Many frustrated job hunters are throwing up their hands in despair and saying, "Maybe I should just start my own business."
That last resort may be a great idea.
"Many people think (a downturn) is the wrong time to start a business, but that's not always correct," says Edward D. Hess, professor of business administration at the University of Virginia and co-author of "So, You Want to Start a Business? 8 Steps to Take Before Making the Leap."
Don't despair over the news about the bad economy. Plenty of companies started during bad times, including General Electric, Walt Disney, Microsoft and Google. These behemoths were originally started by a few people wondering how to turn a concept into a business.
Here are some tips to help you overcome today's economic obstacles and join these successful ventures.
Do you have what it takes?
According to the Small Business Administration, or SBA, interest in entrepreneurship has spiked, with a 32 percent increase in the number of visits to its website so far this year compared to the same time last year. Before you create that business letterhead, make sure you're cut out to run a business. While entrepreneurship is a great way to work at something you love, it also can be marked by long hours and uncertain paychecks.
"The biggest question to ask yourself is, 'Can I really commit to doing this?'" says Amy Cosper, editor in chief of Entrepreneur magazine. "Running a business is all-consuming, so you must be honest and determine whether you've got the business plan, the money, the mettle and your family's support."
You also need structure and discipline, says Mark Volchek, co-founder of Higher One, a company in New Haven, Conn., that creates online banking tools for college students. He started the company as a college student a dozen years ago, just as the dot-com bubble popped.
"You need to be motivated to work independently. When you're employed, you're given an agenda and guidance but when working for yourself, you must be well-organized," Volchek says.
A good first step is to sign up for small-business training and counseling. The SBA offers courses nationwide through its centers and other business partners, teaching accounting, tax rules, customer service and public relations. You also can assess your skills beforehand with its readiness assessment tool and online training courses.
A second stop on the entrepreneur-training route is FastTrac, a program financed by the Kauffman Foundation that offers sessions in more than 300 locations nationwide. Like the SBA, FastTrac has revamped courses to help entrepreneurs withstand the downturn by teaching them survival skills like creating a solid business plan, understanding market needs and bootstrapping a startup.
"(There's) less of a casual attitude of people coming into our program now," says Monica Doss, FastTrac program director. "They want to see if their idea works, then run with it."
What can you offer?
First, not every sector is poised for new growth. For example, starting an upscale restaurant or high-fashion boutique is probably a bad idea now. But there are growing sectors. "Try making a product or solving a problem specifically for a generation like the boomers or the millenials," Cosper says. Other emerging areas are green energy, video games, fitness and health.
For many, though, it's better to stick with an area they already know. "Now is the time to leverage your knowledge. It's not the time to learn an area you know nothing about. You must have work experience in that industry and know who the suppliers and customers are," Hess says.
That's how Michael Nusimow, a former software engineer for Bloomberg News in New York, started his company. He kept missing his dentist appointments and wondered why his dentist failed to remind him. He checked the dentist's software system and found it "truly awful." But a light bulb went off and in January 2009, he resigned and started DrChrono.com, which creates Web-based tools for doctors to manage appointments and billing.
"People thought I was crazy, but I had the passion to run my own business," says Nusimow. "Also, the software idea was relevant and ... could have a big impact."
Also important to Hess is what he calls the value proposition. "You need to decide why someone is going to buy what you have to sell. You must have a message to customers about why you'll be better, faster or cheaper than the competition," Hess says.