Switchfast Blog: The Future of IT
Now is the Time for Small Business Start-ups
Friday, August 13, 2010 by Bryan Anderson
All this talk of a recession generally means a declining
economy, job cuts, and revenue drops. For the hundreds of thousands
of individuals involved in starting a new company, the word
'recession' can sound more like 'opportunity.'
An article by Heide Malhotra from The Epoch Times points out that "the economic
downturn has had little effect on entrepreneurs eager to start new
businesses."
According to the Kauffman Index of Entrepreneurial Activity, a
top-notch indicator of new-business creation in the US, 2009 saw
the highest level of startups, as 558,000 new businesses were
created each month. Both men and women saw an overall increase in
entrepreneurial activity. Even though the western states saw a
decrease in growth rate from 2008 to 2009, business-creation rates
increased in the Midwest and South regions. According to the
metropolitan statistics of the top 15 US cities, Houston led the
way in terms of highest entrepreneurial rate with Seattle coming in
last.
The president and CEO of Kauffman Foundation Carl Schramm offers
his insight on the reason behind the increase in activity:
"Challenging economic times can serve as a motivational boost to
individuals who have been laid-off to become their own employers
and future job creators. Because entrepreneurs drive the economy,
the growth in 2009 business startups is encouraging and hopefully
points to a hopeful trend in terms of our economic recovery."
Other statistics revealed that growth was highest among 35- to
44- year olds. The oldest age group, 55-64 year olds, also saw a
large increase in business-creation rates. This data matches up
with a recent article from Mashable in which research
performed by CB Insights, a corporate information and research
firm, pointed to half of internet entrepreneurs (backed by venture
capital) being between the ages of 35 and 44. However, the 26- to
34- year old demographic tended to raise the most money and
accounted for 30% of internet entrepreneurs.
The economic times may be inspiring entrepreneurs but
prospective investors are "more reluctant to invest in new
ventures, thereby putting strain on entrepreneurs." In 2009,
venture funds reached $5.3 billion during the first quarter. This
year, that number only reached $3.6 billion, a 32% drop in
financial support.
While only 8% of the internet entrepreneurial landscape dealt
with women, teams with "both male and female founders tend to raise
more money," rising from the $2.2 million average for all-male or
all-female teams to $4 million.
Despite the difficulty of earning venture capital, small
business startup growth opens up job opportunities at an
accelerated pace. Annually, 10% of new jobs come from startups
according to the Kauffman study. The Epoch Times mentioned that in
the first quarter of 2010, startups announced more than 13,000
jobs, a 16% increase over last year. The industries seeing the most
growth are Information Technology, Life Sciences, and Clean
Technology Sectors, according to StartUpHire.com.
If there was ever an environment to pursue an entrepreneurial
route, the recession is the perfect landscape for eager, driven
individuals looking to disrupt and reignite the economic state. The
United States has relied heavily on the success of its small
businesses, and this data bodes well for the country's chances of
surviving this latest era of a struggling economy.
Until next time -
Matthew Hymel
Switchfast Technologies
Chicago IT Support &
Consulting
Rochester
IT Support & Consulting
Leave comment: