COVID-19 pandemic

DISCLAIMER: This article was written in 2021 and has not been updated. For more up to date information about small business funding products and options, please browse our recent articles.

The COVID-19 pandemic has put an incredible strain on small businesses across the United States. From lockdowns to decreased spending, many businesses have faced unprecedented challenges. Indeed, closures and shutdowns have shaken small business communities all over the nation. However, at the same time, small business owners have been resilient in the face of the coronavirus, going the extra mile during the last year to ensure that their businesses will be able to operate successfully once this all winds down. With the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) and other government-backed assistance, small businesses have been able to weather the storm and reopen successfully.

Yet, this leaves out the thousands of Americans who were considering opening a business before the coronavirus pandemic who ultimately decided against it. Certainly, when the shutdowns first began was no time to open a new business, and many Americans put their ideas on the shelf during the past year. However, now that we have seen a partial recovery and reopening, there is still an important question on the table: is now a good time to open a small business and, if so, how? This is a great question. Since this is truly an unprecedented time in history it can be hard to know what the right course of action is. With the COVID-19 vaccine now widely available, there seems to be some hope for the possibility that new businesses can open successfully. But is it enough?

In this article, we’ll discuss the opportunities currently available and how prospective small business owners can open a business at this time. We’ll also discuss several challenges in opening a business right now and what they could mean for budding entrepreneurs across the United States.

Are Other Americans Opening Small Businesses Right Now? 

Believe it or not, during the pandemic there was quite a bit of small business activity. Even though millions of American small businesses were faced with shutdowns and other measures designed to impede the spread of the virus, there were still many other Americans drawing up plans to open a small business.

This makes sense since recessions in the United States typically result in an increase in entrepreneurial activity across the nation. The COVID-19 pandemic was no different. With the shutdowns across the nation, millions of Americans found themselves sitting at home with a lot of extra time on their hands. Unsurprisingly, many of these individuals began to mull over potential small companies they could start.

In fact, according to the Census Bureau, more than 4.4 million new businesses were created in the United States in 2020 alone. That is the highest number of new businesses started in a single year in the United States on record! And the startup boom is only getting stronger as more and more Americans have begun executing on their business ideas. 

What is the Nature of this Surge in New Small Businesses?

Interestingly, the surge in new small businesses being opened is stemming in large part from women and minority founders. A new survey indicated that 49% of entrepreneurs last year were women – a dramatic rise compared to the 27% of entrepreneurs who were women in recent years. Additionally, in 2020, 11% of new business owners were African American – up from 3% in prior years.

Meanwhile, a third of new business owners said they started their business because they lost their job – no doubt a result of the impact the pandemic has had on workers across the nation. People are very resourceful, and many great ideas have spawned out of individuals being laid off. It appears that the recession and layoffs caused by this pandemic have been no different.

However, this surge in new businesses does not necessarily mean that it is a great time to start a small business – in fact, now is a time when prospective small business owners must be more diligent than ever before given the fluid nature of the pandemic and the constantly changing economic environment in the United States over the last year. According to the Federal Reserve, in 2020 alone 130,000 businesses closed on account of the pandemic, and the number could be even greater in 2021.

Where are the Opportunities for Small Businesses Right Now?

Unsurprisingly, brick-and-mortar businesses have had to deal with the most downside on account of the pandemic. On the flip side of this though has been the boom that e-commerce businesses have experienced. Businesses that have been taking a digital-first approach to their operations, particularly direct-to-consumer companies, have seen a real boom on account of people’s inability or lack of desire to shop in physical stores.

Right now, there are all kinds of opportunities in the direct-to-consumer (DTC) space, and fortunately, DTC businesses are some of the cheapest business operations to start. You don’t have to buy or rent brick-and-mortal retail space, you can cut down on insurance and associated costs, and you can operate them from your home or a small office. It’s also easier to manage a remote workforce (something that has become increasingly popular during the pandemic).

As part of the e-commerce business, there are dropshipping, wholesale, white label, and private label business models, giving prospective entrepreneurs a host of business options to choose from.

What are the Steps to Starting a Small Business?

The steps to starting a small business during the pandemic are not too much different than in normal times, however, there are added considerations you must take into account. Fortunately, the United States is in a much better place than it was during the start of the pandemic, and small businesses are resuming operations that are as close to normal as possible given the situation. In this next section, we’ll cover some of the important steps for starting a small business and discuss a few extra steps you will want to take on account of the pandemic at the end. 

Identify A Market Need and the “What”, “Why”, and “How” of Your Business

Every business needs a “what”, a “why”, and a “how”. Your first job in starting a small business is to determine “what” the market need is. Maybe you’re starting a small coffee shop in your local town because there isn’t one. Or maybe there is some software or technological tool that a certain segment of the population needs but isn’t available. After that, you’ll need a “why.” Why are you starting the business and why does it make sense? Why does the software you want to build fulfill the needs of a certain segment of the population? Why will it work for them and why would they want it?

