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Small Business

Start-ups have exploded during the pandemic. Here’s how some entrepreneurs found a niche

When the coronavirus pandemic shut down businesses across the country, sisters Angela Muhwezi-Hall and Deborah Gladney decided it was the perfect time to start a new one.

It was an idea they had been thinking about for years: a recruiting platform, called QuickHire, to help workers in the service industry and skilled trades find jobs. They had witnessed what they called the archaic hiring process used by smallholders and also understood the importance of this type of work.

“Covid was definitely the catalyst, when we saw millions of people lose their jobs [and] people had to retrain, ”said Muhwezi-Hall, 31, who quit her job as a student counselor at a California university to start the business in her hometown of Wichita, Kansas.

The sisters have raised $ 50,000 from their savings and 401 (k) plans to start in September, and recently secured a $ 350,000 investment from an angel investor.

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“We think now is the perfect time,” Gladney said, referring to the labor shortage many businesses face as they try to restart.

Muhwezi-Hall and Gladney, 34, who quit her job as a public relations consultant, were part of the wave of start-ups in the United States last year. About 4.3 million new business applications were filed in 2020, almost a million more than in 2019, according to figures from the US Census Bureau.

“We hardly ever see this kind of boom in a recession,” said Luke Pardue, economist at Gusto, a payroll and benefits services provider.

The vast majority of new businesses were started by women and people of color, according to the company’s latest survey. In 2020, 11% of new business owners were black or African American, up from 3% in recent years, and 49% were women, up from 27% in recent years, according to Gusto. He surveyed 1,568 new business owners, who started up during the pandemic, April 4-16.

“It’s no coincidence,” said Pardue, who pointed out that 51% of owners started their businesses for economic need and a third said they did so because they lost their jobs.

“Women and people of color are the ones who bore the brunt of the recession last year,” he added. “They have shown resilience and turned obstacles into opportunities.”

From speech therapist to preparing smoothies

When Ashley Walker, 34, opened her boutique, Smoothie Me Please, in Riviera Beach, Fla., In January, she had something that many other entrepreneurs don’t: financial backing from her town.

The single mother won a grant from the city’s Community Redevelopment Agency two years ago. The location, an empty building, was later renovated by the city. She now operates there rent-free for six months and the remainder of her three-year contract includes very affordable rent, Walker said.

“It was a great time to risk it all because I had the support,” said Walker, who worked as a speech therapist before opening his smoothie store, which also sells sandwiches and popsicles.

However, it was not all smooth sailing. Construction was delayed due to Covid and she struggled to get a business loan. A potential investor has also failed. In the end, she took out a personal loan of $ 15,000 to pay for marketing and equipment.

Yet Walker is already making a profit from not paying rent. She’s not the type to worry, she said when asked when those payments would start.

“Everything I need is falling into place,” Walker said. “I have no doubts that things will work out and we will make the necessary adjustments as the market changes.”

A question of survival

The support Walker has received is an example of the help new business owners should have access to, Gusto’s Pardue believes. This aid could be crucial for their survival.

About 20% of small businesses fail in their first year. Yet 51% of homeowners surveyed by Gusto believe they will fail within the next 12 months without further assistance. Meanwhile, 73% of black homeowners and 71% of Asian American / Pacific Islander homeowners say the same.

“Ultimately, it could actually exacerbate the gender and race wealth gap, as these business owners could see business failures a year later,” Pardue said.

He advocates replenishing the paycheck protection program, which provided forgivable loans to small businesses, and making these new homeowners eligible. He would also like the Small Business Administration to rethink how aid is delivered and to whom it reaches, such as women and minorities.

“The conversation can’t end with ‘This is an inspiring trend’,” he said.

“We need to think about ways to support these new businesses, because new and young businesses are the engine of job growth in the economy.

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Disclosure: NBCUniversal and Comcast Ventures are investors in Tassels.

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