Recession Spawning New Entreprenuers

February 17, 2010

During a recession, the threat of layoffs and fears about money weigh heavy on many people's minds but for others a downturn in the economy can be a huge opportunity. While some frugal souls hoard their money and subside on a steady diet of Ramen noodles and macaroni and cheese until the storm passes, others take the bull by the horns and create their own opportunities.

Deborah Sweeney, CEO of MyCorporation, a provider of online document filing services for clients who wish to form a corporation or limited liability company, there are many mavericks out there who have used the recession as an opportunity to start their own businesses.

"We are seeing a lot more younger people who have been laid off come to us for help," Sweeney said. "These people are 35 to 45 years old and are risk takers. Instead of going back into the market and looking for new jobs they are deciding to start their own business and create their own opportunity."

Whereas before Sweeney's typical client was significantly older and looking to create a corporation, today Sweeney sees a significant increase in people looking to form LLCs, or limited liability corporations.

"LLCs are often considered to be a simpler entity type, and simpler to maintain since no stock changes hands. People are finding that they don't need the structure of a huge corporation to start small businesses."

Sweeney said that many of the new entrepreneurs she is working with are people who were laid off from large companies who have decided to forgo a job search and go out on their own. Experts in their field, many of these people are starting LLCs to work as consultants. Sweeney has also seen an increase in people starting eBay-based businesses, as well as those she calls "Mompreneurs," or women forming businesses to sell crafts, accessories and other handmade items online.

"People used to think that they needed capital or a store front but not anymore. Now many people are throwing up a website and trying to get their names out there," she said. "A lot of people are running their businesses out of their garages because they don't have investors or the overhead needed for an office. There is a lot more price sensitivity out there now but people are still going for it."

Below, meet three entrepreneurs who have become small businesses owners, recession be damned.

Scrapbook Mamma

When MaryBeth Reeves was laid off from her job at Starwood Hotels and Resorts Worldwide in December, 2008, she felt a combination of disappointment and relief.

An employee of the company for 11 years, it was a life adjustment, for sure. While the mother of three-year-old quadruplets admits to being initially hurt by the layoff, the opportunity to spend less time at the office was soon a welcome change.

"While I love working, being an employee of a big company was not conducive to having a family with small children," said Reeves, 40. "I wanted to find a way to continue to work, on my own terms and to be able to spend the time I needed with my children at the same time."

And from being a mom, her company was born.

"Making photobooks was a hobby I did as a new mom, and gave as gifts to family and friends," Reeves said. "The first time someone offered to pay me to do something similar for them, I thought it might make a good business. I had a long-term plan to start a business at some point before the layoff, but my timing was significantly escalated."

Reeves' company Scrapbook Mamma, which Reeves funded with a portion of her severance package, creates custom photobooks and scrapbooks for people who want to preserve their memories into a keepsake but who don't have the time or inclination to do it themselves.

While Reeves admits that there have been stresses along the way--specifically being limited by a lack of capital--she says that that for the most part the venture has been a success. She predicts that her company will show a profit in the first quarter of 2010.

"One of the best parts of starting my own business in this economy is that even given all the doom and gloom, there are still plenty people who are interested in buying my services. Things are going pretty well, and I hope that if they are going well in the not so great times, they should be excellent when the economy gets better."

Living Plus Size

The idea for Jared Nuessen's business had been growing for some time, but with a full time job as a field engineer for GreenFuel Technologies, long hours at work left little time to get his concept off the ground.

When he was laid off in January 2009, unemployment provided Nuessen with the time he needed to cultivate his idea to create, a hub for plus-size shoppers that launched recently.

"With out a doubt, the best ideas for the site have come during unemployment," he said.

Neussen, 28, leapt in with both feet, using his own savings to fund the project.

"I guess my natural instincts are a little skewed compared with most, because intuition told me to save during the 'good times.' Because of that saving, it allowed me to make a move on a great idea during the 'bad times.' allows shoppers to cull vendors for age- and gender-specific clothing, and offers a section of sales, discounts and coupons to offer shoppers money-saving options during the recession.

"Another feature I'm very proud of is our 'Discussion and Hot Topics' forum, where our team of experts answers questions and offer advice on fashion, lifestyle and health and fitness," he said. "It's a great place to ask questions and get answers promptly. People can also visit our 'Lifestyle' section for plus size dating, health and fitness, size acceptance, accessories and furniture."

But more than money, it is often confidence that prevents entrepreneur wannabes from starting a business. Along with his savings, however, Nuessen was rich with confidence.

"Why not," he said. "I'm not married nor do I have any kids, I have some savings to invest and I've always wanted to start my own company. Sure, people aren't spending money as freely as they were three years ago, but if you offer consumers something that's a great benefit to them you're going to see results. There couldn't be a more perfect time to start your own business."


When the recession hit, Ethan Anderson did the unthinkable: he quit his job. Anderson and two friends, all former Google employees, were well versed on the Internet's ability to connect people. What they were also well aware of was a service that the Internet was lacking.

"We saw great progress in so many areas of the Internet, from travel planning to music distribution," Anderson said. "But people were still going about finding local service providers the same way they have for the past 50 years, by asking around to their friends or looking in the phonebook. The best the Internet had really done was Craigslist, which hadn't changed since 1998. So we came up with an idea that combined aspects of Yelp (ratings and reviews), eBay (service providers bidding for a job) and OpenTable (consumers booking appointments online) to completely change the way people find local services."

Anderson, 33, founded Redbeacon along with Yaron Binur, 31, and Aaron Lee, 35 earlier this year.

Redbeacon will find the right business or person to handle any local service need. The process is simple: request a service--for example a gardener, a carpet cleaner or a dance instructor--and interested local providers will receive your request and respond with a bid to do your job at the time and place you specify.

Customers can view information about each service provider, how much they'll charge for the specific job and book appointments online with the provider of your choice. Best of all, it's completely free to use.

From the service provider side, Redbeacon sends local businesses job leads from customers who need their services and allows the providers to bid on the job in question. If the customer selects them, then the job gets scheduled online and the service provider pays Redbeacon 10% of the job's value.

"It's an entirely new way to do marketing," Anderson said. "No more wasted advertising spending and no more paying for leads that don't convert into actual jobs. With Redbeacon, it's a risk-free proposition to acquire new customers at a time when most small businesses desperately need to increase their sales."

As you might expect from a man who quit his job during a recession, Anderson sees this as a terrific time to start a company, both financially and as a way to help others.

"The great thing about launching at this time is we feel like we can really help the many underemployed professionals and small businesses who have lost their access to the marketplace because they were laid off or because they lost a portion of their existing customer base due to the recession," he said. "They're willing and eager to give Redbeacon a try in the hopes of rebuilding their local businesses or just earning some extra money until they land a full-time job somewhere else."

Written by Heather O'Neill

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