Guest Post by Alan Godfrey, CEO of Swyft Filings
Launching a new business during most years is difficult enough. Add in a pandemic, and starting a company becomes exponentially more complicated. In 2021, many industries faced challenges that might cause prospective business owners to reconsider.
Entrepreneurs continued to be resilient and rose against any roadblocks. The following five sectors saw the most growth in new business applications in 2021, according to the annual State of Swyft Industry Report. The report, which reviews data from new business applications filed across the United States, offers insight into the status of the country’s top industries.
Though the volume of new business applications in warehousing was the lowest of major sectors in 2021 — coming in at 18th — the sector saw the most substantial year-over-year growth. According to Swyft Filings’ data, this amounted to a 46.43 percent increase since 2020 in business applications.
Reasons for the exponential growth in applications tie into increased e-commerce. As online shopping became common during the pandemic, new business owners could see a straightforward way to open and run successful warehousing businesses.
While the warehouse industry experienced steady growth before the pandemic, this percentage jumped significantly as warehouses saw an increased demand for goods of all kinds. COVID-19 spikes caused stores to place larger grocery, pharmaceutical, and household product orders. Quick delivery also fueled growth as new warehouses and fulfillment centers opened throughout the United States to meet demand.
At the same time, the capabilities of warehouse automation have made opening a warehouse more enticing for many new business owners. According to the U.S. Census Bureau Department of Commerce, the U.S. retail e-commerce sales estimate for the fourth quarter of 2021 increased by 1.7 percent.
While new business owners can cash in on the increased business in warehousing, challenges remain. As retail footprints shrink and more customers purchase online rather than brick-and-mortar, warehouses must store larger quantities of products. This will require locating and securing affordable and ample space to handle the influx. These shifts will also make embracing automation essential.
The transportation industry has experienced consistent gains in business applications over the past two years. In 2020 and 2021, the sector hit #2 in growth rank, increasing 31.92 percent in 2021 and second in volume.
E-commerce played an integral role in expanding the transportation industry, particularly freight. Over the last two years, there has been an increased need for transporting various in-demand products, including fast fashion and home goods. With online shopping looking to grow year-over-year, there will likely be an increasing demand for transportation services.
According to ReportLinker, the transportation services market expects to reach $7.8 trillion by 2027. This growth will spur the need for increased tracking and logistical technologies. It will also demand that transportation companies incorporate the latest in automation technology.
Fuel prices will continue to create challenges for freight companies in the short-term and foreseeable future. This will require new and established business owners to find ways to cut shipping costs wherever possible and adjust in other areas to offset.
The rental and leasing industry ranked #3 in growth in 2021, with a 26.85 percent increase in new business applications. Last year, the sector also ranked 11th for volume in new business filings.
The total volume of new business formations in the rental and leasing industry is modest compared to other industries tracked by Swyft Filings. However, the sector grew exponentially throughout 2021, and we expect it to continue doing so. According to Business Wire, they project the global leasing market to go from $1,352.88 billion in 2021 to $1,528.03 billion in 2022 and, by 2026, hit $2,403.84 billion.
The rental car sector significantly impacted the 2021 rental and leasing industry growth. When the pandemic cut the need for domestic travel in 2020, rental car companies sold vehicles. A year later, in 2021, demand increased once again as Americans became vaccinated and started traveling. The limited supply of cars led to increased rental prices. Data collected by Auto Rental News shows rental car revenue for 2021 at $28.1 billion, a 21 percent gain over 2020.
After ranking 18th in growth in 2020, the insurance industry jumped up to #4 in 2021. Insurance came in nearly last in the volume of new business applications but saw a 24.37 percent increase in yearly applications.
A study by Deloitte points to much of the insurance industry’s overall growth in 2021 stemming from carriers benefiting from the technological investments and operational efficiencies spurred early on by the pandemic. Insurance providers substantially ramped up digital offerings in response to the necessity of being more nimble and agile in an overnight virtual market. This resulted in exponential growth in 2021. The ability to operate more efficiently and effectively in the digital insurance arena likely attracted new business owners to the industry.
Now that pandemic restrictions have lifted, moving forward, insurance companies will need to ensure that the lifeblood of their business, customer service, remains a top priority. Though business was primarily conducted virtually during the pandemic, there is a current need to reassess customer interactions. For instance, many insurance companies are now considering the value of incorporating face-to-face interactions once again.
The accommodations industry saw substantial growth in 2020, but that slowed the following year considerably. In 2021, the sector ranked 16th in the volume of new business applications and placed in the #5 spot in growth, increasing 15.21 percent. The result was new business applications that were flat and behind other industries.
It’s no secret that accommodation businesses across the board faced monumental challenges because of COVID-19. While historic lows in property loans and grants in 2020 likely resulted in business applications for new accommodation-related businesses, it hit the industry hard. A dramatic slowdown in travel and a labor shortage has left many accommodation businesses fighting to remain viable.
A 2022 State of the Hotel Industry Report by the American Hotel & Lodging Association (AHLA) confirms that hotels struggle to keep their doors open. However, with the U.S. Travel Association predicting domestic leisure travel will surpass pre-pandemic levels in 2022 and beyond, the landscape will likely change over the coming months.
To stay open, today’s accommodation companies will need to embrace digital trends that help ensure consumer safety yet provide convenience. Closing the wide labor gap will also be a necessity. New business owners up for the challenge and with an eye to the future are likely to dive into the accommodations industry, eyes wide open.
Through technological advances and digital transformations, businesses adapted to keep their doors open and continue growing despite setbacks. These five industries are on track to continue their exponential growth, with more and more entrepreneurs ready to jump in on the opportunity.
Alan Godfrey is the CEO of Swyft Filings, an online incorporation, compliance, and SMB services provider based in Houston, Texas. The company analyzed more than 63,000 new business applications filed in 2020 and 2021 to determine the year-over-year potential for new business growth and volume. You can read the complete analysis in the Swyft Filings 2021 State of Swyft Industry Report.
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