Steve King of Small Business Labs has a nice post Wednesday on necessity entrepreneurs. Citing UC Santa Cruz professor Robert Fairlie, Steve says:
Fairlie is the lead author behind the Kauffman Index of Entrepreneurial Activity and a leading entrepreneurship researcher. His work shows that self-employment increases during times of economic stress and flattens out during good economic times. This is due to necessity entrepreneurs returning to traditional employment.
So no big surprise here. People are starting businesses because they have no other choice. Several million people have lost jobs in the current recession, and unemployment is higher than it’s been in decades (where I live, in Eugene, Ore., our local paper said yesterday we’re over 14 percent.) So not only are people getting laid off, but there are a lot of people already out looking.
Sure, all of that sounds pretty bad, but Steve offers some good news, too, in his post:
The good news for necessity entrepreneurs is that the cost of starting a small business, and especially a small business based at home, is lower than ever before. Technology has become inexpensive and, in many cases, even free.
And while most necessity entrepreneurs will return to traditional jobs, our research indicates that a growing number of displaced workers find they prefer self-employment. The reasons given by these people for preferring self-employment are the same as other small business owners. They prefer working for themselves, job and work flexibility, passion for their business and work/life balance reasons.
I also think it’s good to acknowledge that a lot of startups are spurred by more than ideas, passion and entrepreneurial spirit. At some point you also ask do you have a choice? And, if you don’t, you deal with it.
Or, maybe, even enjoy it.
Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.
