Inflation Will Fuel More Small Business Formation in 2023

Rhea-AI Summary

Intuit QuickBooks released findings indicating that entrepreneurship remains strong in the U.S., with business formations hitting historical highs. A survey of 15,200 adults revealed that 66% of aspiring entrepreneurs cite inflation and the need for extra income as key motivators. Notably, 65% plan to maintain their current jobs while developing side hustles. The report highlights states like New Jersey and Florida as leading regions for new business creation in 2023, and emphasizes technology's role in simplifying business setups.

Positive

• 66% of potential entrepreneurs cite inflation as a motivator for starting a business.
• Historical high levels of business formation indicate strong market activity.
• Increased interest in technology and e-commerce among new business owners.

Negative

• Many new businesses are side hustles, indicating potential instability in income.

Majority of Entrepreneurs Will Maintain Current Job While Starting a Side Hustle

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)-- Business formation continues to be at historically high levels, with concerns over cost of living and inflation motivating Americans to pursue a small business venture. New research from Intuit QuickBooks shows this trend will continue in 2023 and of those survey respondents who say they plan to start a small business, two thirds (66%) indicate inflation and the need for additional income is behind their decision. These findings and more are highlighted in the QuickBooks New Business Insights report, based on a recent survey of 15,200 U.S. adults commissioned by Intuit (NASDAQ: INTU), the global financial technology platform that makes QuickBooks, TurboTax, Mint, Credit Karma, and Mailchimp.

What funding will new business owners use in 2023? (Graphic: Business Wire)

The report also uncovered several geographic trends related to business formation and where small business economic activity in the U.S. flourished in 2022 and is expected to increase in 2023:

• Business formation continued to hover at a historically high level in 2022 with several states leading the pack: The states where the most residents reported starting a new business were Delaware (23%), Hawaii (22%), New Jersey (21%), Virginia (21%), and Maryland (20%).
• These states are poised to lead the country in small business formation in 2023: The states with the highest number of residents who said they plan to start a business next year are New Jersey (42%), Florida (40%), Hawaii (40%), California (39%), Louisiana (38%), Maryland (38%), Georgia (37%), Nevada (37%), New York (37%), Delaware (37%), and South Carolina (37%).
• While small business formation is at historically high levels, many of these new ventures will be side hustles: Creating a new small business as a side hustle is continuing to increase in popularity as people look to supplement their income amid inflation. Almost two-thirds (65%) of respondents indicated that they will continue to work for other employers at the same time as managing their new business ventures, suggesting that side hustles are increasing in popularity as people look for more income opportunities, particularly amid inflation.

“As we navigate the small business landscape post-pandemic, we’re seeing increased business formation as people look for new revenue sources and opportunities in a changing economy,” said Alex Chriss, executive vice president and general manager of Intuit’s Small Business and Self-Employed Group. “With an increase in small business creation, it’s imperative that we support them with the tools they need to successfully run and grow their business, especially as a majority of them lean into ecommerce, online lending solutions, and digital tools to gain customers and manage cash flow.”

Technology, and its ability to simplify many aspects of starting and running a business, continues to be a key driver of small business starts.

• Technology has made it easier than ever to start a business: 45% of those surveyed indicated that the opportunities technology platforms enable is a key reason they decided to start a business.
• E-commerce opportunities were identified as the strongest growth opportunities: 46% said that they would pursue an e-commerce business as their new business venture and 37% plan to pursue a job in the creator economy, driven by social media apps and services.
• Accessing funding is top of mind for new business owners: While the majority of those surveyed (73%) indicated they’d use their own money or savings to start their businesses, roughly one in six (17%) said they will look to online lenders as an option, and more than one in five (23%) would consider a traditional bank.

This report and additional research and insights from Intuit QuickBooks are available here.

About Intuit

Intuit is the global financial technology platform that powers prosperity for the people and communities we serve. With more than 100 million customers worldwide using TurboTax, Credit Karma, QuickBooks, and Mailchimp, we believe that everyone should have the opportunity to prosper. We never stop working to find new, innovative ways to make that possible. Please visit us for the latest information about Intuit, our products and services, and find us on social.

Source: Intuit Inc.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221215005264/en/

Intuit QuickBooks:

Dan Mahoney

Dan_Mahoney@intuit.com



Jen Garcia

Jeng@accesstheagency.com

Source: Intuit Inc.

FAQ

What are the recent trends in entrepreneurship according to Intuit?

Intuit's findings show a significant increase in entrepreneurship, with many individuals citing inflation as a motivator to start new businesses.

What percentage of aspiring entrepreneurs plan to maintain their current jobs while starting a business?

About 65% of aspiring entrepreneurs indicated they will keep their current jobs while starting their new businesses.

Which states are expected to lead in small business formation in 2023?

New Jersey and Florida are among the states expected to see the highest rates of small business formation in 2023.

How is technology influencing new business creation?

Technology is recognized as a key factor in simplifying the process of starting and running a business, with 45% of surveyed individuals citing it as a reason for their entrepreneurial ventures.

What funding sources are new business owners considering?

73% of new business owners plan to use personal savings, with others considering online lenders (17%) and traditional banks (23%).