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    7 Replies Latest reply on Feb 3, 2009 3:44 PM by Adducent

    Decrease in number of small business start-ups

    My_Lan Adventurer
      This is a question to anyone else who has been observing and following the ways things are going with the economy these past few months, but has anyone else notice there has been a recent decline in small business start-ups?

      And it also seems that a lot of people interested in start-ups do not get past the funding part?

      This is just my observation and was wondering if anyone else noticed the same.
        • Re: Decrease in number of small business start-ups
          amspcs Ranger
          Absolutely. I see the very same trend since end of December.

          AMSPCS
          • Re: Decrease in number of small business start-ups
            Lighthouse24 Ranger
            The recent decline in start-ups in my area has been about 1 percent. (For instance, in my city, 3,602 start-ups were registered from 11/1/08 through 1/31/09, compared to 3,641 from 11/1/07 through 1/31/08.)

            I think it has always been the case that a lot of people "interested" in start-ups do not get past the funding part. People who are committed to starting up a business, however, will continue to do what's necessary to put together the funding -- and "what's necessary" often involves a series of formal preparations, learning activities, lifestyle changes, networking initiatives, and other actions that those who are merely interested in starting a business are not willing to do.
            • Re: Decrease in number of small business start-ups
              DomainDiva Ranger
              Give it six months. All of those tekkies that have lost their jobs have moved back home and are huddled in their bedrooms making new and wonderful internet and software technology. The next two years will see a boom in new 'stuff' for everyone and the start of brave new economy part 3.
              • Re: Decrease in number of small business start-ups
                Tracker

                I agree that there are fewer people willing to start-up businesses that require a lot of capital or that are capital intensive to operate them. Funding for them is tough to find and frankly, if the entrepreneur has the cash to fund it themselves, they need to look very hard at the type of business they plan to start to make sure it can weather the current market/economy ... a wrong choice will burn through what capital they have very quickly. If they have capital on hand; one thing I suggest is that they think about buying an existing business versus starting one. There are ways for them to use their capital wisely to buy a good solid business and additional funding/financing is easier to find for an established business as opposed to a start-up. But whether a start-up or acquisition, they have to be very sharp in their thinking to work through what makes the most sense, what is "doable", and what will meet their objectives.

                 

                On one hand though I am seeing an increase in people contacting me that are interested in low-cost (both for upfront capital and ongoing operations) start-up businesses based on proven business models. With all the layoffs, job cuts etc. I am seeing those with severance packages look at ways to start their own business instead of entering what is proving to be a terrible job market. And for many that have had their job "yanked" from underneath them without any cushion or severance package to ease the landing ... they are scrambling to come up with something to do or start that can lead to income.

                 

                There are some options out there for them that are worth considering. And there are some business markets that are going to be active, offering opportunity, even during the current rough economy we are dealing with. Bottom line ... there are still people starting or buying businesses but now its even more important to be smart about how you do it.

                 

                Dennis Lowery
                Adducent, Inc.
                • Re: Decrease in number of small business start-ups
                  Iwrite Pioneer
                  I was thinking it was the opposite. A lot of my friends who were at agencies are trying to go it on their own. I think a lot of people are recognizing that corporate jobs are no longer safe or stable, and that they can do it on their own.

                  I agree with DomainDiva that things should kick into high gear in a few months, a lot of people are still in the shocked and stunned stages but once the dust settles things should pick up.

                  As for funding, I think something is going to have to change - banks cannot keep doing things the way they have been in terms of lending. The big banks will be slower to evolve but there are signs that some smaller banks and credit unions are starting to recognize the vacuum that the bigger banks are leaving and are moving to fill that hole with new and unique solutions or at least I hope so.
                    • Re: Decrease in number of small business start-ups
                      Tracker
                      Good points about funding. I'm seeing small community type banks in my areas reaching out to small business owners. Hopefully that trend strengthens and that they draw more business accounts and capital begins to flow from those type sources.
                        • Re: Decrease in number of small business start-ups
                          Iwrite Pioneer
                          From my standpoint, this is the story I would tell if I was a small bank - think about the amount of business a bank could generate by putting into place programs and funding that is designed to help small and medium businesses grow?

                          I think the original question is a little off, starting a business and needing funding is not always a requirement. You are seeing individuals with the assets being forced to re-think their careers due to the economy and these people don't always need funding. What about individuals who are working a job as they are starting a company?