The number of new businesses launching across the country and in Missouri is surging, reversing a decades-long slump.
Last year, the Census Bureau recorded more than 4 million applications for new businesses. That’s an all-time high since the agency started keeping track.
Chuck Gascon, a regional economist with the Federal Reserve Bank of St. Louis, said momentum isn’t slowing and Missouri is following the national trend. Last month, entrepreneurs in Missouri filed nearly 7,000 business applications, up about 2,000 from the same time in 2019.
Gascon said most of the growth is in e-commerce businesses, including sellers on marketplaces like Amazon and Etsy. But industries across the board are seeing an increase in new businesses.
“A lot of that is probably due to the fact that there’s a lot of aid out there, households have more income. They’re able to actually form businesses in ways they couldn’t before,” he said. “At this point I think it’s a really positive sign and a bright spot for the economy going forward.”
New business applications peaked last summer. As time has gone on, Gascon said the data show there are more new businesses launching that are likely to grow big enough to employ people. The Census Bureau categorizes these as “high propensity businesses.”
Gascon said this is a good sign since new businesses are a key driver of job growth.
But new businesses also face steep failure rates.
One way to reduce risk is to create business ecosystems that connect entrepreneurs with resources, Gascon said, adding that St. Louis does a good job of that.
Connecting entrepreneurs with resources
Betsy Blancett Nacrelli opened a coworking space for women entrepreneurs in May.
The office space she rents filled up almost immediately with real estate agents, event planners and fashion brands. She said a number of tenants left corporate jobs to start passion projects. Her goal is to give them a springboard.
“I think that’s really going to be the key to success — leaning on one another, working with other women-owned businesses to create something really unique and sustainable,” she said.
She’s launching a weekly speaker series soon that will connect entrepreneurs with tax attorneys, accountants, financial planners and other resources.
Blancett Nacrelli also runs a jewelry boutique called Joya, and she’s experienced the struggles of running a woman-owned small business first-hand. She said there are a lot of barriers.
“The lack of resources, our tendency to bootstrap our businesses longer than male-owned businesses and the lack of representation in the business world,” she said. “I just felt that we needed a place for women businesses to come together to collaborate, create and grow together.”
Blancett Nacrelli doesn’t see new business launches slowing down any time soon. She’s already working on launching a second location and a fulfillment warehouse.
This kind of support is also critical for entrepreneurs of color in St. Louis, who face a $13 billion gap separating the amount of funding they need versus what they can secure.
Gabriela Ramírez-Arellano is working on building an ecosystem to help connect the dots for the slew of new businesses she’s noticing pop up in the Latino and Black communities.
She said many people start businesses out of necessity, and the pandemic has exacerbated the need for flexibility in how people make a living.
“Daycare is an issue now, being able to work from home is something that people are prioritizing, medical — if I've been sick, or I'm having to take care of someone, I may not have the flexibility or the support that I once did,” she said.
Ramírez-Arellano is working with Erica Henderson and local business service groups to launch what they’re calling the St. Louis Small Business Coalition for now. They started regular lunch-and-learn webinars last year to help connect entrepreneurs with resources as they navigated lockdowns and complex government aid programs.
She said the group has secured initial funding to implement recommendations from a recent report that will guide how they build out the ecosystem.
“Our first priority will be making it accessible to entrepreneurs, that they have a place almost like a one stop shop, ‘Okay, I'm a small business in this industry, who can I go to for help?’” she said.
Follow Corinne on Twitter: @corinnesusan