The more you can home in on what the market needs and why they need it the more clearly you will be able to determine “how” you can fulfill the need. Try writing up a few paragraphs where you explain to a friend or a potential investor (doesn’t have to be a real person, this is just an exercise at the beginning) the entire rationale for your business. See if it makes sense. If it does, give it to a friend to review. What are their thoughts? A compelling product can be explained, and you can convince others that it is needed.

Remember, this is possibly the most important stage of your business. You can execute correctly on everything from production to marketing to shipping to customer service, but if your product doesn’t fulfill a need and people don’t need or want it your business will never be able to get off the ground. 

Write a Business Plan and Identify Precisely What Will Be Needed to Start the Business

Once you decide to move forward with your business idea your first priority will be to identify exactly what your business needs to get running. Maybe it needs a website and you need to start reaching out to suppliers to start building relationships. Maybe you need a team of two or three employees to run the operation. Whatever it is, you want to start laying out the foundation for your business right away and develop a clear path forward.

This is where writing a business plan comes into play. Your goal is to clearly express the entirety of your operation in just one document. Someone should be able to read your business plan and know exactly what your business is and why it will be successful – it’s a quick pitch.

You might be thinking: why would I write a business plan if I don’t need a loan or investors? That’s a good question. Even if you don’t need a loan or investors, you should still write a business plan because it helps you build out a plan for executing your business idea. If you go into your business making decisions on a whim with no clear long-term goal in mind there is almost no chance you will succeed. How are you going to acquire new customers? How many products do you eventually want to offer? How are you going to market your product? Who needs your product? These are all questions you should have answers to in advance so you can make each decision with them in mind. Each decision you make while running your business should put you one step closer to realizing these goals.

Now, it should be noted that the answers to these questions and your long-term goals may change. That is ok. Oftentimes, it’s a good thing. But you still need to have goals and clearly defined objectives from the beginning to get going.

As part of this stage, you will also want to clearly identify how much money you think will be needed to get the business off the ground. Try to price out all the different expenses you will have. You can also try to project some revenues but remember to be very conservative with your projections – better to make more money than you expected and have excess cash flow than to make less money than you expected and struggle to pay the bills when they are due.

For assistance in crunching all the numbers needed for a business plan and determining what your business will cost, consider reaching out to a certified public accountant (CPA) who specializes in assisting small businesses. They’ll be able to help you determine expected costs and direct you to funding sources. Plus, it’s good to start building a relationship with a CPA early on, since they can be incredibly valuable when you need to navigate tax season in the early stages of your business. 

Reach Out to Your Connections and Your Network

There’s an old saying that your “network is your net worth.” This certainly holds a lot of truth in the business world. Connections can often mean the difference between success and failure for small businesses (large businesses as well). So, as you begin planning out and eventually executing on your small business idea, make sure to reach out to your network.

Maybe you know a person from high school who now works as a CPA. Or maybe you have connections to some supply network that is critical for operating your business. Maybe you know a few management consultants who can review your business plan and give you tips and feedback. Any assistance you can get and anybody who you can bring on as an advocate and a supporter is beneficial. You never know who might know who. Connections are incredibly valuable – don’t forget about them!

What Extra Steps are there on the Account of COVID-19?

The COVID-19 pandemic has thrown a number of very serious curveballs at small businesses across the nation. In light of this, there are some extra steps you should consider taking during the pandemic before starting a small business just to make sure you have all your ducks in a row. We’ll discuss a few of them here. Remember, this is certainly not an exhaustive list of all the market, industry, and other small business-related conditions that have changed as a result of COVID. So, please be sure to do your due diligence in familiarizing yourself with the state of affairs in small business communities across the nation.

Focus on How You Can Leverage the Digital World

It seems like this is always being said – even in pre-pandemic times – but right now the “digital world” is more important than it has ever been. Digital marketing is critical and leveraging technology to your advantage is crucial for running a successful small business. As such, you should take some time to familiarize yourself with different digital marketing strategies, social media sites, and any new and innovative technological tools that will be able to help your small business grow. You’ll want to begin using these from day one in order to establish an online presence for your company and its product(s) or service(s). 

Take Into Account Supply Chain Issues

One thing you will want to pay close attention to is the issues in the supply chain that are taking place right now. All across the United States small businesses are struggling to deal with supply shortages and rising prices. Don’t forget to include this in the calculus for your small business. 

For example, maybe your small business is going to require company vehicles. Right now, the price of new and used vehicles is through the roof on account of the shortage is semiconductor chips that cars need (as well as some other shortages in the supply chain). This means you will be paying a lot more for any vehicles you want to purchase than you would have been paying just six months ago.

Remember to stay up to date on any news as well. For example, the White House is currently looking into the chip shortage that is impacting car production and considering using the Defense Production Act to get more information from automakers as to what is really going on behind the scenes. This doesn’t mean that the situation with the cars will change (the Biden Administration does not plan on using the Defense Production Act to require any factories to start producing chips), but it provides an example of how industries, supply chains, and more are all in an incredible state of flux with rapid changes taking place all the time on account of the pandemic. As someone interested in starting a small business, you will want to stay informed about these developments so that you are aware of any sudden changes that could impact your small business idea. 

