When The Going Gets Tough, The Tough Start New Businesses - InformationWeek

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1/13/2009
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Jim Manico
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When The Going Gets Tough, The Tough Start New Businesses

Startups better make more room in the sandbox.

Startups better make more room in the sandbox.According to an article on CNN.com -- parts of which entrepreneurs might take exception -- with so many people out of work, we can expect an influx of new small businesses. "Some of the best new businesses start in recessions because what they have really makes a difference if the market is interested in it," John Challenger, CEO of employment firm Challenger, Gray & Christmas, told CNN's Thom Patterson. "There's not a lot of easy money to go around, and they have to fight their way forward."

Between 5 percent and 7 percent of Challenger's clients are choosing to start their own businesses -- a byproduct of the dot-com era, Challenger went on to say. "I think we're in a more entrepreneurial period than we were in the '80s and '90s," he said.

In its annual top 10 small business trends list, Small Business Labs also predicts the number of small businesses will increase in 2009: "With job losses high and traditional employment options limited, many will turn to self-employment and small business in 2009. The prior three recessions have seen small business formation rates increase. And with it easier and cheaper than ever to start small or personal businesses, we expect a strong year for small business formation -- especially personal businesses."

An article in The New York Times concurs. "It's likely that as in past recessions, many new small businesses will be created in the coming year as laid-off workers rethink their careers." The article also offers a half-dozen or so tips about how these new businesses can thrive.

All told, 2.6 million jobs vanished in 2008 -- the highest level since the end of World War II. That said, BusinessWeek maintains long-term historical comparisons of recessions are better served by comparing unemployment rates. For those who prefer to look on the brighter side, you'll be relieved to know that even though the unemployment rate hit 7.2% last month, that's less than what it was in the early '90s (7.6%) and early '80s (10.8%).

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