Even though unemployment soared while pandemic mitigation measures took hold in the United States, 2021 saw the most significant increase in new business applications in recorded history. And that wasn’t the only large shift in the U.S. workforce. In November 2021, a record 4.5 million workers left their jobs, according to the Labor Department’s latest Job Openings and Labor Turnover report. During that same period, an unprecedented 5.4 million new business applications were filed, according to the latest data of the U.S. Census Bureau, surpassing the previous record set in 2020 of 4.4 million. This seismic increase of newfound entrepreneurship entering the global economy may be attributed, to some extent, to the millions of workers who left their jobs during the pandemic.
However, the numbers don’t fully reflect the psychological change that US workers have been experiencing—a psychological shift that some say began in the early 2000s with the dot-com era, which has peaked amidst this global workforce shake-up. This shift includes an increase in value being placed on autonomy, independence, and flexibility, especially among newer generations of workers.
Over the past two years, obviously, a lot has changed. First, it was the push for adaptability and adjusting to the new normal—but what does that even mean? Initially, it meant moving from in-office work to remote work, but as the pandemic progressed, so did the conversation around our workforce. Anthony Klotz, a professor at Texas A&M, coined the term “The Great Resignation” in response to the 4.5 million that left their jobs. In an interview with CNBC, Klotz stated, “This is a moment of empowerment for workers, one that will continue well into the new year.”
But one could argue that the Great Resignation had been gearing up long before the pandemic—it certainly didn’t develop overnight. According to a recent study from Upwork, today’s economy holds up to an estimated 60 million entrepreneurs, including microbusinesses, contractors, freelancers, and other “gigsters”— all with their unique set of needs and requirements, and many of whom had been in business prior to the wide-scale pandemic shutdowns.
This new surge in entrepreneurs and work-for-yourself professionals is only a result of the pandemic in the sense that the pandemic continues to motivate rapid developments in technology—specifically software that empowers individuals to work for themselves. From gig work (Uber and Thumbtack) to selling products (eBay, Etsy, and Instagram) to creating content (YouTube and TikTok), we’ve already been operating in a boom of autonomous work, and the pandemic merely accelerated people’s need to take control of their livelihoods. And now, with so much new talent filling the markets—especially ones hit hardest by the pandemic, we’ll continue to see more innovative and disruptive resources to support this growing demand for self-employed business owners.
One of these key resources, funding, has thus far been one of the biggest hurdles for these new-wave entrepreneurs. This has been the case for a few reasons. First, the entrepreneurs of today aren’t looking to start the same types of businesses that legacy banks are used to. They aren’t starting major corporations or large operations—and in many cases, they aren’t even starting the traditional small business. While, of course, there are still mom-and-pop shops, privately owned restaurants, and neighborhood plumbers who need funding to start their small businesses, entrepreneurs of today are also Etsy-shop owners, influencers with brand partnerships, and gig-workers making DoorDash runs, driving Ubers and more.
Another issue is that they don’t look like the entrepreneurs of decades past. They belong to one or more minority groups, they aren’t independently wealthy (or don’t come from a family that is), and/or they are first-time entrepreneurs starting out on their own rather than serial entrepreneurs with backlogs of businesses sold or acquired. When you or your business aren’t the status quo according to legacy banks, then legacy banks don’t cater to your needs.
Traditional financial institutions do not provide adequate resources for the new entrepreneurs rising in our markets. Their premier financing solutions are exclusive to big, well-known companies, leaving newer, smaller businesses to fend for themselves. Many banking options also make it difficult for entrepreneurs to access business credit and make them jump through endless, unnecessary hoops.
As with the shifts in our workforce—from in-office to remote, from worker bee to entrepreneur, and so on—the banking industry needs to shift. Banking options should be more accessible for small businesses and modern-day entrepreneurs.
As the son of two Vietnamese immigrants who came to America after the Vietnam war, I grew up watching them deal with being underserved by banks that didn’t recognize their entrepreneurial value. They scraped together what they could to build a better life for our family—moving to a new country with no friends, relatives, or support system and starting over—a true act of independence and autonomy. But it was incredibly daunting for them. My parents’ entrepreneurial endeavors helped them succeed, but it wasn’t an easy road. They didn’t have financial resources, and the struggle it caused was enormous. I believe that struggle is enough to dissuade talented innovators from bothering to pursue their own entrepreneurial dreams, and that’s a problem.
It’s time to value the next generation of innovators and business founders, and the first step is to start with the fundamentals. New entrepreneurs are often part of underserved communities within the banking industry, and they are especially vulnerable in our rapidly changing economic environment. Banks need to acknowledge this valuable population and start providing options and financial education. Learning what options are out there, figuring out how to make the most of them, and finding new ways to incubate a dream will help new entrepreneurs ride the tumultuous economic wave and set themselves up for success. To support our economy and the entrepreneurial spirit so valued in our culture, innovative financial resources should be there to support and grow the emerging businesses that have already taken over the market. From one founder to another, stay focused on making sound financial decisions at every step in your journey, and you are sure to get there.