Human history has been marked with certain great events that not only changed the course of life for people globally but also redefined existence in many ways. These mega events were almost always unprecedented and humans were almost each time, unprepared. It is out of these sheer unprecedented events that humans chose to react in different ways and add nuances to human response and behaviour that were never observed before. From the two great wars of the past century to the current COVID-19 pandemic, humans and their grit have been tested and that has definitively had consequences for the economic arena as well.
Looking back at the past century, it is evident that human beings generally respond to big shocks in two primary ways; their either recoil or get scared of taking or facing risks like they did during and after the Great Depression (evident from the decades of fear of the stock market), or they simply realize that shocks are bound to arise and taking risks is the only way forward. This response in terms of the economy is similar to how human beings generally respond to threats or unprecedented circumstances in life too, they either face the challenges head on or they choose to hide from them.
An instance in history when humans fully embraced the changes brought on by shocks was during the roaring twenties in the aftermath of the Spanish flu. When business activity arose and people began stepping into the marketplace with more zeal than ever before. The situation brought on by COVID is perhaps one of the biggest- if not the biggest, shock for humans worldwide. Facing a pandemic that took the world by storm in mere weeks with infrastructure that was unprepared to say the least, the world suffered from the consequences in every aspect of human life including the economy. However, despite the fact that many businesses shut down and the world saw record rates of people being laid off and sheer unemployment, the situation seems to be going more similar to the roaring 20s than anything else, and the main reason is that entrepreneurship rates are definitively up.
If anything, the pandemic has forced humans to rethink business and operational models. Despite the past year and a half being increasingly hard on businesses and people alike, people have found new business applications, new ways of approaching business problems and increasingly innovative ways of providing their service to consumers. According to the U.S. Census, rates of entrepreneurship arose by a stark 38% during 2020 compared to 2019. Another interesting fact found by the U.S. Census is that a larger chunk of the new businesses is characterized by organizations that are relatively small-scale, contractual or related to consulting. Data shows that most of the new businesses will probably stay small, focus on remote work and not hire a lot of workers, a model that gained dominance thanks to the pandemic.
Perhaps one of the key takeaways during the pandemic for people across the world has been that there’s more than one or two ways of doing things. No business model is perfect, regardless of how efficient it may be and the pandemic has shown us that the conventional way of doing things is not always the right way. With the growing spread of applications and the e-business model risk taking and innovation has never been more fruitful than it is now. Provided the impacts from an economic risk perspective will be observed over the coming years in detail, the stark rise in rates of entrepreneurship shows that there is opportunity in every challenge waiting to be capitalized.
