Recession Spawning Entrepreneurship

By Staff

March 2, 2009

As layoffs increase, many skilled and experienced unemployed workers are launching their own small businesses.

The Nashville Business Journal reports that the number of new businesses in Tennessee's Williamson County has surged, despite the economic downturn. In December, the number of new business licenses was more than four times higher than one year before.

"I'm seeing a much larger portion of people who are kind of being unexpectedly thrust into this," said Jeff Cornwall, the Jack C. Massey Chair in Entrepreneurship at Belmont University, who was quoted in the article. "Interestingly, what we have found in recessions is that many of these folks that had never intended to be entrepreneurs get the bug and get that lifestyle, and never want to go back even when the economy picks up."

Randy Blue, who was laid off from his job as director of IT portfolio management at a healthcare company, began his own consulting business in Nashville after months of looking for work. He built his own Web site and now works with a handful of clients.

To be sure, these are challenging times to launch a new business. A survey released last week indicated that many entrepreneurs are worried about the recession, although the number has decreased slightly. Crain's New York Business reports that according to the American Express OPEN Economic Pulse survey, less than half of 600 small business owners polled say they're operating at lower profit margins, compared with 56 percent in August. Additionally, two-thirds of small business owners say they are concerned about the economy this year, down from 71 percent in August.

Yet despite the difficulties of running a small business during an economic downturn, the survey indicated that 80 percent of small business owners believe that the rewards and opportunities of running their own business outweigh the risks and challenges.

"Small business owners have looked for efficiency and they've cut to the bone," noted Alice Bredin, a small business advisor to American Express OPEN, who was quoted in Crain's. "But they already have an eye towards what they're going to do when things turn around."

Kyle Brown, who launched ExpressoGoGo, a business selling coffee drinks at two drive-through windows in Houston, is a case in point. The Houston Chronicle reports that even though Brown acknowledges the difficulties of launching a business during tough times, she is already looking into opening up second location. She points out that despite the economic downturn, people still will pay for coffee.

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