Recession sparks boom in entrepreneurship

Chris Corradino owns a photography business in New York City — something he never would have thought of doing three years ago, when he worked comfortably in a corporate environment. Yet when the economy started to falter in 2008, Corradino watched as most of his co-workers — many dedicated staff with over 30 years of experience — were coldly sent packing. With his impression of job security completely shattered, Corradino decided to take a leap of faith.

“I had savings in the bank, clients to work with, and most importantly, a wife who believed in me,” he says. “With her support, I nervously walked into the boss’s office and handed in my letter of resignation. It was a surreal moment, and truth be told, it felt great. Two weeks later, I was free to begin a new chapter in my life.”

Corradino says he’s never been happier in his professional life, than he is now as a freelance photographer. “Although my journey was long and arduous, I believe it saved me from certain disaster,” he says.

Carolyn Frith also knows what it’s like to have job security shattered. Frith was in the middle of a teleconference, when her company’s human resources manager interrupted to call her to the boss’s office. “Having just had a two-hour meeting with my manager, discussing everything on my plate, I had no idea what could be that important,” Frith says. “I told [the HR manager] I would talk with them after the teleconference. She went off to chat with my boss but came back two minutes later. ‘He really wants to talk to us now. It should only take a few minutes,’ she said.”  In those minutes, Frith was told there were changes taking place in the marketing department, and was presented with a few sheets of paper to sign and three-weeks’ severance pay.

After that, Frith says her whole life changed. Not wanting to go back to the corporate world, she re-evaluated her skill set, and now runs her own business as a marketing consultant and copywriter.

Since the recession started, stories like those of Corradino and Frith have become increasingly common. Whether it be caused by a layoff, pay reduction, or general unrest about job security, the recession has caused a boom in small business startups. And while it may seem like an odd time to start a business, experts say that history proves just the opposite: Economic downturns are often the best time to start a business.

“Most people don’t realize that more new businesses are created in down economies than in more prosperous ones,” says Brian Miller, president of The Entrepreneur’s Source. “Historically if you look at small business start ups you can see a trend of new businesses increasing when the economy and job market dips. This trend is holding true in our current downturn as well,” Miller says, citing a recently released study by the Kauffman Foundation, which found that more entrepreneurs launched business in 2009 than at any time in the last 14 years.

So why does a poor economy create such a spike in small-business start-ups? “In some cases its forced entrepreneurship, due to unemployment,” says Miller. “In others it’s simply that people don’t see big business and corporations as the future of our country, so they take back the control of their careers — and their investments — by putting it in their own hands.”

Still need testimony? Sales and marketing website InsideCRM.com published this list of top companies that were started during a recession:

  • General Electric Co. – 1876
  • Hewlett-Packard Co. – The Great Depression
  • Burger King – 1954
  • Sports Illustrated -1954
  • Hyatt Corp. – 1957
  • IHOP Corp. – 1958
  • The Jim Henson Company – 1958
  • Trader Joe’s – 1958
  • FedEx Corp. – 1973
  • LexisNexis – 1973
  • Microsoft – 1975
  • CNN – 1980
  • MTV – 1981
  • Wikipedia Foundation Inc- 2001

So, if you find yourself out of work or are sick of feeling unstable in your current position, it seems like there is no time like the present to try your hand as an entrepreneur. For more information, visit Entrepreneur.com, The Small Business Administration, or take a small business course from CareerBuilder Institute.

Kaitlin Madden is a writer and blogger for CareerBuilder.com and its job blog, The Work Buzz. She researches and writes about job search strategy, career management, hiring trends and workplace issues. Follow @CBForJobSeekers on Twitter.