New entrepreneurial business booming in California

OAKLAND, Calif. - It's true that California is seeing a lot of high-profile layoffs, and some folks are choosing to leave the state. But one undeniable trend has gotten very little attention: Since the end of World War II, through thick and thin, California has continued to be the leading incubator of new businesses.

And business is a-boomin' in California with record level applications for small businesses, state data shows. 

Edith's Pie, formerly a pop-up, moved into a brick and mortar location on 21st Street in uptown Oakland.

"My business partner and I quit our jobs at the same time to work on this project, we realize it's risky," said Edith's Pie co-founder Jeffrey Wright. "A lot of people from my generation only have that option. And by taking the step from not working for people and taking the full plunge into the pop-up, it forced us to be good."

Despite widespread white collar and tech layoffs, employment lawyer and former Employment Development Department director Michael Bernick said many Californians are staying here — but are changing their careers by hiring themselves.

"It shows that entrepreneurship, in terms of new business starts, in California to be up in 2023, above 2022 even well above the pre-pandemic time," Bernick said.

The latest figures show that for the first six months of 2023 applications for new Golden State businesses have risen to 278,000. That compares to 232,000 in the previous year and 180,000 in 2019, the very strong pre-pandemic year.

"I'm not surprised," Wright said. "I think a lot of people are ready to take hold of their own future saying."

Most of these new businesses appear to be remote work-based, service-rendering firms, such as information, consulting, direct-to-consumer or direct-to-other-business functions.

"It's really the entrepreneurship that driving much of the strength of our economy," Bernick said.

But it's not all sunshine and rainbows for small businesses, note this: four out-of five of these new businesses indicate they will be 'doing it alone,' solo operations, starting with just one employee.

"I think that reflects the cost and difficulty and, really, dysfunctional employment laws we have here in California," Bernick said.

That strongly suggests that cutting the red tape and bureaucratic barriers to opening and running businesses will make those growth numbers even greater.