Business creation is the process of transforming a creative idea into a full-fledged business. It involves making key financial decisions, completing a series of legal activities, and creating a plan that will guide the business through its early years.
A successful business is often based on a product that fills a specific need in the market. For example, people looking to make money from their passion for a certain sport might start an online sportsbook or a training program. Entrepreneurs must be resilient and dedicated if they are to succeed. This is especially true when opening a new business during a difficult economic period such as the COVID-19 pandemic.
Until recently, there was little systematic information about the process by which people initiate business ventures and bring them to fruition. But now, longitudinal studies that track entrepreneurs as they begin a new business provide rich descriptions of the firm creation process. These studies also offer substantial evidence for adjusting policy to better facilitate the emergence of entrepreneurial opportunity.
Some economists believe that downturns are good times to open a new business: competition is weak, inputs (labor, supplies) are cheap. Others argue that downturns are simply a blip in the cycle, and that the rate of business creation should return to its pre-recession trend. Whatever the case, it is clear that stronger rates of business creation are a necessary component of recovery. Bipartisan policymakers are working to determine the best policies to support current and aspiring business owners.