U.S. entrepreneurs formed a record 4.38 million new businesses in 2020, according to data from the Federal Reserve Bank of St. Louis.
That total has been topped every year since, including in just the first 11 months of 2024.
In the first years of the COVID-19 pandemic, urgent factors like job losses helped spur business formation. That motivation, along with the desire to increase one’s income, remains for some people. Others are searching for increased flexibility and autonomy, a 2024 NerdWallet survey found.
If you want to increase your income
Around 50% of entrepreneurs said they started businesses because they wanted to increase their incomes, according to that NerdWallet survey of 425 current small-business owners conducted online by Harris Poll in October 2024.
“If you look at the data from the last two years, the one constant has been higher prices for everything,” says Thomas M. Sullivan, vice president of small-business policy at the U.S. Chamber of Commerce. “There is a certain element of necessity entrepreneurship that’s going on in the economy” — people starting businesses because a traditional job isn’t cutting it financially.
Most businesses don’t generate profit right away. If you’re relying on your business to pay your bills, you’ll need to stay laser focused on your finances — first on controlling your startup costs, and then on generating revenue quickly.
The shock of COVID-19 made entrepreneurs much more serious about balancing their books, Sullivan says.
“The difference is the attention to the balance sheet,” Sullivan says. “I have never met as many small-business owners who know, to dollars and cents, inventory numbers in a week.”
If you want to monetize a side hustle
Slightly more than a third of business owners said they turned an enjoyable hobby (34%) or successful side hustle (34%) into their current small business, according to that NerdWallet survey.
Kristy Cruz, owner of The Succulent Studio in Olympia, Wash., turned a hobby — arranging succulents — into a business in 2023, after her military family relocated and her teaching certification didn’t transfer across state lines.
Today, The Succulent Studio sells arrangements and hosts public and private workshops. Cruz dreams of opening a storefront where she can display inventory, teach lessons and host parties.
While growing the business, however, Cruz still works a full-time job. If you also want to transition a side gig into a full-time business, keeping another job temporarily can be a wise move to help maintain your financial security. But keep in mind that balancing the two can be exhausting.
“Until I became a small-business owner, I did not realize how much it takes and that you’re basically on the grind all the time,” Cruz says.
If you want to control your schedule
Despite the “grind” Cruz describes, the second-most popular reason for starting a business was a desire to manage one’s own hours, according to NerdWallet’s data.
Flexibility is especially important to parents and caretakers: A 2024 survey from BambooHR found that 75% of parents and caretakers who prefer remote work say it’s because of work-life balance, compared to 66% of non-caretakers.
Shelly Allhands, a nonprofit communications professional in the Seattle area, was laid off in 2022. She had a child a few months later.
After that, “my priorities changed,” Allhands says. Instead of another full-time job, she started doing contract work and then founded her own company, Evergreen Communications.
It’s proven to be “the best balance of, I get to do what I love to do, but I still get to take my daughter to the zoo,” she says.
Owning your business can allow you to grow or scale back in accordance with caregiving needs. Just make sure you keep up with your business’s changing needs during that process, too.
For instance, Allhands says she’s had to level up her software as her business became more formal: “The free solutions are great until they’re not.”
Seek support as you adapt to entrepreneurship
Your plan may be to start a business in 2025, but ideally it will last much longer than that. As your company and your motivations evolve, be prepared to change with them.
Helen Ianniello was working as a travel nurse in rural Nebraska and South Dakota when the pharmacy in her rural community (Stockmen’s Drug in Gordon, Neb.) faced closure. To keep it alive, she bought it.
Ianniello didn’t start the business, but she’s embraced entrepreneurship over the last two years.
“I decided a long time ago that my ‘go for it’ voice is going to be what I listen to,” Ianniello says.
NerdWallet’s 2024 survey suggests that working significantly more than full time in your own business is not uncommon — 19% of business owners said they spent 50 hours or more in their business.
Still, 70% of current small-business owners said they never want to work in a traditional job again.
“I am working more and I took a huge pay cut,” Ianniello says. But with help from a mentor, she’s been able to reduce her hours; she encourages other business owners to seek out that kind of support.
Since Ianniello’s acquisitio, she says Stockmen’s Drug has grown significantly. The size of the staff has more than doubled, they’ve taken over services at nursing homes and launched a satellite pharmacy, and on average, they write at least 100 more scripts per day than they used to.
In 2024, Stockmen’s Drug won the $20,000 first prize in a virtual pitch event from SCORE, a national business mentoring organization.
“The impact that we’re able to have on all the other surrounding communities — it’s made all the struggles worth it,” Ianniello says.
