The “Great Resignation” and Entrepreneurship

Jan 5, 2022 | business attorney, Entrepreneurs, Small business, Small Business Administration, Startups

The “Great Resignation” and Entrepreneurship

We have all heard about the so-called “Great Resignation,” the millions of people who have quit their jobs during the course of the pandemic in 2020 and 2021 (4.2 million in October, and 4.5 million in November of 2021). Where are all of these people going? While some are looking for new and more satisfying jobs, and others are sitting on the “sidelines” and assessing their options, many have started new businesses.

According to a survey by Zapier, new business creation was up sharply over the past year, mainly in the Southeast and West. The U.S. Census Bureau recorded nearly 5 million new business applications submitted during the first 11 months of 2021, a 55% jump over 2019.

Why become an entrepreneur?

When asked why they were starting their own business, the budding entrepreneurs cited extra time due to the pandemic (77%), a desire to contribute to their community (69%), to take advantage of business opportunities created by the pandemic (65%), and a need to make more money than before (57%).  According to the survey, 27% of those starting a new venture had no prior business experience. 70% of those under age 54 who started a new business were employed at the time they did so (or just before), and 46% of those over age 55.

What types of new businesses did these formerly-employed people start? It breaks down like this:

  • Brick-and-mortar retail: 16%
  • Professional services/consulting: 22%
  • In-person services: 25%
  • E-commerce: 37%

Resources for starting a new business

What do new entrepreneurs need to start a new business? There are many resources for budding entrepreneurs starting a new business. The U.S. Small Business Administration supports SCORE, the Service Corps of Retired Executives, which offers mentoring services on a volunteer basis to small businesses. SBA also funds the Small Business Development Center (SBDC) program, which offers resources, training, and counseling to small businesses.  SBDC’s operate in a number of locations, including (just in Colorado) Denver, Colorado Springs, Boulder, Greeley, Fort Collins, La Junta, Dillon, Alamosa, and Grand Junction.

Legal issues when starting a business

Just from a legal perspective, there are several considerations:

  • Structure of legal entity (limited liability company, corporation)
  • Tax issues-how should the business be taxed?
  • Initial formation documents
  • Contracts with vendors/suppliers and with clients
  • Leases for a business with a physical location
  • Employee matters, including offer letters, employee handbook, etc.
  • Raising capital through loans, SBA, or other sources

A good business attorney can help with these and related matters. It is also advisable to find a good CPA to help with tax and accounting issues.

While there is some uncertainty with inflation, interest rates, and continuing Covid surges, many participants in the Great Resignation are considering starting their own business and working for themselves instead for an employer.

If you have questions about the legal aspects of starting a new business, feel free to contact Mark Spitz at Spitz Legal Counsel LLC, by email at mark@spitzlegalcounsel.com or call 720-575-0440.