By Leslie Lum and Judith Paquette
There is huge buzz about the impact of the pandemic on business startups. In 2020, 4.3 million businesses were started, a 24% increase over 2019. At the end of July 2021, the uptick was even bigger with a 41% increase over 2020.
What is even more exciting is that these new entrepreneurs are more likely to be Black, Latinx, and female with the proportion of Black businesses more than tripling and women businesses almost doubling. Could it be that there is a silver lining to the pandemic?
The rate of entrepreneurship had been in long-term decline pre-Covid, a troubling trend as startups create jobs, foster innovation, and make the economy more diverse. This huge increase in business startups has people hoping that a turnaround has come and our country is back on track to being the entrepreneurial hotspot of the world and, more importantly, that BIPOC businesses are included.
We got a taste of this new vibrancy when we offered Innovation Lab in fall 2020. All of the 10 businesses who signed up for the class were of color. Seven of the 10 were women. They were eager to learn how they could move their businesses to the next level.
Innovation Lab was conceived as part of an entrepreneurial ecosystem to nurture new businesses. Five cities (Kirkland, Bellevue, Redmond, Renton, and Issaquah) on the Eastside and the Port of Seattle could see that the pandemic was closing down businesses. Stimulus funding could help older, bigger businesses, but new businesses really had no support. Three years ago, they had formed a consortium called Startup 425 to jumpstart entrepreneurship and now engaged the two of us to develop a solution to recovery post Covid.
It helped that we had a two-decade involvement with the UW Foster Consulting and Business Development Center, which has been incredibly successful working with underserved businesses and has a proven knowledge base. But entrepreneurs need more than knowledge. They need to be motivated and take action. We incorporated mentors and expert advisors who participated pro bono.
Together, we mounted a pilot Innovation Lab with 10 businesses. The results with two API businesses in the pilot were nothing short of miraculous. Yavnika Khanna is the founder and Chief Impact Officer of Impactika Consulting LLC, a digital marketing, strategy, and social change consulting firm. She says, “I got introduced to a great set of mentors, teachers, and real-world change makers who were enthusiastic about making a difference through business. Every week, I was in the company of do-gooders who are looking to improve, learn more, and build a local network. My business has doubled since I took Innovation Lab.”
Daniel Ingitaraj K, co-founder and CEO of docu3C, recounts how the pandemic took a massive hit on his company’s sales as the world moved to “remote everything” and changed forever their way of doing business. Businesses had to pivot to digital models. He says that Innovation Lab was probably one of the best things that happened to them during the pandemic.
“They made us think critically about our business model, our customer segment, our value proposition using the Business Model Canvas—which was honestly a breath of fresh air for us to think strategically about our business.” They moved quickly to adapt themselves and help their customers adapt to the remote world. The results have been astounding. The first quarter of 2021 was their best ever. They are currently doubling their employee count to meet customer demand and, if all goes well, they are looking at a 125% to 150% increase over 2020.
These success stories are all the more amazing because data shows that 130,000 more businesses closed during the pandemic, which compounded an already dismal survival rate—only half of businesses make it to five years. Projections are that the shutdowns will be even higher in 2021.
Unfortunately, the story does not end here. Research done by Gusto shows that there are higher signs of stress from BIPOC business owners. While 51% of all businesses think they will fail within a year without support, a much larger proportion of BIPOC businesses—73% of Black owners and 71% of AAPI owners—feel the same way.
There are a number of partners in this region who are determined to make this surge in BIPOC entrepreneurship an inflection point and not a blip. Moving BIPOC businesses towards digital maturity is a huge part of survival in the new normal. This training to get more digital (no matter where business is) has been developed and offered at Boost, a one-day workshop on Saturday, Sept. 25.
Boost is chock full of strategies and tools to help small businesses get their stories online. You will hear from three superstar BIPOC CEOs, Brandon Ting, Ana Castro, and Lewis Rudd, about their amazing growth, fueled, in large part, by a great digital strategy. Three promising, emerging businesses led by BIPOC women will show how they transformed their businesses quickly. Online powerhouses, Google and Facebook, will be presenting. They and other generous sponsors are making this workshop available free of charge to businesses.
Register at https://app.brazenconnect.com/events/xBE1E.