NewsMaking It In San Diego


Making It In San Diego: Record number of businesses started during pandemic

More than 4 million companies started in 2020
Posted at 5:54 AM, Jan 21, 2022
and last updated 2022-01-21 11:49:57-05

SAN DIEGO (KGTV) — A record 4.4 million new businesses started across the U.S. in 2020, even as the coronavirus pandemic wreaked havoc on existing industries.

The number comes from the US Census Bureau, but experts say it only tells half the story.

According to a new analysis by Salesforce, the startups show a wave of entrepreneurship during some of the most challenging financial times in recent history.

"I think people probably decided I need to take care of myself," says financial analyst Dennis Brewster from SagePoint Financial. "I can't wait just for my employer or someone else to take care of me."

The survey from Salesforce found most of the people behind those businesses started them because they were laid off or furloughed during the pandemic. Nearly 39% of the people surveyed fell into that category. The next largest group, 15.5%, say they turned a side-job into their full-time job. Another 13% say they started a business because they saw an opportunity to fill a need during the pandemic.

Most new businesses (75.8%) are considered very small, with ten employees or fewer. And 80% of them are consumer-based instead of companies that sell/market to corporations.

"Those businesses tend to have lower overhead and easier to set up," explains Brewster. "But maybe not quite as high revenue."

That's the kind of business Tim Trevino started when he opened Lost Cyclery. When the pandemic began, Trevino worked as a server/bartender at Lost Abbey in San Marcos. As the brewery closed its taproom, he needed to find a new source of income. Trevino began fixing bikes for friends and neighbors.

As his business grew, he started using a room at the brewery as his repair shop. Eventually, he needed his own, separate location. Trevino officially opened Lost Cyclery in August. Now, he plans to hire more people to keep up with demand.

"The pandemic was weird," he says. "The demand for bikes and bike repairs was really cool, and I didn't expect it ... but I definitely got the realization that this is viable. You have a dream and go after it."

Next door to Lost Cyclery is Voodworx, a small company that sells wooden racks for skateboards and snowboards.

Owner Brad Marquette says he was laid off from an architecture firm just before the pandemic hit. He started making the racks in his garage and selling them on Craigslist, Etsy, and Facebook.

Demand grew so much that he opened a storefront at the beginning of 2022. He now sells racks all over the world.

"It's been quite a road," Marquette says. "I just started small, and this is where it ended up. Hopefully, it's just the beginning."

But Trevino and Marquette's stores are the exception. The survey found most of the new businesses are digital or online-based. Only 38.6% of the new businesses have a physical storefront. 31.9% are digital but plan to open a physical location in the near future. The rest (29.5%) say they have no plans to open a physical location.

Gloria Edge falls into that last category. She and her husband worked as hairstylists and salon owners. COVID forced a lockdown of businesses like theirs. While closed, Edge says several small cosmetic and beauty brands came to her for advice. They were struggling to find customers since the salons were closed, and they wanted to find a way to promote their brand.

Edge decided to start BeauBeau, a social media-based platform for cosmetics.

"It's a marketing platform," she says. "People are so used to going on Instagram or TikTok or different platforms to learn about products."

Edge used LaunchPeer to help start her business. The tech startup company helps people take their businesses from idea to reality.

Founder and CEO Jake Hare says LaunchPeer saw their business skyrocket during 2020, mainly because online businesses are easy and relatively cheap to begin.

"I feel like starting a tech startup is the best route to take because it requires the least amount of effort upfront," Hare says. "All you need is a domain name and a few bucks spending on website hosting and some other small associated costs."

Salesforce data backs up his claim. According to their survey, 21.7% of new businesses in 2020 started for less than $1,000. 30.4% of them needed between $1,000 and $10,000. 14% needed between $10,000 and $50,000. Just 33.9% needed more than $50,000 to get going.

"Start small," says Brewster. "You can always build it up. But you don't want to get ahead of yourself and wind up with too much overhead."

"Because the world is all digital today, anyone can start a business," says Hare. "You just have to have the confidence in yourself that you can do this, and you'll find a way to do it."

That's the message Trevino, Marquette, and Edge have as well. They all say they would never have taken the chance if not for the pandemic. Now they're glad it forced them to gamble on themselves.

"It's a blessing in disguise," says Edge. "It really comes down to you. It could be easy or hard, but the potential opportunity is limitless."