Keep in Mind the Labor Shortage

Another thing to keep in mind on account of the pandemic is the labor shortage. Small businesses across the nation have been struggling to find employees for all kinds of jobs, and the shortage hasn’t been letting up. If your business is going to require several employees, this is something you will need to think about very carefully. Many businesses – particularly restaurants – are having issues even opening the doors in some cases on account of the lack of workers. You don’t want to start up a brand-new business and be unable to operate because you couldn’t find qualified help.

So, make sure to assess the job market in your area and determine whether you think you will be able to hire the number of employees your business will need. Don’t forget to consider the costs of benefits that you will need in order to attract top talent as well. Given the competitive nature of the job market right now and the lack of workers, employers are going the extra mile to incentivize new workers to join their team. You’ll have to ensure your business is able to compete on a local level. This includes potentially offering things like 401(k) plans, healthcare, paid vacation time, and other common benefits. So, be sure to look into these and understand what employees are currently looking for in today’s job market. Then factor this into your plan.

Consider the Operational Difficulties Presented by the Pandemic

The pandemic has also presented challenges that have impacted the ability of businesses to operate, and many workplaces have had to put in new restrictions on account of the Delta variant.

If you are going to start a new business during the pandemic, you will have to think carefully about how any workplace restrictions needed to keep you and your employees safe may impact your ability to operate. This means thinking about the social distancing guidelines you will have to implement, the potential need for mask mandates, and the restrictions you may have to place on travel depending on COVID infection rates in your local community.

One thing to consider is whether you think your business can operate with a remote workforce. If you are going the e-commerce route for your business, odds are you may be able to accomplish your goals and operate your business without actually having a team of employees in an office. Zoom and other video communication platforms have been shown throughout the pandemic to be very effective methods for managing a remote workforce, and they could be the key to starting your small business.

You will also want to consider how your state and local government is dealing with COVID. In New York City, for example, they are being much more restrictive with regards to what people can and cannot do than in almost any other city across the nation. These kinds of factors are things you will want to include in your calculus as you determine the viability of your business idea. 

How Can You Fund Your New Startup?

If you are at all involved in the small business community, odds are you have heard about all the funding small businesses have been receiving during the pandemic. Whether it’s PPP loans from the SBA or term loans from alternative lenders, small businesses have been bringing in all sorts of funding to help them survive (or in some cases thrive) during the pandemic.

Unfortunately, when you are starting a new small business obtaining a small business loan is almost impossible. Small businesses are typically seen as risky borrowers, and you have to have some track record of operation (hopefully successful operation) to qualify for loans from almost any lender, including alternative lenders. 

That said, interest rates are quite low right now and personal loans are not too difficult to come by, especially if you have an established history with a bank and a good credit score. Now, obviously, we are not recommending you go and take out a massive personal loan. However, many of the new startups popping up are not huge, capital-intensive business ideas. Many can be started with just a small $10,000 investment – a very realistic amount to take out a loan for (in fact, it would be hard to find a good car given the supply chain issues for less than that right now). As such, a personal loan is a viable option for thousands of Americans looking to make a splash and start a new business.

As always, we recommend carefully considering any loan you take out. Remember, a personal loan would mean that you are on the hook for the amount of the loan if your business idea does not work out, so you will want to carefully understand your liabilities and obligations before accepting one. 

Don’t Be Afraid to Wait

There is no doubt that it is a challenging time to open a small business given the pandemic and all of the resulting downstream impacts. In spite of all this, it could still be a good time to open a business. But it also might not be – and that’s ok as well. Don’t be afraid to hold onto your idea until the pandemic is over. Obviously, if it is a pressing idea or something that you think is time-sensitive, then it may make sense to act on it now. But if you feel the opportunity will still be there in a year’s time, when hopefully things will have settled down and the United States will be able to return to normal, then that is another option as well.


With new small business activity and new startups at an all-time high, there’s no doubt that millions of Americans feel that now is the perfect window to start a new small business. And while there are certainly many obstacles in the way of starting any new business, with the proper execution plan, there is no doubt that many of these businesses will go on to achieve considerable success.

As such, if you have a small business idea that you have been mulling over, now may be the perfect time to start acting upon it. Even if you are unsure of whether or not you want to start a new business, building out a business plan and turning your thoughts into a more concrete business idea can be a great way of determining whether or not you think your idea is worth acting upon. Plus, it can give you a head start and a great foundation if you do decide you want to join the millions of other Americans deciding to join the nationwide community of small business owners. So, take some time to do some research and begin getting your ideas down on paper – who knows, in just a few months you may be well on your way to starting a business that will last a lifetime!


At Biz2Credit our mission is to serve the millions of small business owners across the nation who work hard each and every day to ensure their businesses can grow in a sustainable and profitable fashion. With the ongoing COVID-19 pandemic facing the nation, we realize that our mission has never been more important than it is now – and we take that very seriously. As part of this, we work tirelessly to bring our readers the latest information on trends and developments occurring in the U.S. small business community. So, please be sure to continue checking back here at our Biz2Credit Blog for timely updates on everything related to small businesses!

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