Economic Recovery: It Starts with Passion

  | May 2010  Posted in Business, Consulting   |   2 Comments  

Times are hard, and things have gotten tough for Americans over the past three years.  A mini-recession has caused millions of layoffs, taking unemployment into record-breaking numbers.  Neighbors have lost their homes to foreclosure, short sales, and bankruptcy.  Businesses in our communities have closed, some after 20 years of service, others after only a couple years.  It has been devastating for many families throughout the U.S.  Burdened with high debt and low or reduced incomes many families have suffered from the decisions of the past.  What options are there?  File for bankruptcy like 1.3 million other American consumers did in 2009 (NumberOf)?  Or like 8.7 percent of job seekers in 2009 (Petrecca) there is always the option of starting a business and becoming self employed.  In this past recession, starting a business became the solution for many.  People who never imagined themselves owning and operating their own business were forced into entrepreneurship.  According to Laura Petrecca, 530,000 new businesses were started every month in 2009.  To improve the state of our economy we must first improve our individual and family financial situations.  More Americans need to think outside the box and start a business that will enable them to make a profit from their passions.

From laid off to start-up, one in ten Americans in 2009 (Petrecca) started a business.  The hardest part about starting a business is the decision of what to do, what product or service to offer.  Not everyone has to start from scratch, in fact, many of those that started businesses in 2009 joined already established companies as Independent Associates, such as Mary Kay.  Others took their trades and skills and started consulting firms offering their expertise.  Some found opportunity for profit in their hobbies; many photographers start their own photography businesses after developing a passion for taking pictures.  Many in retirement also find opportunity to start a business by applying the skills they practiced in previous decades.  What every business owner and entrepreneur discovers is that being self-employed provides more control over life. The great opportunity of our time according to Peter Bregman is “[s]mall companies with low overhead, reliable owners, a small number of committed employees, personal client relationships, and sustainable business models that drive a reasonable profit”.

President Obama said, “It’s worth remembering that every once in a while a small business becomes a big business and changes the world, that’s why it is so important that we help small business struggling to open, or stay open, during these difficult times” (Wingfield 10).  Some of those small companies that changed the world are; Microsoft Corp., CNN, General Electric Co., Hewlett-Packard, Burger King Corp., FedEx Corp., and IHOP Corp.  All these companies have brand names that not only Americans recognize, but that are recognized in many other countries as well.  Interestingly enough, all of these companies were also started during a recession (Caron).  Not every business is started by someone determined to change the world or interested in penetrating a global market.  Many small business owners start their business with the soul purpose of generating extra income to help offset their cost of living.  However, small businesses are generally run by passionate entrepreneurs who are interested in making their dreams come true, and living the American dream.  They want to see their ideas become a common household name, and provide better services and products at the same time. They look forward to getting out of bed every morning and going to work.  They love what they do and do what they love.  They are driven by desire and passion every day.

Do small businesses every fail?  Absolutely.  Do the owners every give up?  Probably.  In fact, 50 percent of starts-ups fail in the first year (SBA).  Ethan Epstein author of “Are Small Business Good for the Economy?” believes that small businesses are a “…drag on the economy”.  Epstein’s theory assumes that when small businesses fail they default on their government and bank loans suggesting “…failing small businesses do further harm to the already soaring budget deficit”.  Although he presents a reasonable theory, he does little to support it.  The idea that the governments and banks simply lose out on loans made to companies that fail is no different than loans made to people who stop paying their mortgage and force the bank to foreclose on them.  In 2009 a total of 89,402 businesses filed for bankruptcy, while 1.3 million consumers filed for bankruptcy (NumberOf).  Epstein mentions that stimulus packages, tax write-offs, and regulation exceptions offered to small businesses are the causes of our recent economic downturn.  While in 2009 the government offered a stimulus package to first time homebuyers with a promise of an 8,000-dollar tax refundable credit.  What’s more of a “drag on the economy”; “small businesses that provide profits, jobs, and the ability to draw new dollars into a local community” (Muske and Woods 97), or helping people buy homes, which only creates an illusion of recovery while raising the nation’s deficit?  “The housing market is unlikely to turn around while there’s so much cheap money about, or while the feds are subsidizing home purchases to such an extent” (Hutchinson).

Epstein further suggests that because small businesses account for 52 percent of the American workforce “…they are responsible for a stunning number of layoffs in times of economical tribulation”.  What he fails to mention is that when a small business closes its doors, it may eliminate anywhere from 1 to 150 jobs, but of those workers 1 in 10 will start a new business.  The other fallacy in Epstein’s claim is that every small business has employees, when in reality, “75 percent of small businesses are non-employer firms” (Petrecca). This suggests that the majority of the 2009 14.9 million unemployed workers came from larger corporations that do mass layoffs, cutting thousands of jobs at a time.  Small businesses, especially those that are non-employee firms, have a better chance of success mainly because they have lower overhead and a minimal cost of doing business providing more profits for the owners (Abrams).

