Business creation helps an economy grow and recover by expanding firms’ markets or products, or a combination of both. New firms may also generate employment and higher earnings, which can add to a country’s tax base and help support public projects.
New businesses add value within a market and solve problems that existing companies or the public face. For example, a successful startup might develop a mobile app that makes it easier to schedule dental appointments.
Creating a new business requires considerable effort and resources. These costs can add up, particularly if the business doesn’t reach profitability early on.
The social costs of business creation are also substantial. These costs include lost time, which business owners have to spend on work instead of family or friends.
As the business world becomes more competitive, it’s increasingly difficult to earn a living as a freelancer or contractor without significant investments. Entrepreneurs must be willing to sacrifice their time, energy and financial resources to make their business thrive.
Despite the challenges, there’s a growing bipartisan consensus that policymakers should support entrepreneurship and business owners in the United States. But that will require a sustained focus on the issues that matter to entrepreneurs and those who want to become one.
A surge in high-propensity business applications, according to the Census Bureau, offers a promising sign that recovery is gaining momentum. It is a reversal from the sharply depressed business application rate that persisted throughout much of the 2010s, and a sign that strong rates of firm formation will help drive job creation and economic recovery.