The pandemic has sparked a surge in new business formation in Tennessee. The numbers have been on a steady climb for the last decade. But the first quarter of 2021 was like nothing the state has seen.
The Tennessee Secretary of State, who oversees business filings, released its quarterly report on Thursday. The number of new LLCs and for-profit firms shot up by 19,652, a 55% increase. Before 2020, the largest quarterly growth was around 15%.
Economist Bill Fox from the University of Tennessee says much of the activity appears pandemic-related, like new online stores or self-employment attempting to grow into something more.
“Certainly many of these new filings will be small, for sure. Maybe a single person or a family or a household. But of course, big businesses start small.”
Business creation is seen as a leading indicator of economic activity. But partly, the new filings are just replacing how many companies went out of business in the last year. The new data shows that 3% of firms didn’t file their annual reports this spring, signaling they may end up dissolving.