Amid uncertainty, more employees become their own bosses

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Lily Melio has a busy life, but she’s never afraid to go to work.

Most days, the doors to Lily’s open at 10 a.m., and 22-year-old Melio works in her colorful boutique in Clinton, Conn., stocking products, placing orders, and attending to customers who are often surprised by her age.

“It’s always so much fun and I feel so creative when I’m there,” Melio said. “That means a lot to me.”

Last summer, her life changed. She had just graduated from Emmanuel College in Boston with a degree in marketing and was finishing up more than 100 job applications. Then she asked herself a question that had been spinning around in her head for years. “What if I started my own business?”

She now runs a website, a store, and a growing following on social media. Lily’s boutique is profitable.

She did what many Americans plan to do in 2026, even as the U.S. labor market shows signs of recovery. About 3.1 million Americans filed paperwork to start a business in the first half of this year, according to Census data, an increase of nearly 17% from the roughly 2.6 million Americans who filed paperwork during the same period in 2025.

“There are a lot of different factors that could explain why we’re seeing so many new start-ups, but it’s very clear that this is not just a flash in the pan,” said Whitney Ward, director of communications at Registered Agents, which provides business formation services and tracks business creation. “This is a very important and very strong trend that we see every month.”

Why is small business creation booming?

U.S. employers added just 181,000 jobs in a year, according to revised data from the Department of Labor. Meglio said the free time he had while waiting to hear from potential employers was the impetus for opening Lilly’s.

“Even if it didn’t work out, even if I didn’t get the loan I applied for, I still had time to think about it, put in the effort, and see how far I could go,” Melio said. “I wouldn’t be surprised if many others happened to be in the same situation.”

The second reason behind the growth in business creation may be that as the prices of essential goods have increased, some of the one in three Americans who started side hustles to make a living have turned them into full-fledged businesses.

“That’s what happened to me,” said Tori Dunlap, a money expert who quit her 9-to-5 job three and a half years after founding Her First 100k, a financial education platform. It’s now her full-time job and a multi-million dollar business. “If you’re interested in entrepreneurship and being your own boss, a side hustle is a great way to try it out. It’s a great way to test your own skill set. It’s a great way to build the skills you need without asking too much from a company or deciding if this is what you really want.”

AI: Threat or assistant?

Another reason behind the growth could be that employees want to take their destiny into their own hands amidst the fear of layoffs. According to a Harris Poll survey conducted for outplacement and career development firm INTOO, 61% of employees report feeling that way in 2025.

This year, more than half of Americans are worried that they or someone in their household will lose their job due to artificial intelligence, a Reuters/Ipsos poll found.

But Ward said that for some small business owners, AI has gone from being a threat to being a useful tool.

“Marketing, bookkeeping, social media, these can all now be helped with free AI programs that are very easy to use,” Ward said. “Before, all of these things had to be done by one business owner, and it was a lot of work. I think that scared some people away. And they decided not to pursue their ideas because they didn’t want to bite off more than they could chew. But now it’s much easier to start a business.”

Contributing to the increase in women-owned businesses

The number of business applications grew gradually throughout the 2010s, rapidly increasing in 2020 and 2021 as the COVID-19 pandemic kept people at home, and has accelerated since then.

Contributing to this trend is the increasing number of women starting businesses. According to Wells Fargo’s 2026 report, from 2022 to 2025, the number of women-owned businesses increased by 12.1%, from 14 million to 15.7 million. Over the same period, we found that the number of male-owned businesses increased by 6.3%, from 19.2 million to 20.4 million.

“While it is too early to know how many of these companies will survive in the long term, this surge suggests that the entrepreneurial spirit kindled during the pandemic is becoming a more permanent feature of the U.S. economy,” the Wells Fargo report said. “Women in particular were drawn to entrepreneurship as a way to gain flexibility and regain financial stability after experiencing unfair job loss during the pandemic.”

Dunlap recently hosted a workshop titled “Quit Your Job in 90 Days,” where most of the audience members were women. The event aimed to teach participants how to find a “bridging business,” or something that will help them quit their 9-to-5 jobs.

“Women are waking up to the fact that work is not meant for them, especially if they are mothers, especially if they are caregivers, and especially if they want some time, freedom and autonomy in their lives,” she says. “That’s very hard to find in a traditional corporate environment.”

What new business owners need to know

Dunlap said the first thing he advises future small business owners is to identify their “ramen number,” or the minimum amount of money they need to earn each month to make ends meet.

“If I’m just going to eat ramen, what’s the minimum expense?” Dunlap said adding a business would ideally “make you about 30% more than that because of the taxes and expenses you have to pay.”

She said another piece of advice that sounds obvious but is important for new business owners is that you have to put yourself out there.

“I don’t think people understand the amount of pitching and just being unashamedly loud.”, Dunlap said. “You want your business to succeed, but if you’re not the loudest person in the room about it, it’s not going to work.”

Meglio said the biggest challenge he’s faced since opening Lily’s is learning to be a boss to his employees, but he would advise future business owners not to doubt themselves.

“If I can do it, you can do it too,” Melio said, adding that it’s not easy. “The only question is whether you’re willing to put in the work, and you really want to do it enough to make it happen.”

Contact Rachel Barber rbarber@usatoday.comFollow her on X @rachelbarber_and subscribe to her newsletter Making More of Your Money here.

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