While there’s no denying the blows that many businesses have endured since the spread of COVID-19, it hasn’t spelled disaster for every business. For some, in fact, it’s created opportunities to serve customers and clients in new ways. Who could have guessed that the conferencing tool Zoom, for instance, would become one of the most-hyped businesses of the year so far? Suffice to say, the novel coronavirus has drastically altered the course of industry growth for 2020. Suddenly, last year’s trends and projections hold less weight, as a global pandemic ultimately shifts which businesses are poised to excel vs. shutter during such an unusual time.
Regardless of external factors, Swyft Filings is here to support businesses through extraordinary moments, whether those are moments of growth or periods of regression. That’s why keeping a pulse on the distinct challenges and opportunities for different industries, and our customers in those industries, is vital to us. To help us better understand how different industries are faring now, Swyft Filings looked to its business formation database to analyze growth in the face of COVID-19. To do this, we compared the number of new business formations in March, when many Americans began sheltering in place, to January, which was well before most U.S. citizens were making decisions based on a potential outbreak.
In this report, we’ve broken down the percentage change in new business formations during the beginning of COVID-19 in the U.S. and the beginning of the year, while also diving further into notable changes for a few specific industries below.
Industry % Change in Business Formations in March vs. January 2020 Warehousing 87.50% Health Care 1.11% Entertainment -4.64% Accommodations -4.92% Insurance -7.50% Transportation -8.71% Social Assistance -16.33% Technology -16.60% Rental & Leasing -17.60% Retail -18.54% Manufacturing -21.84% Construction -23.37% Wholesale -24.64% Finance -25.81% Professional -27.89% Food Service -30.04% Consulting -30.70% Real Estate -34.50%
Our initial findings were much of what we expected: almost across the board, barring a couple of exceptions, there were fewer new businesses being formed in March compared to January 2020. For many industries, the prospect of thriving (never mind starting a new business) in the face of COVID-19 was unrealistic. Yet, a few industries have emerged as critical, be that on a logistical level or for the mental health of people stuck in their homes.
Today, we’re taking a closer look at the growth trends of a few industries which saw a drastic impact during the first quarter of the year, plus considering its role in adapting to a new normal, at least for the time being.
In 2019, the warehousing industry was already experiencing strong year-over-year business formation growth but has since skyrocketed. According to the Swyft Filings database, the warehousing industry saw the highest growth (87.5%) of new business formations in March vs. January 2020 compared to other U.S. industries.
Over the past few years, U.S. consumers have continued to rely more heavily on delivery, bolstering warehousing’s place in the market. In the past couple of months, however, delivery has become a lifeline. With consumers unable to leave their homes and fearful of entering stores, more and more people are relying on delivery not just for retail items, but for groceries, medication, and other household essentials. It’s estimated, for instance, that Amazon Fresh orders increased 323.2% year-over-year in March 2020.
This increase in demand has strained most last-mile delivery services, including Amazon, while businesses are also seeing declines in the workforce who are on the frontlines and falling ill or are unable to work because they’re high risk. This creates a complicated opening in the market. For one, last-mile delivery is more important than ever, but it doesn’t come without its challenges (think access to PPE, healthcare for workers, etc.). Yet it also increases opportunities for those in the delivery industry, be that the last-mile delivery services or the warehouses that are relied on to store an influx of goods, to provide support during heightened demand.
While in quarantine, many people are turning to entertainment for escape, connectedness, and, quite frankly, something to pass the time. Though new entertainment businesses drove fewer formations in March than January 2020 (a -4.64% change), it still ranked among the top three industries for new business growth.
Entertainment businesses, which include streaming services, social media, music, video games, plus much more, have adapted to the COVID-19 outbreak through many ingenious ways. Blockbusters, for instance, which were set to be released in movie theaters are available on popular streaming platforms such as Amazon Prime and Disney Plus. Musicians are hosting free concerts and fundraisers to support those who have been hit hardest by stay-at-home orders or those who are on the frontlines, such as nurses and caretakers. And fitness trainers and studios are sharing free sessions online.
This adaptation is also clearly evident in the types of entertainment businesses that formed using Swyft Filings in March 2020. For example, we saw new businesses that taught virtual music classes for children, new podcasts and YouTube channels, and DIY classes for various home projects. The very notion of less screen time is becoming irrelevant, as screen time is now a method to connect with others, learn something new, and keep occupied. For businesses that can harness the attention of the increasing volume of people spending more time on devices, it might be easier to engage new and existing customers and viewers more than ever before.
Despite hotels shuttering throughout the U.S., the accommodations industry, as a whole, doesn’t appear to have been hit as hard as other industries amid the widespread outbreak of the novel coronavirus in March. The industry saw a -4.92% decrease in the volume of new business formations in March compared to January 2020, yet was still among the top four industries for growth.
An important distinction to make is that the accommodations industry encompasses more than just hotels. Looking at the types of accommodation businesses that formed via Swyft Filings in March, for instance, there was also a new nonprofit that’s refurbishing shipping containers to provide shelter for the homeless, property management services, and a business providing consulting services to hotels harmed by COVID-19. Many businesses, including hotels, have been changing course to meet the ever-arising needs during this time. In March, hoteliers across the U.S. opened their doors to infected individuals who needed to quarantine and offered discounted stays to people who’d been affected.
Accommodations businesses are one of the strongest examples of how to adapt during a crisis. And while many, if not most, accommodations businesses will see losses in revenue due to halted travel and other restrictions, it’s been proven that there are ways to evolve, even if for a short while.
Whether you just started a new business or if you’re a small business veteran, Swyft Filings is here to help. We’ve been researching and writing about pressing topics that we ourselves care about as a business, be that small business relief programs, the guidelines and steps for the SBA Paycheck Protection Program, tips from long-time remote workers, or exploring the possible benefits of starting a business in a down economy. We’ve also launched a grant giveaway for businesses impacted by the coronavirus.
Check out our Learning Center for more tips and advice for small businesses, both for during this time but also all of the time. Or, contact us today to speak with a Business Specialist who can help you navigate through the changes you need to make for your business during COVID-19.
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