Business creation is a process of transforming a creative project into an economic activity with an appropriate structure to meet its objectives. In the world of business, this involves identifying potential clients and markets, finding an adequate commercial strategy, determining the price range and formalizing the project in a document called a business plan.
In some cases, this can involve setting up a network of companies that provide different services to the client: for example, a web design company could partner with a fulfillment center to save money on shipping and storage costs while getting the products out to customers more quickly. This is called a vertical integration strategy and can help entrepreneurs avoid duplication of effort, reduce overhead costs and increase their sales and marketing reach (Acs, Audretsch and Braunerhjelm Reference Acs et al.2009).
Whether or not we agree with EIG’s interpretation of the Covid-19 startup surge as “a renaissance of genuine entrepreneurship,” it’s hard to deny that new employer businesses are on the rise. However, what we need to know is whether this resurgence will last.
It’s worth noting that even before the pandemic, new employer businesses were on a long-term downward trend. And, if we cross-reference Census BFS data with other business creation metrics like those from Yelp, it’s clear that the state-level picture gets more complicated. For example, Mississippi ranked 9th in 2022 in terms of high-propensity business applications but only 50th in the rate at which those business applications became actual employer businesses.
