These States Were The Most 'Entrepreneurial Minded' In 2021 Despite COVID-19

After nearly two years of economic disruption created by COVID-19, the United States is treading down the path to economic recovery.

Unemployment claims are hovering around historic lows, weakened sectors are showing renewed signs of life and wages are up -- all signs that the U.S. economy is regaining its vitality. That is not to say that the recovery is complete or that the pandemic is over, but neither factor takes away from the strides made towards returning to some level of normalcy for Americans.

If there was one unintended side effect of the COVID-19 pandemic it was that it inspired more Americans to consider the possibility of starting their own businesses. The flexibility provided by working at home arrangements in 2020 has ebbed away as employees return to the office, but many are not keen to sacrifice that newfound sense of freedom.

In a recent study by payment platform CardConnect, analysts decided to look into just how many Americans across the 50 states are taking the entrepreneurship route and just which state has the most entrepreneurial vigor.

"While many of the four million or so people who have been quitting their jobs every month of late may be seeking alternative permanent employment, the new business application numbers suggest that thousands of others are seeking to launch their own ventures," said a spokesperson for CardConnect.

To figure this out, CardConnect looked at the number of business applications filed in each state in the last year. According to their findings, Wyoming, Delaware, Georgia, Florida and the District of Columbia rounded out the top five.

In terms of stats that saw the greatest increase in business applications since COVID-19, Mississippi dominated the rankings with a 111.94% increase in new business applications compared to 2019 followed by Georgia, Louisiana, South Carolina and Alabama.

Olivia Lott, a representative of Pandable, who worked alongside CardConnect to carry out this research, noted that the majority of the states that were found to be higher in their entrepreneurship rankings are situated in the American South with 13 out of the top 20 placings. What Lott also explained was the relationship between these states and the level of job losses experienced during the pandemic.

"It looks like it was indeed the states most affected by COVID job losses and slowest recoveries that appear among some of the most 'entrepreneurially-minded' in this CardConnect research,” Lott told International Business Times.

She acknowledged that there are exceptions in CardConnect's rankings, like New York and New Jersey, but for the most part, the uptick in applications to start a new business tells a story about the South wanting to "take things into their own hands" after a slow couple of years of recovery.

Previous studies showed that COVID-19’s damages have been borne by many “red states,” or those dominated by the Republican Party. In research by Moneygeek, blue states, led by Democrats, had a 37% faster job growth rate than red states from January to July and red states had nearly three times the rate of COVID-19 cases per job added than blue states.

By the same token, Lott pointed out that these red states were the ones showing a sense of entrepreneurial spirit. For example, in Wyoming, which ranked at the top as the most entrepreneurial state, around 1 in 20 people made a new business application, while runner-up states with larger economies like Georgia and Florida had rates of 1 in 30 and 1 in 35 new applications, respectively.

But job losses from COVID-19 do not tell the whole story. According to the University of New Hampshire, Wyoming experienced a negative 5.5% job growth in the last year while CardConnect’s second most entrepreneurial state, Delaware, saw a 3.3% job loss in the same period.

These states, Lott says, have what can be considered challenging environments to launch a new business in the first place. What the CardConnect study’s findings suggest is that this interest in starting a business may also be a pent-up desire among residents in some of these difficult states.

To help gauge this interest, CardConnect examined the Google search results for how to “start a business with no money” and how to "start an online business." It found was that the states with more favorable business climates, like Florida or Georgia, scored higher, while those like Wyoming and Delaware were further from the higher rankings.

"While Wyoming has seen more new business applications per person in the past year than any other state, it could also be considered as one of the toughest states to start a business in," said Lott.

"It’s a similar story in Delaware, but on the other hand, budding new business folk in Florida and Georgia may find it much easier to translate that interest into reality."