Entrepreneurship up in down economy
One can think of the recession as a kick in the pants for would-be small business owners.
People who have been laid off as a result of company cutbacks or individuals who arenÂ’t finding the opportunities theyÂ’d like frequently become entrepreneurs not only to secure a paycheck but also to explore an idea they might have thought about for some time, entrepreneurial experts said.
“People who are downsized, or lose their jobs, for a while they’ll look for other employment but if they don’t find something they say, ‘What can I do for employment?’” said Brad Hancock, director of the Neeley Entrepreneurship Center at Texas Christian University. “I’d like to believe people dreamed of owning their own business and that’s their ultimate dream – to be their own boss. But they never had that push, that catalyst. Sometimes they aren’t intentional entrepreneurs but once they’re forced they become successful entrepreneurs.”
Mariam Morris had a good job as chief financial officer for Sucampo Pharmaceuticals Inc., based outside of Washington, D.C., but the single mother of two daughters wanted to come back home and manage her own time. She left the company in August 2008 but remained a consultant through January 2009 on her road to becoming an entrepreneur.
Morris turned to a franchise home maintenance company and opened the eighth Dallas-Fort Worth location of Mr. Handyman about two weeks ago.
“Even though it’s a bad economy and the housing bubble has burst a lot of people are left to reassess the homes they’re in and decide they’re going to be in the home a lot longer,” said Morris, adding she saw the opportunity in home maintenance.
Morris owns 90 percent of the business, while brother Kevin Morris, a Gulf War veteran who did concrete construction for 12 years, holds the remaining 10 percent. Mariam Morris bought the franchise for about $55,000 and invested about $100,000 overall to create the business without having to secure a loan.
Mr. Handyman is a professional handyman service, focusing on home repair and maintenance. (The companyÂ’s national spokesman is Richard Karn, who played Tim AllenÂ’s no-nonsense sidekick Al Borland on TV show Home Improvement.) Employees arenÂ’t contractors and before employment are drug tested and screened for criminal offenses. Mariam Morris said safety appeal attracted her to the company.
The siblings hired their first technician and hope to hire another two within the first six months.
“There is a good feeling knowing that men who have been in this industry for over 20 years work hard and are so grateful to have this job,” she said. “It’s nice to have an impact on someone’s life.”
There are two types of companies according to the U.S. Small Business Administration: non-employer companies and employer companies. A non-employer company is something like a construction contractor, a consultant or a dog walker – a single-person entity that exists without necessarily having a product to sell. An employer company is a traditional business such as a restaurant, law firm or product manufacturer. The latter tends to struggle during a bad economy or recession, and do well during a good economy.
Typically, the non-employer base experiences between 2 percent to 4 percent annual growth during a good economy, however, from 2007 to 2008 the SBA saw a 7.5 increase in this group.
“Changes in the economy can affect the number of people who are self-employed,” said Brian Headd, an economist with the SBA’s Department of Advocacy. “It’s easier to become self-employed when you’re providing services rather than a huge product that requires heavy machinery.”
At TCU, there are 201 students majoring in entrepreneurial management, some of whom also are getting other degrees. There are more than 400 members in the universityÂ’s Collegiate Entrepreneurs Organization, or TCU CEO. That organization had 12 members when it was started eight years ago, Hancock said, illustrating the ever-growing interest in business ownership.
Hancock said many new small businesses are created by an older demographic.
“If you’re 30 or 35 and lose your job at GM, you probably have a better chance of going out and finding employment,” he said. “But if you’re 60 and you get downsized, that’s a greater incentive (to start a business) because there’s less of an opportunity.”
Just as previous slumps in the economy gave way to huge opportunities, such as the tech boom, the current recession provides an opportunity for people to get in on the ground floor of what Hancock believes is the next great business boom: the green economy.
