You can’t spell “United States of America” without plenty of the letters found in “entrepreneur.” In a pandemic-pounded nation full of entrepreneurs, the start-up urge remains high. For March, the Census Bureau reported 413,958 applications for new businesses, down slightly from February but still about 25% above the monthly application rates of 2019.
The record-setting figures cut across many economic sectors, from retail, food service and logistics to manufacturing, finance and construction. While economists ponder the broad resurgence of entrepreneurial energy, each application contains a unique story, and each nascent business still must follow time-honored principles and practices to succeed after its launch. There’s rarely been a time when there was more support for new businesses, though it remains a challenging undertaking for each owner.
In Poughkeepsie, New York, Davina Thomasula is in the middle of her quest to become a new business owner. The 42-year-old left New York City after working in hospitality for 15 years, netting a 2015 nomination for Best Bartender from Time Out, and settled in the quieter environs of the Hudson Valley several years ago. Now she plans to open Goodnight Kenny, a “small little neighborhood bar” that features classis cocktails and draws on the history of her rented space of about 700 square feet on the edge of the downtown historic district. “I’ve always dreamed about opening a bar, ever since I first started working in one in Manhattan,” she said.
Thomasula’s checklist before the planned end-of-summer opening is, unsurprisingly, still a long one. Aspiring small business owners quickly learn there’s a lot to do to move from an idea to the first sale: Writing a comprehensive business plan, meeting any legal requirements, finding capital and credit, establishing a solid digital brand identity, using technology efficiently and taking advantage of government and private sector assistance are all part of the start-up journey.
For small retailers, food-and-beverage operators and in-person service providers, there’s also the need to stand out from competitors and make your storefront an unmissable destination, said JBG Smith vice president of retail leasing Lauren Greco. “The goal is really to draw people to a place by creating compelling reasons to pay a visit and create a connection to that transformed neighborhood, she said in an ICSC Virtual Series. Thomasula said: “When I worked in a neighborhood bar, I fell in love with the industry. I wanted to re-create that same feeling here in Poughkeepsie.”
As the U.S. economy rebuilds after the pandemic, support for small business is a clear, well-funded priority for the Biden administration. It should be a popular initiative: The nation’s 32 million small businesses employ almost half the country’s workforce. President Joe Biden ushered in National Small Business Week on Monday with encouraging words to point new business owners and aspiring entrepreneurs to resources and agencies that rarely have enjoyed such high levels of financial support. “From local mom-and-pop shops to innovative start-ups, small businesses are pillars of our communities and the engine of our economy,” he said. “By rebuilding our economy from the bottom up and middle out, we can maintain our global competitiveness and build a stronger nation where everyone can succeed.”
The government actually wants to help. There are long-established loan programs administered and backed by the Small Business Administration, including 7(a), the agency’s most common loan type; the 504 loan program for long-term, fixed-rate financing of as much as $5 million; and microloans of as much as $50,000, provided by intermediary lenders. Additionally, in all 50 states and Puerto Rico, the SBA supports a network of Women’s Business Centers, which offer counseling and match entrepreneurs with the resources they need to open for business. The SBA also touts its Community Navigator Pilot Program, which will provide $100 million in funding to 51 organizations. Those national, state and local grantees would use the capital to direct hundreds of local groups and entrepreneurs to government resources “so they can recover and thrive,” the agency said. Rep. Judy Chu (D-CA) said prioritizing some of the most vulnerable segments of the economy is vital to the economy’s overall recovery. “While America’s whole economy has suffered from the coronavirus pandemic, small businesses, and especially minority-owned small businesses, have had an especially difficult time,” said Chu, who chairs the Congressional Asian Pacific American Caucus. “That is why Congress acted so quickly to pass historic amounts of aid for struggling businesses.”
The pandemic has had plenty of unwelcome economic effects, including rapidly rising inflation, labor shortages and high rates of small business closures — some estimates suggest more than 90,000 restaurants shuttered between March 2020 and the end of 2021 — but it also reversed a 40-year decline in formation of new businesses. Census data showed 12% of employers were new businesses in 1980; by 2018, that figure was down to 8%.
“Hope springs eternal,” said U.S. Chamber of Commerce vice president of small business policy Tom Sullivan. “This is the highest growth of start-ups since the government started measuring these phenomena 30 years ago.” He echoed broad sentiment among economists that thriving small businesses would help the broader economy become more resilient and able to rebound from recessions and other setbacks. “If we could just get past the headwinds of inflation and workforce shortages, small businesses are positioned to do well over the next several years,” he said.
Thomasula, the soon-to-be bar operator, echoes the upbeat outlook. Goodnight Kenny is a years-in-the-making project. After deciding to go for it, Thomasula spoke to an SBA representative to assess the numbers needed to launch, “which was very helpful in getting me to realize what type of lease I needed and what I could afford for the area. That was great.” She enlisted partners, too. One partner has extensive bar-ownership experience, and another’s connections helped lower construction costs as the space gets readied for happy hour crowds to come.
“I came to Poughkeepsie and started looking at commercial spaces, and I walked into this one and fell in love right away,” she said, adding that an earlier bar in the same space is rumored to have counted Eleanor Roosevelt among its patrons. While the path to Goodnight Kenny’s launch has suffered many of the same issues that plague other small businesses, such as rising costs for labor and materials and shipping delays for important equipment, “those are just temporary roadblocks we have to navigate through as we get closer to opening,” she said.
The entire project has provided valuable lessons about starting a business, but Thomasula said one early, abstract realization during her work with an SBA advisor proved crucial to sustaining momentum: “She got me thinking like an owner.”
By Will Swarts
Executive Editor, ICSC Small Business Center