New research from payroll company Gusto reveals that the number of small businesses started by entrepreneurs who already had a job nearly doubled in 2023 compared to the previous year. According to a survey of 1,345 business owners, 44% of new businesses in the US began as side hustles in 2023, up from 27% in 2022.
A quarter of respondents said they were working full-time day jobs while starting their companies, and 19% were working part-time jobs. However, uncertainty around the economy’s direction made people hesitant to give up something they had established in order to pursue their entrepreneurial aspirations.
Generative AI tools like OpenAI’s ChatGPT may have helped business owners set up and develop products more quickly last year. The survey showed that more than 20% of new companies are using generative AI tools, with the majority (76%) employing them for marketing purposes. A smaller number (41%) used AI to communicate with sales leads, and 26% used it for customer service.
Gusto’s principal economist Liz Wilke explained that hybrid and remote work could give employees the space and time without commuting to explore their entrepreneurial potential. While generative AI may have helped some side hustlers cut down on time commitment at the start of their businesses, Wilke believes it is not solely responsible for the increase in small businesses created by entrepreneurs who already had a job. 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, while over half (51%) were still employed by that company at the time of the survey. In comparison, only 42% of those aged 35-44 said they had a job while starting their companies, while 43% of those aged 45-54 and 38% of those aged 55 or older did as well.
