Hard thinking outside the box
New companies facing a tough task to survive, thrive during pandemic
NEW YORK — Julie Campbell had to rethink her new wallpaper business before she could sell her first sheet.
Campbell launched Pasted Paper in February, but soon after, the coronavirus forced the cancellation of the trade shows where she expected to introduce her wallpaper to customers. Suddenly, the $30,000 she’d invested in creating the wallpaper was at risk, dependent on her transforming the company to sell directly to consumers.
Campbell learned online selling and marketing — skills not immediately in her wheelhouse.
“I had so much inventory and I needed to sell it. I was forced to figure this out,” Campbell says.
A recession amid a pandemic may seem like the worst time to start a business. Despite millions of loans and grants from federal and state governments, it’s estimated that hundreds of thousands of companies have failed since the coronavirus outbreak began.
Yet, from people like Campbell, who’d invested too much money to turn back, to others who lost their jobs and saw starting their own company as the best path forward, thousands of Americans have opted to take the plunge. A few have even folded one business and quickly launched another better suited for the “new normal” of the pandemic.
Owners of all these fledgling companies face a tough road as they try to thrive. While nearly 80% of startup companies had survived their first year in 2019, according to research by the Kauffman Foundation, those businesses had the benefit of launching in a strong economy.
Slightly over 1 million companies that have employees were launched in 2018 while 925,000 closed, according to the latest available data from the Labor Department.
Despite the pandemic, interest in starting a business has picked up as parts of the U.S economy reopened. The number of applications for business tax identification numbers was down more than a third at the end of March compared to year-earlier levels; in the week ended Sept. 5, the most recent data available, they were up 93.6%.
Unemployed people needing a source of income likely accounted for some of those applications, says Dane Stangler, a researcher at the think tank Bipartisan Policy Center. But he also says owners who closed their businesses permanently early in the pandemic might be restarting with a new entity.
Within weeks as the pandemic spread across the country in February and March, Amy and Cody Morgan lost their executivelevel jobs. The couple, who live in Cypress, Texas, north of Houston, decided to start a pool servicing company called Pit Stop Pools.
Cody Morgan ran a similar business to help pay his college expenses 25 years ago. The Morgans anticipated that demand for services like pool cleaning and maintenance would be even greater than usual with people spending more time at home.
“It became imperative that this pool service company happen,” Amy Morgan says.
It will take 200 accounts to replace one of the salaries they made pre-pandemic, but the Morgans are optimistic that despite the competition for pool services in the city, they’ll be able to grow.
Like the Morgans, many new and prospective owners have chosen industries like home improvement or in-home gym equipment whose services are currently in demand, says Sara Moreira, a strategy professor at Northwestern University’s Kellogg School of Management.