No matter what year it is, starting a business is a risky decision. Yet in 2020, entrepreneurship is rising. New business applications are up 45% compared to this time last year.
Last month, JustBusiness conducted a survey on these “pandemic founders”. A substantial number of the respondents were people of color (POC). Unfortunately, POC entrepreneurs do not have access to the same resources that their white counterparts do when getting their business off the ground. They have less startup capital, receive less assistance from bank loan officers, and tend to lean more heavily on assistance from family and friends than traditional financing. Despite all these obstacles POC entrepreneurs are motivated to take the risk and pursue their passions.
When we asked what industries, these entrepreneurs were starting businesses in, we were surprised by the responses. The accommodation and food services industry were the top response (17.6%) by a wide margin. Retail trade (10.6%); arts, entertainment, and recreation (9.2%) round out the top three. Besides retail trade, the top picks of POC entrepreneurs are industries that have struggled during the pandemic. It’s clear that these future business owners see opportunity in areas that aren’t performing well.
Another interesting aspect of starting a business during a pandemic is the presence of a physical storefront. 28% of respondents said their businesses will be entirely virtual. 38% said the business will have both an in-store and online presence, while the remaining 34% said the business will have a physical location only.
For more information on the industries POC entrepreneurs are choosing, check out the infographic from JustBusiness below.