The year 2020 is known for many things, and one is the start of a surge in new business formations. It had the highest number of applications of any year on record at 4.4 million, according to the National Bureau of Economic Research, which noted an uptick in gig work – generally used as supplemental or stopgap income for individuals – but also in retail, which accounted for a third of new pandemic businesses, and personal services.
Against a backdrop of existing businesses shuttering – 200,000 of them permanently in 2020 alone, according to Federal Reserve economists – an even bigger surge of innovation followed in 2021. The World Economic Forum reported a record 5.4 million new business applications were filed that year, followed by 5.1 million in 2022.
In the best of times, about a fifth of startups fail in their first year, according to data from the U.S. Bureau of Labor Statistics. CNBC reported 47% of startup failures in 2022 were due to lack of financing, according to a survey conducted by Skynova, which makes invoicing software for small businesses. That’s double the percentage from 2021. Another 44% failed because they ran out of cash, either from poor planning or a lack of available funding, according to the survey.
Lance Coffman, business development specialist with the Missouri Small Business Development Center at Missouri State University, said the pandemic created an opportunity for budding entrepreneurs.
Many people were displaced from their jobs and at home more than they were used to, Coffman said. Some started side gigs or tried their hand at a business they had always wanted to explore. Stimulus money from the federal government also was a factor, he added.
“It was the perfect situation,” Coffman said. “More time, more money – why not pursue something you wanted to do?”
Since that time, some pandemic entrepreneurs found business difficult to sustain, especially in the face of inflationary pressures and a reduction in funding. In the final quarter of 2022, investments in U.S. startups fell 63% compared with the same period a year earlier, according to a Crunchbase report.
With so many new entrants into the market at once, in some cases the demand just wasn’t there to make a business viable long-term, Coffman said.
Businesses that did take off during the pandemic found the secret recipe, he said.
“You have to have something that makes you stand out – makes you unique from others operating in this vein or with a similar solution to a problem,” he said. “It could be the way you market it, the way you brand, the connections you have, or it could come down to knowing your target very well.”
Aaron Schekorra thought he had a pretty good side gig going, but then his business, Own Your Pride LLC, took off. Now it’s making $2,200 in sales on an average day, though there are days that figure is $4,000.
Own Your Pride specializes in online sales of pride flags and other merchandise geared toward the LGBTQ+ community. It’s just Schekorra and his husband, Daniel, and sometimes keeping up with orders means he’s elbow-deep in rainbows from sun-up to sundown. A product that is especially popular is a colorful sticker that identifies a classroom or office as a safe space for LGBTQ+ people.
Schekorra, who registered his LLC in May 2022 but eased into the business before that, said he hit $24,000 in revenue in the month of July, and by the middle of August, he had hit $30,000.
“People are finding us,” he said. “We keep selling out of stuff, and a bunch of our designs have gone viral. We’re trying to capitalize on that by expanding into different designs and products.”
On Aug. 24, Schekorra quit his job as public health information administrator at the Springfield-Greene County Health Department. It’s not something he wanted to talk about, but in his social media posts, he describes harassment and even threats he received on the job and an insufficient response from city officials to them.
But he also mentioned his company.
“In the last few months, my income from Own Your Pride has significantly surpassed the salary I made in this job,” he wrote on Facebook. “That is what enabled me to make this decision.”
Schekorra said his queer identity, which made him a target for harassment in his previous role, helps to explain some of his company’s popularity with buyers. He said he has attended pride events and found either no merchandise or poor-quality items.
“It’s coming from God knows where, and it may be coming from a company whose donations are directly opposed to the values of the merchandise they’re selling,” he said.
But Schekorra has found his groove with customers who appreciate buying from an LGBTQ+ business, and he built Own Your Pride using only seed money borrowed from his and Daniel’s savings, plus revenue produced by the business.
Other capital came from an unexpected source: a business bank account he opened at Central Bank in Springfield. The bank offered a $500 bonus for companies that opened an account and reached a certain number of transactions.
“Central Bank paid for the machine that die-cuts my stickers,” he said.
Workers on the move
Dustin Beasley owns 417 Resume Renovators LLC. His company, registered in the summer of 2021, was born out of the pandemic, he said, and business is hopping.
“People were just leaving their jobs, whether it was voluntary or involuntary,” he said. “I found there was a need for career services.”
Many of the company’s clients were trying to pinpoint their passions, Beasley said. He offers resume writing, but also career coaching and interview help.
“The ‘great resignation’ kind of prompted people to really start looking for work that was more meaningful to them or that worked better for them,” he said.
Many want to expand their opportunities outside of the Springfield area, he said.
“I wanted it to be easily recognizable for Springfield folks,” he said, adding that 80% of his clients are local.
Like Schekorra with Own Your Pride, Beasley has built his business from revenue.
“I bootstrapped everything I did,” he said. “I looked for opportunities for grants and funding, but I kind of realized that my business had pretty low overhead. I work out of my home office, and I don’t have a lot of supplies or products that are needed – it’s a service-based business.”
With growth over time, Beasley expects to take on some contractors for resume work so that he can focus on career coaching.
“I believe I will get to the point where I’m not going to be able to do both,” he said.
Like Schekorra, Beasley has taken his business from side gig to a full-time job. When he was still working as a leadership development manager for global workers with T-Mobile, he said his average revenue from 417 Resume Renovators was $2,000-$3,000 per month. Now, average revenue is upwards of $5,000 per month, he said.
The challenge now is balancing work between weeks that are nonstop hustle and those that are slower. He is looking forward to something people in his profession call the September surge – businesses hiring at the end of the third quarter when they realize they have room in the budget.
Beasley said he started his business because he saw a need in a community that was underserved with resume writing and career coaching.
“It’s scary, starting a side business or going out on your own,” he said. “If we see what the gaps are in the community, there are some big opportunities for people to provide a wide range of services and products that buyers around here are looking for. I’m hoping now that we’re getting out of the post-pandemic stages, there’s even more of that innovation.”
Adrianna Norris became a first-time business owner with the opening of Finley River Chiropractic; PaPPo’s Pizzeria & Pub launched its newest location; and Huey Magoo’s opened its second store in the Ozarks.