Axed by a big business? Start your own.
Unemployed seek fulfillment in new careers from pet care to finding jobs for moms.
America may be in a recession, but that’s not stopping thousands of would-be entrepreneurs from using their severance pay or savings to do something they’ve always hankered to do: be their own boss.Skip to next paragraph
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Even as more and more large companies hand out pink slips, budding do-it-yourselfers are starting new businesses – some of them far different from the jobs they used to hold.
A former Wall Street executive now is walking dogs instead of making deals. A laid-off banker is offering soothing massages. Earlier this month, a former marketing executive – and mother – started a business that helps other moms find work.
Small businesses have long been a key part of America’s economic makeup, representing the majority of the jobs created in the country.
Even now, as big businesses shed thousands of workers, small businesses are shrinking at a slower pace, recent economic data suggests. If Congress passes President Obama’s economic stimulus package, small businesses could get help in the form of an increased ability to expense their capital purchases, such as expensive printers or computers.
Several aspects of the stimulus package are designed to help small businesses, says Richard DeKaser, chief economist at National City Bank, part of Pittsburgh-based PNC Bank. Traditionally, he says, small businesses have been “more resilient” in creating new jobs, “and the past year has been no exception.” [Editor's note: The original version misidentified the bank that Mr. DeKaser is affiliated with.]
Data through the end of the third quarter of last year suggest the number of self-employed remained relatively constant, the Small Business Administration (SBA) Office of Advocacy reports. Since the mid-1990s, small businesses have generated 60 percent to 80 percent of net new jobs, the advocacy office says.
This is not to say the small-business community is as vibrant now as when the economy roars. After growing quickly in the past few decades, small businesses are experiencing a “modest” decline now, the International Franchise Association says. For 2009, the IFA projects a loss of 207,000 jobs.
The federal government defines a small business as having fewer than 500 employees. But of the 6 million small businesses with employees in 2006, 5.4 million had fewer than 20. Some 2.9 million had four or fewer.
And those statistics don’t include some 21 million “nonemployer” firms, single-person shops or small partnerships.