s initiative of the SMEs Go Digital programme. The Start Digital Pack offers SMEs easy ways to digitize their business operations. Osome works with OCBC, Xero and Talenox under this programme to provide SMEs with accounting, bookkeeping and payroll solutions.
Digital Tools Levelling the Playing Field
With digitization happening all around us, launching a business is easier than ever. You can set up an entity, open a business account, launch a website, connect with suppliers and set up marketing within a couple days without leaving your couch. By being digitally connected, entrepreneurs can find clients from anywhere in the world.
There are also plenty of time-saving tools allowing you to focus on your business. Cloud and collaboration services, digital business assistants and online admin support platforms help you manage many parts of your business without the need to pay thousands of dollars for in-house staff.
Tips for New Entrepreneurs
Don’t be afraid to take the first step
Crisis breeds opportunity. Many companies like Dropbox and AirBNB were founded during the 2008 crisis and have since become multibillion dollar businesses. After recession comes recovery and a business that can survive during tough times will prosper during great ones. After all, launching and managing a company has never been so easy, so why not now?
Be nimble to adapt to change
While this time of crisis might pose challenges along the way, it is also the perfect opportunity for entrepreneurs to adapt to and respond to changes in consumer behaviour and needs, addressing the constraints caused by difficult economic or health conditions. New startups can and should move faster and iterate more than bigger players with legacy infrastructure and long decision-making chains. Move fast and you can pull away before they catch on to the trend.
Better manage your resources
When entrepreneurs first start, they often make the mistake of trying to manage everything alone. This could hinder the growth of their business. Where possible, entrepreneurs should outsource certain services and focus on what they do best: working on their product, with their clients and growing their business