A new study by the Ewing Marion Kauffman Foundation finds a comforting prospect in today's challenging economic times: Recessions can spur entrepreneurship, which leads to the creation of much-needed new jobs.
The study, The Economic Future Just Happened, found that more than half of the companies on the 2009 Fortune 500 list were launched during a recession, along with nearly half of the firms on the 2008 Inc. Magazine list of America's fastest-growing companies.
"We are a society of risk takers and creative people with a constant stream of ideas," said Michael March, J.D. Brown Center for Entrepreneurship executive director. "The recession has made people realize that there is no better time than now to take a risk."
March believes that when people go through life-changing experiences such as layoffs, it is common for them to think about how to control their own destiny by becoming self-employed.
"Someone may have had an idea for years, but since they were content at their job, they put it on the back burner," he said. "Now that they have the time and nothing (in a sense) to lose, they are more likely to go for it."
That is when March and his staff at the J.D. Brown Center usually are contacted. The Center, supported by York College and founder John Brown, promotes entrepreneurship through education, research and outreach initiatives designed to meet the varied needs of the region's current and emerging entrepreneurs.
What is your product or service? Why would anyone want to buy it? Those are the first questions March has for emerging entrepreneurs, and the answers usually determine what happens next.
"If they think what they have will sell, we then sit down and determine if their product or service could survive in the current market," he said. "If we aren't sure, we bring together a focus group to help us find out."
March believes it is extremely important for entrepreneurs to find out in the beginning of the process if an idea will survive in today's economy before they invest time and money into the product or service.
"We don't want them to lose their life savings on an idea that is not commercially viable," he said.
Examples of a few commercially viable businesses are ones that sell products that save people money, ones that incorporate existing products with a cost-effective energy product and ones associated with software or medical devices.
"Every possible business is evaluated independently," he said. "What may not work for someone could possibly work for someone else depending on the location and product, and vice-versa," he said.
That advice runs parallel for existing businesses in a recession. According to March, while businesses should shed cost in a recession, there is a right way and a wrong way, depending on the particular business.
"If a business wants to cut their staff – which many people think of doing first – they need to be sure someone on staff can do that job," he said. "Or if a business thinks of cutting advertising, they need to make sure it doesn't drastically effect the top line revenue."
For some companies who have managed to stay in the black, a recession is a great time to acquire other companies and think strategically about the future.
"If a business has a product or service someone wants to buy now, it will be just as popular or more when the economy improves."
"While it was probably one of the worst of economic times to start a business, it was the best time for me personally. My experience at the J.D Brown Center has been like a crash course in business, which is something I needed since my degree was in art. I officially opened my paper sculpture business, Paper Meditations, in 2009."
– Christine Kirk (York, Pa.), a client of the J.D. Brown Center
Entrepreneurship Program at York College Continues to Grow
Even in a recession, more than half of young adults envision starting a business or doing something entrepreneurial as adults, according to the National Consortium on Entrepreneurship.
York College students are no exception. The program, which began in the fall of 2007, has 22 majors and 15 minors.
"The applications for the entrepreneurship major doubled from Fall 2008 to Fall 2009," said Jay Azriel, PhD, assistant professor of entrepreneurship.
Azriel came to York College in Fall 2007 to start the program. His goal was to create a solid program that would be an indispensable part of the Business Department, and in his short time on campus, progress has been made.
"We opened up an introduction to entrepreneurship class to all majors this fall and it immediately sold out," he said. "I had to add extra seats to accommodate the new freshman majors."
The entrepreneurship major, which will graduate its first class in Spring 2011, teaches students about business start-up – from staffing and payroll to advertising.
"We encourage students to start their businesses small during college and by the time they graduate they should be moving in the right direction," said Azriel. "If they fail, they get back up and start again. Or maybe they will find that business ownership is not for them. It is easier to start over as a college student than later in life."
He also encourages students from all majors to take one entrepreneurship class to see if they are ready to start and maintain their own businesses.
"A large number of small business owners who were liberal arts graduates told me that they were not prepared to start their own business and wish they had taken at least one entrepreneurship course," said Azriel.
Kacie Pinnock '10 (Greenwood, Del.), a music industry/recording technology major, has always dreamed of opening a sandwich shop. Pinnock, who has excelled in her major (which is her second passion), began studying entrepreneurship last year so she could learn how to one day make that dream a reality.
"I had no idea what I would be getting myself into," she said. "I thought entrepreneurship meant nothing more than being my own boss."
Fortunately for her, York College's program has already given her with the tools she needs to create an entrepreneurship venture that matches her personality and goals.
"I always had a passion for unique clothes. I designed custom prom, homecoming and pep rally dresses for myself. The entrepreneurship minor at York has helped me turn my passion into a business. About a year ago I started a clothing line called Donnaccia. The entrepreneurship classes taught me how to research my industry, create a brand, market to customers and design an effective business plan. While people are scaling back on purchases, I'm not concerned with the health of my business.
I want to work in a very niche market and build brand loyalty, which can make me stand apart from competitors."
Samantha Ferguson '10, finance major (York, Pa.) (pictured)
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