News and HeadlinesIndiana Coronavirus NewsCOVID-19 Economic Impact

Actions

Indiana sees nearly 170,000 business filings during first two years of pandemic

State reports record-breaking year in 2021: “I think it suggests that the entrepreneurial spirit in Americans is alive and well.”
Indianapolis.JPG
Posted at 8:49 AM, Jan 22, 2022

INDIANAPOLIS — Businesses fought hard to survive during the pandemic, and many were forced to close their doors permanently. But the pandemic also created new opportunities and welcomed thousands of new businesses.

On Tuesday, the kitchen at Sidedoor Bagel was busy prepping for the week ahead. Co-owner Emily Greeson joined her staff weighing, cutting, rolling and shaping dough. The team produces thousands of bagels a week, not to mention homemade “schmear” and other breakfast classics.

“Our most popular bagel is the everything bagel and right behind it is the everything spicy bagel,” Greeson said.

The business is her husband Josh’s dream. In late 2019, Greeson said her husband started cranking out bagels as a side gig, selling on social media and during pop-ups, while working full-time at a local bakery.

“I think what happened was just finally one day he thought you know, it's time. We're gonna do it, I think we're ready and it was just kind of some intuition,” Greeson said.

In 2021 the couple made it official, opening a brick and motor shop off of Mass Ave on East 10th Street. Sidedoor Bagel opened its storefront on Christmas Eve. Less than a month later, there are regularly lines out the door and several times, the shop has sold out.

“During the pandemic while so many small businesses had to close down or really cut back staff, I think it’s just very encouraging and we're very thankful that we were able to open,” Greeson said.

The couple is extremely thankful for the business.

“I imagine we’ll be here for a while, that’s the goal,” Greeson said.

From 2020 to 2021, the Indiana Secretary of State’s Office reports a 26.3% increase in new business registrations. Last year, Indiana set a record with 94,670 filings.

“I think the small business community is the backbone of our economic strength in our state and I think we should have a lot of pride around that,” Secretary of State Holli Sullivan said. She noted many of 2021’s filings were small businesses with less than 20 employees.

Filing Data from Indiana Secretary of State’s Office:

  • 2021 - 94,670
  • 2020 - 74,937
  • 2019 - 62,391
  • 2018 - 58,465
  • 2017 - 54,693

“Initially when we saw the increase in 2020, I was surprised, but then continuing to see that in 2021, I’m not anymore because I know Hoosiers have confidence in the process,” Sullivan said.

Two economists WRTV spoke with agree this is not a trend just in the Hoosier state, but nationwide.

“I think it's an interesting response to the big job losses in early 2020 of the opportunities that Zoom and remote work and everything else many who had this this entrepreneurial spirit hovering in their soul,” Dr. Michael Hicks, Director of the Center for Business and Economic Research at Ball State University, said.

Dr. Hicks notes new business filings across the country “are up about 13-14%” over the last two years.

“The one thing that this pandemic gave us is a good opportunity to see how responsive people are to change, so businesses mainly went to adopted remote work — they did home sales, restaurants that were normally seating were doing takeaway. So all the sorts of responses that you saw on the pandemic are reflected in these entrepreneurial numbers. Americans are very entrepreneurial,” Dr. Hicks said. “I think there are several factors at play here. The first one is, there are people who stay at home with kids because they're isolated or quarantined, or their school is in hybrid. They say, I'm going to start a business and I'm going to make something, I'm going to sell something, I'm going to provide a service. There are people who lost their jobs, who seem to not be coming back and said, I always had this hankering to be my own boss. Here's my opportunity. There are other people who banded together with a bunch of friends and said, ‘Look, there's this new service that needs to be done, tutoring or watching kids or setting up people's home computer, so I'm going to start a business and do that.'”

Dr. Hicks said generally this is a good thing showing Hoosiers are following their passions, but he believes it is too early to know its impact on GDP.

“Undoubtedly [there are] a lot more people in business for themselves today than there were two years ago, and I think that's long term healthy, even if 5% of them survive,” Dr. Hicks said.

The majority of the new filings, Hicks said, are “non employer businesses.”

“My hunch is, a lot of these are people starting businesses and maybe holding on to their jobs until the business is successful. So I think the great resignation could continue for months or years; there's a lot of turnover as people find alternatives. And also [I] think that these new jobs are maybe filling gaps in business services or household services that we didn't know existed. We didn't know we needed somebody to set up our Zoom account at home, we didn't know we needed somebody to help with tutoring for online education. Those are just two examples of people that that I think are likely take advantage of this,” Dr. Hicks said. “But the in the long run, I think the evidence is that people are able to find niches where they can make a living is a really positive sign for a lot of households and whether or not it puts stress on other businesses at this point, I don't know. But you know, to some degree, that's too bad if you're an employer, and you can't keep an employee because you can't offer the wage and working conditions that they need and they're able to go make a living somewhere else. That's okay, maybe you don't need that worker or maybe you don't need to be in business.”

IUPUI economist Kyle Anderson agrees many of these businesses are side gigs. He finds the large number of business filings “a little bit of a surprise.”

“A lot of times new business formation does happen during an economic downturn. So people get laid off and situations like we've seen over the last year and a half. They respond by going into business for themselves but not in these kinds of numbers, and it's a little bit interesting and surprising given the hiring shortages. There are plenty of jobs out there for folks, but they're still choosing to form a new business, or go into business for themselves,” Anderson said.

As for the future, Anderson believes things will slow down when it comes to booming business filings.

“I think in a lot of ways [businesses closing vs. business opening] probably [even each other out], maybe the new business formation is higher, actually exceeds what is closed. But it again, it's a dynamic economy. We should have this where businesses open and close as the needs of our consumers change, and people are going to, you know, have different preferences, and what they want, what businesses they want to support change over time,” Anderson said.