Why You Might Start a Business in a Recession

Despite dire economic news, entrepreneurs finding ways to flourish

Thursday, August 20, 2009

With so much talk about the ailing economy, it may not seem like the best time to start a new business,  but in our weekly work segment we look at some reasons why it might make sense to do it now. Takeaway contributor Beth Kobliner, author of Get a Financial Life: Personal Finance In Your Twenties and Thirties, joins us with two entrepreneurs who are doing well in the recession: Marva Allen, co-owner of Hue-Man Bookstore in New York, and Jo-Ellen Stammen, who runs her own design business. ...(continue reading)

What they see is [that] bigger, more established competitors may be having to cut back and lay off people, maybe not having that great service they used to have. So a new company could start, a small business could start, and really have that edge.
—Financial author Beth Kobliner on why starting a business during a recession can be a good idea

Facts from Beth Kobliner on starting new businesses:

  • In general, people just aren't starting new businesses right now at the same rate they had been before the recession.  In 2005-2007, about 200,000 very small companies were forming every month.  By late 2008, in the depths of the recession, the rate had fallen 9% to 176,000.
  • More small companies are failing than at any time since the government started keeping track in 1994.  In 2005-2007, about 185,000 of these companies shut down every month.  By late 2008 the failure rate had climbed 7% to 200,000 a month.
  • It's been an especially rough year for construction and real estate, which accounted for about 22% of all start-up plans as recently as 2004.
  • The construction industry is dominated by small companies, and companies of that size lost 682,000 jobs in 2008.  Education and health care start-ups actually reported some growth last year, but it wasn't much (2.5%).
  • People who start their own businesses are statistically more likely to be Hispanic or African-American; the number of Hispanic entrepreneurs in this country has doubled since 2000.
  • People who start their own businesses tend to be older; according to the SBA, about 60% of all business owners are over 45.



Marva Allen, Beth Kobliner and Jo Ellen Stammen

Hosted by:

Amy Holmes


Jen Poyant

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