'People are betting on themselves': Iowans starting new businesses at record pace

If you had told Chelsa Smith two years ago that she would not be working her 9-to-5 job but selling sourdough out of her Des Moines home, she just maybe would have believed you. 

Then came a pandemic.

Even so, add a passion for bread baking, stir in a year-plus lockdown, mix into that a touch of time, et voilà. On Jan. 1, 2021, Smith registered Bread by Chelsa B, her  bakery specializing in artisan sourdough bread.

“I’d hate to call it serendipitous,” she said, “but things aligned in a way that allowed me to keep naturally growing.”

New ventures like Smith's are up across the state: Bread By Chelsa B was one of 33,260 new business filings the Secretary of State's Office has seen in the past year — that's 36% higher than the numbers in the previous fiscal year. The sharp influx of new filings is not only up from 2020 when large swaths of the economy suffered and multiple businesses were forced to shut down; new business registrations are even up from 2018 by 41%. 

A new record of 2,940 filings in a month was set this January, only to be broken again when it peaked in March with 3,579 new business filings, according to a news release from the Secretary of State's Office. The previous record for most new business filings in one month was 2,512 in May 2019.

The pandemic provided a "unique circumstance" for Smith, who began baking long before it became a pandemic hobby. She previously worked as a logistics merchant, managing online sales and costing items at the men's clothing company Todd Snyder. In April, she decided to quit her job and make bread baking her full-time occupation.

"My kids were home and I needed an opportunity that was going to allow me some flexibility,” Smith said. “I was working 50 hour weeks — and I loved it. But I didn't know how long I could do both the baking and the full-time job, and be a parent, and be a partner, without really hitting burnout." 

New business owners want to build 'something they can trust'

Gravitate Coworking, an office workspace company with four locations across Iowa, is not deaf to the buzz of business. Offering a shared workspace, the company attracts a lot of entrepreneurs who do not have central offices. 

“We are as busy as we've ever been," said Geoff Wood, CEO of the company. "I don't know if it's summer or what, but our team is operating at a level that we haven't even done pre-pandemic.”

More:Ten tech startups moved to Des Moines this week. Here's what they make.

However, while the bustle of the entrepreneurial space is undeniable, the numbers require a more nuanced interpretation. 

New business filings are a paperwork metric. Registering a business at the Secretary of State’s Office is not synonymous with obtaining a business license, opening a storefront, or selling a product. Also,  according to Iowa law, sole proprietorships are not required to register with the state, excluding them from that total. They instead may file for a trade name in the county where the business is registered.

Iowa’s unemployment rate during the pandemic rose as high as 11.1% in April of 2020. Such periods of economic downturn cast a net of uncertainty which can provide a catalyst to turn towards self-employment.

“People want to build something that they can trust because they own it or they know it,” Wood said. “We saw a lot of that in 2007, 2008, 2009, coming out of the last big economic downturn. Now, a lot of the new companies we saw that started coming in at that point have gone away.”

That’s excluding Whatsapp, Venmo, Uber and other now-major companies founded in the wake of the Great Recession.

“The economy improved, and people went back to work," Wood said. "So, just because we're seeing that doesn't mean that it'll be around forever.”

Iowa saw a 6% increase in the number of new businesses in the fiscal year of 2010 (Oct. 1, 2009 to Sept. 30, 2010) coming out of the Great Recession, a small number compared to what the state is witnessing today.

This marks a difference between what is happening in Iowa’s entrepreneurial community a decade ago versus now. Today, the Des Moines metro boasts an abundance of new infrastructure for its entrepreneurial community: Companies like Gravitate Coworking, Maple Ventures, Global Insurance Accelerator, and other organizations were built to assist new business. Iowa also has two venture capital funds, Next Level Ventures in Des Moines and ISA Ventures in Cedar Rapids, to help startups flourish.

Pi515, Summer Startup Tour, others help startups 'take the chance and do this'

The success of Bread by Chelsa B is not only a culmination of Smith's previous work experience in online sales or the influence of her social circle of entrepreneurs, she said: “The (Greater Des Moines) Partnership and the Small Business Association have been really supportive. There's a lot of resources in Des Moines that I've called upon."

"We are seeing an uptick in calls (from) people reaching out or starting businesses," said Diana Wright, a startup community builder working at the Greater Des Moines Partnership. "I think people are betting on themselves."

Wright’s work with the Des Moines startup community led her to pioneer the Summer Startup Tour Series, a monthlong series of free events fostering a community and connection amongst the city’s creatives and makers. Her work with new business owners across the city led her to understand that coming out of the pandemic it was important to realize the support system present for entrepreneurs in Des Moines. According to Wright, there's no better way to show community than bringing people together physically.

The series has hosted two events so far, featuring Wood, the Gravitate CEO, at the first event. The next will be 4:30-6:30 p.m. Thursday, July 22 at Mainframe Studios

“Through Covid, I think people realized they really want to create the quality of work in life," Wright said. "And entrepreneurship, a lot of times, can do really that."

Safie Jackson, an Iowa State University student studying kinesiology, recently started her business, Safie’s Souffle Creations, selling natural body butters and oils.

Jackson, 21, took an entrepreneurship course with Pi515, a nonprofit educational program, earlier this year and soon after decided to start her business in June.

“I thought (the timing) was perfect," she said. "School was out, I was going to have a lot of time, the class material was still fresh, so I thought I’m going to take the chance and do this."

Jackson had contemplated starting her business for a while. Having grown up using natural oils, watching videos on other people online creating skincare products, and seeing people in her community start their own businesses, she was inspired to start something of her own. She is currently in the process of registering her business and is running an Instagram page to market her products.

"I think people are at home a lot more and have more time to be creative," she said. "That time to explore your creativity can give you confidence."