It’s a good time to become an entrepreneur
By Tillie Fong 
| July 2, 2009 | 4:49 PM
Amid a nationwide recession and climbing job losses, this may seem like a bad time to start a new business. But some experts say that economic downturns don’t really affect business launches and that rising unemployment rates may actually help them.
“Recessions don’t have much of a negative impact on business starts,” said Dane Stangler, senior analyst for the Kauffman Foundation, which promotes entrepreneurship.
In a June study titled “The Economic Future Just Happened,” Stangler looked at whether economic downturns affected the creation of new businesses and was surprised to find that more than half of the Fortune 500 companies were created during a recession or a bear market.
“Job creation from startups is much less volatile and sensitive to downturns than job creation in the entire economy,” he said.
In fact, the Colorado Secretary of State’s office received nearly 58,600 new business filings in the 12-month period from June 2008 to May 2009. The majority of those filings were limited liability corporations, which could represent an individual or a small group of people.
While the state does not keep track of the number of employees these LLCs have, a fair number of them may fall into what academics describe as “necessity entrepreneurs” — people who lose their jobs and start companies out of need.
“If you don’t look at whether the companies are successful or have high salaries, the large impetus is out of necessity — they will do what they have to do to feed their families and keep a roof over their heads,” said Catherine Kunst, executive director for the Bard Center for Entrepreneurship, which is part of the business school at the University of Colorado at Denver.
If anything, rising unemployment rates mean that startups can tap into a much larger pool of experienced workers who would not be available otherwise.
“There doesn’t appear to be a bad time to start a company,” Stangler said. “There is always room for innovation, and someone will find that room to innovate.”
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economy, jobs, recession, startup
