SPRINGFIELD, Ill. (NEXSTAR) — Illinois ranks as one of the fastest growing states in the nation for new businesses to open up shop, according to new information from the U.S. Census Bureau that tracks new start-ups across the country.
According to the Business Formation Statistics, Illinois entrepreneurs launched 198,827 new businesses in 2021, up even higher than the 170,400 new companies formed in 2020. The 2021 start-up success represents the highest number of new businesses on record, dating back when the figures were first compiled in 2004.
The Census Bureau tracks IRS data to monitor how many new business owners file papers to register a new business entity each year.
Only six states opened more businesses than Illinois in 2021. Heavily populated states Florida, California, New York, Texas, and Georgia saw more new businesses formed last year, but Illinois’ rate of growth jumped far higher.
Seven smaller states, mostly located in the south, saw a faster growth rate of new start-ups. Mississippi, Georgia, South Carolina, Louisiana, Alabama, Wyoming, and Delaware are the only states to beat Illinois in that category.
Illinois’ initial start-up spike mirrored national trends when a flood of workers signed up to register for a federal tax ID in the summer of 2020. Sole proprietors who practiced business in Illinois without a tax ID number needed one in order to qualify for federal stimulus relief. However, in 2021, Illinois’ sustained growth rate outpaced the national average, exceeded all other states in the Midwest, and every other large state in the country.
Illinois opened 69% more new businesses in 2021 than it did in pre-pandemic 2019.
“The fact that we’re doing even better than we were in 2019 I think really shows that there’s big growth here and a lot of folks are starting a new business,” Illinois Department of Commerce and Economic Opportunity Director Sylvia Garcia said.
Kevin Lust, the director of an Illinois Small Business Development Center in Springfield, said more workers are willing to take a chance on themselves after what they endured during the pandemic.
“Most of the folks that we’ve dealt with in the last two years, who have been interested in starting their own business, have taken the opportunity of the pandemic,” Lust said.
“They’re willing to make that bet, both in terms of their personal finances as well as the inertia of their existing careers,” Lust said.
He described a wave of workers who ventured out on their own after bearing the brunt of the pandemic on the job.
“Disgust is a very powerful motivator,” he said. “So sometimes people just get sick of it. They’ve worked for somebody else. They want to do their own thing, and they just get sick. That’s the trigger. ‘I’m done. I’m disgusted over whatever,’ and they start their own thing.”
Many of the most popular sectors for start-up growth were in retail, warehousing, consulting, IT, construction, and transportation.
“Across the board, we’re seeing that Illinois is a great place for folks to start their new business,” Garcia said.