This statistic from the U.S. Census Bureau takes my breath away. In the midst of a terrible recession, with virtually no capital and no bank loans available, and yes, a bit of “necessity” due to unemployment – Americans stood up to the economy and kept working, likely with little revenue to the business or income to themselves at first.
Now, many of these are likely “lifestyle” or ‘back bedroom” businesses, as there was so little capital to build the beginnings of an empire. (More on these lifestyle startups in a future posting soon). These businesses create an income for the founders and a few staff members. Still, it is an engine of job growth, as those folks are not on unemployment and are often happily creating a new vision, and living in a more flexible work environment than their previous corporate positions.
Marketplace reported on this phenomenon: here are some highlights in summary, and the link to the interview:
- Groups ramping up startups include African Americans and folks 55-64.
- Advantages include: cheap talent, cheap rent, reduced competition.
- Failure rate stable as in other years: 50% in the first 5 years.
- Small business credit cards cost more than before – a 14% increase vs. the consumer increase of 2.5%
- Small business credit cards not protected by new consumer protection laws passed by Congress
http://marketplace.publicradio.org/display/web/2010/05/20/pm-thank-recession-for-busy-start-ups
I am seeing more startups that have created their early stage capital on strategic alliances with no equity out the door, or by early revenue from intelligent deal flow (my two favorite kinds of capital – the ones I strive for), none of whom need capital at all, or only to exceed organic growth. They have built these companies in the past couple of years, when capital was tight (actually, it still is tight). These are exciting clients for me, as we have an open runway for growth and market share which we can gain from smart strategies.
I am proud to see that, in the face of limited capital and policy to support small business initiation, development or growth over the past couple of years, Americans have stepped up to the real conditions and done something about it – they’ve gone independent of the system and taken their destinies in their own hands. They could, after all, have turned their heads to the wall. Good work!
