The March 2023 Business Formation Statistics were released yesterday by the U.S. Census. And it was another strong month.
As the Census chart below shows (click to enlarge), there were 451,752 new business applications in March.
This continues the surge in new business applications that started during the pandemic in 2020.
Prior to the pandemic. applications averaged around 300,000 per month. Since Q3 2020, they've averaged around 450,000 per month.
About 300,000 of March's applications come from what the wordsmiths at Census call "applications other than high propensity."
These are applications from people not planning to hire employees - in other words, freelancers and other kinds of solopreneurs.
This continues the long-term shift in applications to nonemployers businesses. In 2005, about 60% of all applications were from businesses planning to have employees. Since the surge, about 2/3rds of all applications are from firms planning to be solopreneur businesses.
It's important to note that new business applications are applications for a federal tax I.D. And only about 20% of those who apply for a federal tax I.D. end up starting a business.
So if you read somewhere there were 450,000 new businesses started in March, it's wrong.
But a surge in applications also means a surge in new small and solopreneur businesses - with March's applications leading to about another 90,000 new businesses over the next year or so.
We're two and a half years into this surge in new business applications. We think it's now safe to say it's real.
