Pint-Sized Startups Pack a Powerful Punch: The Growth of Small-Scale Startups Post-Pandemic

Last week marked my two-month anniversary as CEO of LegalZoom . While I’ve been an investor, stakeholder, and board member at LegalZoom over the last decade, I now have a close-up look at the amazing work our team does on a daily basis to help small businesses thrive. One of the things that stands out most to me is the complexity of starting a business. It has become far more simple than when I started my first company back in 1998 but is still incredibly complex. I am proud of the work the team at LegalZoom performs to provide ongoing support to small business owners as they grow their businesses. These individuals are the bedrock of our economy and are often building their businesses by themselves - or if they’re lucky, with a few friends and family helping.?

The Wall Street Journal recently reported on what they described as “pint-sized startups,” the newest crop of small businesses that are even smaller, many of which have no official employees or continue to decrease in size. In light of what we do at LegalZoom, I found this to be an interesting perspective but it painted a slightly different picture than what our extensive data on entrepreneurship shows.

LegalZoom counts nearly two-thirds of our business customers as solopreneurs, smaller than what the WSJ described as “pint-sized startups,” defined as about five employees or so. Our most recent research shows that, as compared to small businesses more generally, our solopreneurs have started graduating to the role of job creator, expanding their teams and enterprises. To be sure, our business owners have higher intent than others who have not incorporated but, across the first half of 2024, our small businesses incrementally added on average 1.5 employees, employing more than 3 workers per business. Why is this statistic different from what the WSJ reported? Perhaps it is the methodology. Small businesses are scrappy, independent, and work differently than large corporations. For employment, when you check payrolls for small businesses, you often get a very different picture than when you survey them. Traditional payroll data (ie, W2 information) rarely gives an accurate viewpoint; our data came direct from the businesses. That data paints a very positive picture of “pint-sized startups” and their impact on the economy.

This is not only encouraging, it also supports the common perception that small businesses drive the majority of job creation over the long term. Moreover, with the U.S. Treasury reporting that 70% of small business leaders are expecting revenue to increase over the next year, the likelihood is that we will see more hiring in the near future.?

We continue to work on research to dive deeper into the state of small business formations so I suspect there will be much more insights ahead.??

If you are an entrepreneur, small business owner or a proud “pint-sized startup,” we want to hear from you so please tell us your thoughts. #Entrepreneurship #SmallBusiness #StartupTrends LegalZoom