I am passionate about business.  I have been self-employed for three years, and in my opinion there is nothing better then running a business.  I get excited when people are motivated to find ways to profit from their passions.  I have discovered through my own web development company that starting a business is hard and requires lots of work.  The idea of building a business around a passion is to prevent the hard work from interfering with the dream.  Building a business without the passion will end up creating just another job.  According to business experts, economist, presidential committees, and the Small Business Association, small business is so important because “[a] full economic recovery won’t really begin until small businesses start spending, and hiring again” (Anderson).  Most Americans spend their day working, some at a job they hate and others enjoying their work but feeling trapped or tied down.  Starting a business is risky, there is no doubt about it, but in today’s economy jobs can be just as risky.  We could see a significant improvement in our communities, economies, and lives if more people were to start a business doing something they loved.  For example, Michelle Donahue-Arpas, who just after becoming a first time mother started a web-based business called Genius Babies.  Her business is comprised of her two biggest passions, her daughter and pre-natal or infant stimulation.  Michelle has run a successful business for the past ten years.  In another success story, two people driven by unfortunate circumstances, David and Wendi Kast turned their hobby of candle making into a successful business after Wendi was laid off (Isidro).  “It’s been said that there are two kinds of people in life: those who make things happen and those who wonder what happened. Leaders have the ability to make things happen” (Maxwell).

Whether the dream is big or small it doesn’t matter.  What matters most is that Americans find more opportunities to improve their financial problems so that we as a whole can work to improve the economy.  Small business focus should be on relationships and personality.  Big corporations stiff-arm their customers keeping them at arms length while providing just enough service to keep consumers coming back.  Our “new economy” is fueled by passion and interaction.  Consumers want to be engaged and they want to know the people they do business with.  When small business owners are passionate about their service or product they can make huge impacts in individual lives and communities.  Their business is not just about the product or service they offer, it’s about the relationships they develop.

Will you become part of the solution?

Need Assistance with your startup?  Send me an email and I would be happy to offer any advice and suggestions!

Work Cited

Abrams, Rhonda.  “Strategy: It’s a good time to start a business. Really.”  Strategy & Leadership Jan. 2008.  Academic OneFile. Web.  22 Apr. 2010.

Anderson, Scott.  “Not Just Hype-Small Business Means Jobs.”  USBanker Feb. 2010: 39. Academic OneFile. Web.  01 Mar. 2010.

Bregman, Peter.  “Why Small Companies Will Win in This Economy.”  Weblog entry.  Harvard Business Review 23 Mar. 2009.  Web.  06 Mar. 2010.

Caron, Sarah.  “14 Big Businesses That Started in a Recession.”  Weblog entry.  InsiderCRM 11 Nov. 2008.  Web.  22 Apr. 2010.

Epstein, Ethan.  “Are Small Businesses Good For The Economy?” Weblog entry.  True/Slant 30 Dec. 2009.  Web.  06 Apr. 2010.

Hutchinson, Martin.  “Housing Stimulus May Be Creating An Illusion Of Real Estate Recovery.”  The American Enterprise Jan. 1 2010.  Academic OneFile. Web.  22 Apr. 2010.

Isidro, Isabel.  “Small Business Success Stories.”  Weblog entry.  PowerHomeBiz.com. Web.  28 Apr. 2010.

Maxwell, John C.  Thinking For A Change.  New York: Center Street, 2003.  Print.

Muske, Glenn, and Michael Woods.  “Micro businesses as an economic development tool: what they bring and what they need.”  Journal of the Community Development Society 35.1 (2004): 97.  Academic OneFile. Web.  05 Mar. 2010.

“Number of Bankruptcies in 2009.”  NumberOf. Web.  22 Apr. 2010.  <http://numberof.net/number-of-bankruptcies-in-2009>

Petrecca, Laura.  “Recession, layoffs fuel many to start small businesses.”  Weblog entry.  USA Today 18 Aug. 2009.  Web.  06 Apr. 2010.

United States.  Small Business Association.  Office of Advocacy.  Small Business Research Summary.  Washington:  GPO, 2009.  Web.  22 Feb. 2010.

Wingfield, Brian.  “Obama’s Small Business Conundrum.”  Forbes 8 Dec. 2009: 50+.  Print.

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