Summer 2009 | Volume 107 | Number 652
Put Yourself in Business
Job layoffs have a way of awakening the entrepreneurial spirit. Particularly when the unemployment rate is sky high. But is it crazy to open your own business during a recession? Recessions do tend to hit small businesses hard, and the current credit crunch has made this one particularly grueling. Small business owners typically buy inventory and pay workers on credit, so with banks slashing credit limits, hiking interest rates and closing credit card accounts, an increasing number have been driven into bankruptcy.
Yet, despite adverse conditions for existing small businesses, experts say recessions can be optimal for start-ups. Commercial office space and equipment are less costly, as are employees, and there's a larger pool of qualified workers to choose from. Plus, recessions are generally followed by long periods of economic growth.
Another pro: The stimulus bill is full of provisions aimed at unlocking credit markets for small businesses. Curative effects were already being felt in March, when President Obama announced stronger federal guarantees for Small Business Administration loans, and the loan program saw a quick 20% expansion.
Budding entrepreneurs can find a full range of resources on websites like SCORE's score.org, the U.S. Small Business Administration's sba.gov, and Entrepreneur magazine's entrepreneur.com – including advice on writing a business plan, raising capital, branding, franchise opportunities, individual mentoring and more.Read More: