New businesses started by entrepreneurs who already had a job nearly doubled from 2022 to 2023, according to a survey of 1,345 business owners from payroll company Gusto. The survey found that 44% of new businesses in the US started as side hustles in 2023, up from 27% in the previous year.
One of the reasons for this increase is uncertainty around the direction of the economy, which made people hesitant to give up something they had established in order to pursue something they wanted. According to Liz Wilke, principal economist at Gusto, hybrid and remote work options have given employees more space and time with fewer commutes to explore their entrepreneurial potential.
Generative AI, such as OpenAI’s ChatGPT, which emerged in November 2022, has also helped business owners set up their ventures and develop products more quickly last year. The survey showed that over 76% of new companies are using generative AI tools for marketing purposes. However, Wilke pointed out that while AI may have played a role in some instances, it was not solely responsible for the increase in small businesses started by existing employees.
In terms of age demographics, younger workers were more likely to start a business as a side hustle. Nearly half (49%) of founders aged 25-34 were working for someone else while starting their own businesses. This compared to just over half (51%) who were still working for their employer at the time of the survey. In contrast, only 43% of those aged 45-54 and just over one-third (38%) of those aged 55 or older reported having a job while starting their companies.
