With unemployment beginning to rise and bank lending anemic at best, leave it to an entrepreneur to point out the upside.
We are about to wittness the unleashing of the largest, best educated, self-funded, graduating class of involuntary entrepreneurs this country has ever seen.
Here’s the scenario: When downsizing and layoffs come, more experienced employees — who also cost more — will be pondering life with a different perspective. If all goes well, they may get offered early retirement, though they have no desire to retire. Or they might get a decent severance package.
What you have, then, is an experienced worker with seed money. Oh, and as a more mature person, there will likely be a large number of them who have been in their present homes for more than 10 years. Even with depressed housing values in recent years, they probably have equity to turn to.
Here’s the mix. Educated, experienced, severance, early retirement money, home equity. Unlike past recessions, starting a business has never been easier. A home office today has as more resource than most small offices had during the last big recession in 1982: Internet access, email, land lines, cell phones, faxes, powerful computers, software for bookkeeping, design, building web sites.
In addition, startups today can be very efficient. Email files to the accountant, farm out projects all over the world, online banking, a mobile office in your car…and thousands of coffee shops where business meetings can be held.
Whenever there is an economic downturn, there is a counter-cyclical uptick in the filings for new businesses. With banks riding the brakes on lending, traditional new business funding practices would suggest that new business formation and success will be adversely affected.
This time, this recession — even with tight credit — things will be different.
Keep your eyes open. These entrepreneurs will need your services and products and your help. It will be one part of the economy that will be expanding during the upcoming year.
