New businesses still are going strong in the wake of the Covid-19 pandemic — and economists see it as a sign of a resurgent innovation economy.
A breakdown of new business applications by county across 2022 shows much of the American South and Southwest is benefiting, too. The top 10 major American metro areas in terms of new businesses per 1,000 residents is dominated by Southern cities — with Miami at the top, followed by Atlanta and Orlando, Tampa and Jacksonville in Florida.
In fact, according to Miami-based finance website WalletHub, Orlando is the best place in the nation to start a new business in 2023.
The ranking is based on metrics ranging from five-year business-survival rate to industry variety, presence of higher education institutions, prevalence of investors and more. Orlando was ranked No. 3 for the highest average growth in number of small businesses, but came in last (No. 100) for lowest availability of human capital.
For years before the pandemic, Census data and other sources showed a decline in new businesses and a series of headlines that decried the “slow death of entrepreneurship” and “the mysterious death of entrepreneurship in America.”
And the data reflected that — a stagnating number of new business applications every year, with the number of “high-propensity” new businesses, which the Census Bureau defines as those likely to create new jobs in the future, declining over time.
How the new business boom happened
The massive disruption brought about by Covid-19 reshaped the entrepreneurship landscape overnight. That, combined with increasingly lower costs to start a business and more Americans willing to take the risk, led to a massive surge in new business formations.
In Central Florida, the strength of the tourism sector factors in, said University of Central Florida Assistant Professor Arthur Huang, who studies and writes about technology, hospitality and tourism. Tourism Economics, a subsidiary of UK-based analysis firm Oxford Economics, on Aug. 21 released a study that analyzed Orange, Osceola and Seminole counties' tourism industries generate $87.6 billion in economic impact.
Huang said it isn't just locals starting new businesses: Both entrepreneurs and customers seeking better weather and quality of life are moving to the South.
“Other than tourism, Orlando has a diversified economy. Lake Nona has the growing Medical City. There are more sports events and training activities happening here,” he said.
Why Orlando is a hot spot for new businesses
A national breakdown of new business applications by county across 2022 shows much of the American South and Southwest is seeing new business growth. The top 10 major American metro areas in terms of new businesses per 1,000 residents is dominated by Southern cities — with Miami at the top, followed by Atlanta and Orlando, Tampa and Jacksonville in Florida.
In many respects, the new business application data mirrors the so-called “great migration” of people moving from expensive coastal cities to cities in the American South and Southwest.
“This is a huge deal, to see the return of entrepreneurship in America,” said Luke Pardue, a senior economist at payroll and benefits provider Gusto Inc. "It took a once-in-a-century, a once-in-a-generation pandemic that sparked a surged in entrepreneurship and dynamism, and we are starting to see that dynamism take hold as people take advantage of opportunities that they might not have had in the past.”
ADP Chief Economist Nela Richardson stressed there is a wide range of changes fueling the new business dynamism — like more acceptance for remote work and contract work, democratization of health care access and and a surge in home equity.
More companies are hiring workers on a contract basis, which often means that person is a small business.
“All of this stuff is coming together,” Richardson said. “You are seeing a lot happen that does present opportunities for dynamism, and I think we are just getting started with that.”
In Central Florida, a concentration of tech talent and a supportive ecosystem of incubators and other entrepreneurial support organizations could be one of the reasons so many new businesses are starting up here.
An Orlando Tech Community committee called Tech Connect chaired by StarterStudio CEO Dawn Haynes is well into a project that is mapping out all the existing elements of the local ecosystem for startups. An interactive platform plugging in all the committee's gathered information will launch later in the year.
As Haynes describes the landscape, it's only up from here. "We are looking at ways to ensure that all of those resources are better connected to be able to help the entrepreneur on their journey far better than we are doing today."
One piece of that puzzle? The tech schools and universities in the region.
“I give a lot of credit to the higher education institutions," said one of the area’s most successful entrepreneurs, Salman Rehmetullah — co-founder of Orlando-based fintech unicorn Stax Payments. "We have UCF, Rollins College and Valencia College in town, and the University of Florida less than 100 miles away. That brings a vibrant, youthful population, a workforce looking for jobs in innovation.”
Earlier this year, Orlando Economic Partnership, a local public/private economic development organization, spun off a new entity, Innovate Orlando. Like its parent, it is designed to spur business growth, capitalizing on momentum that already exists. "We are telling the world what this community is in hopes that they learn so much about it that they want to relocate their businesses here or they want to grow their businesses here," said Innovate Orlando CEO David Adelson.
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