AmEx: Small business starts hit a record high in 2021

A record number of people decided to strike out on their own and start a new business in 2021, according to data from American Express.

“In 2021, we saw over 5 million new business applications were filed, which was the highest year on record, and about a 50% increase form 2019,” said Brett Sussman, vice president of Business Blueprint and Banking at American Express.

In Pennsylvania, close to 160,000 new businesses were registered in the same year, according to U.S. Census Bureau data.

It’s notable that this peak hit during the covid-19 pandemic — a time when a lot of folks took the chance to rethink their working situations as illness, lockdowns, and caregiving needs became front and center.

“The pandemic really gave folks time to do a Great Reset. It was a chance to ask, ‘What is my ambition? ‘What do I get excited about in my life? What do I want to do going forward?’

“I think, coupled with the digital tools that are out there, that it actually is very easy for people to start a business, particularly an online business,” Sussman said.

While millions of new businesses were launched nationally, keeping them open is the next challenge.

“When we speak to them, they are very optimistic about 2023 from a revenue perspective, but the real question is whether they can keep pace with costs. And 53% of small business owners expect incremental costs in 2023,” Sussman said, citing data collected by American Express.

“What will separate those who hopefully are going to survive long term is the focus on cash flow. Nowadays, really, cash flow is king. And I encourage small business owners to take a deeper look at revenue and plan for potential increased costs for their business.”

Business owners also said issues around hiring and employee retention is another challenge, as well as concerns about supply chain and raw material costs.