Number of small businesses increases, despite pandemic

By ETHAN BERMAN
Staff Writer

It’s no secret that small businesses have suffered during this pandemic. Many have been temporarily closed, having to furlough most of their employees. Some have even been permanently shut down.

Interestingly enough, data from Michigan’s Department of Licensing and Regulatory Affairs’ public database shows an increase in new LLC business openings since the pandemic began. An LLC business is one with minor legal protections, ensuring the safety of the owner’s assets.

In pre-pandemic October of 2019, there were 8,341 new LLC entities created in Michigan, while in August of 2020, there were 16,570 limited liability companies formed – almost double from the previous year.

Through government aid promised to small businesses and stimulus checks to help support employees, small companies may have a gateway to stay open. But what about opening a new business?

Grace Salisbury was working at Ulta Beauty after receiving her cosmetology license from Jackson Area Career Center, a business tech center, in July of 2018. It wasn’t until January of 2021 that she opened her own small business, Captivate Studios, inside Sola Salon Studios in Ann Arbor. It has always been her goal to have her own business.

“The most difficult part was getting the state legalities in order,” said Salisbury, “The LLC has been a challenge because the office has been closed since the beginning of COVID-19. So, I have to wait an extra two to three weeks for my license.” But this hasn’t stopped her.

Salisbury isn’t afraid of her business shutting down due to COVID-19. If her shop shuts down, the rental payments would be put on the lease’s back end, so she wouldn’t have to pay for the months missed until the lease expires.

“As far as COVID in a salon,” said Salisbury, “we already sanitized everything between clients. Not much else has changed except the masks.”

Salisbury offered advice for fellow small business owners, “For some people, opening a small business could be a bad idea. For others, great. I don’t think it’s that big a deal right now,” she said, “As long as you’re setting yourself up for success and have a plan, you’re good.”

Kristin Gapske, the program director for the WCC Entrepreneurship Center, said that “it’s difficult being unable to help new entrepreneurs in person.” However, Gapske said, “It’s been easier to include a broader audience for her webinars. We even get international clients looking for information about Michigan.”

Gapske believes there is more of an increase in clients needing help in maintaining a business rather than needing help starting one.

“I do see an uptick in LLC formations since the pandemic started,” said Gapske, “It remains to be seen, of course, how this will all look in the end, given the sad truth that many businesses will have to close. But I can speculate that the increased number of business starts might be due to the fact that many people put off legally forming their businesses, and when given the time, they may finally take a moment to officially register as a business.”

“The high numbers of unemployed can lead to an increase in business formations – whether out of necessity, or the desire to pursue their dream of opening a business, and finally getting the chance to focus on starting that business.”

So, what are some good tips for new business owners?

“Do your research about the market and test it. Run the numbers and get help when you can,” Gapske said, “It’s best to work with people outside of your circle to see if your idea is even viable.”

“There are more financial aid options than before the pandemic,” said Gapske, such as the CARES Act, Small Business Association Debt Relief, and the COVID-19 Economic Injury Disaster Loan, “so take advantage of them.”

If you would like to schedule a consultation about a potential business idea, you may contact the WCC Entrepreneurship Center here.

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