Starting a New Business Gets Popular Again

By Paul Ausick Updated Jan 12, 12:35AM EST · Published Apr 24, 10:05AM EDT

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

The percentage of job seekers who chose to start a new business in the first quarter of this year was the highest since the fourth quarter of 2013. Nearly 8% of Americans looking for a job started their own businesses last quarter.

That’s a dramatic increase from the 5% who started their own businesses in the fourth quarter of last year. For all of 2017, only 5.1% of U.S. job seekers started their own businesses, down from 6.1% in 2016.

The data were reported Tuesday morning by outplacement firm Challenger, Gray & Christmas.

Company Vice-President Andrew Challenger commented:

We tend to see an increase in start-up activity when confidence is high. The current job market is such that a failed venture does not necessarily spell total joblessness for the entrepreneur, as companies are scrambling for talent.

[nativounit]

Those with long memories will recall a similar spate of new business start-ups in 2009 when the financial crisis drove many Americans to go into business for themselves because unemployment was so high. The current surge in new businesses may be taking place for exactly the opposite reason.

In addition to a greater willingness to take risks, new businesses have more access to small business loans. Challenger, Gray noted that new loans totaling over $8 billion have been made so far in 2018, compared to just $4.5 billion in 2017. New loans have not topped $5 billion in the past five years.

Challenger also notes that more than 88% of new businesses begun last quarter were started by people over the age of 40. He commented:

Older job seekers draw on the breadth of their experience, institutional knowledge, and networks to embark on new ventures. For those who may want to start winding down their careers, contract or consulting work allows for greater freedom in selecting projects and setting work schedules.

Another reason for the surge may be the pass-through provision of the new tax law that allows business owners to reduce their taxes by deducting 20% of qualified business income before calculating an individual’s adjusted gross income. The tax savings could be significant, depending on the size of the business.

[recirclink id=457748]

[wallst_email_signup]

Follow 24/7 Wall St. on Google

About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.