In 2008 there were a record number of startups that came from the world of the unemployed.
People that were forced into thinking outside the box, and turning something negative into a positive. But starting a business unemployed? That would seem to be like jumping off of a cliff into a black, dismal abyss.
But for some it has proved to be the best way to find work when there is no work to be found. Launching your own startup is as much of a career choice as is becoming an employee for some company.
The trend in 2008 was to simply start a business to end your state of unemployment, and by doing that these entrepreneurs were using unemployment to take that leap of faith, and turning a passion that seemed out of reach into an actual money maker.
The mindset of “find a need and fill it” is the order of the day. And with the economy the way it is, the playing field is wide open to not just your own community, but globally.
Although the government offers programs and resources for the unemployed, they fail to realize the underlying problem at its core; society needs a mentality shift towards innovation, creativeness, and experimentation.
When unemployed people shift from thinking of it as competing with each other for the jobs that are available to a collective effort of collaborating to create new opportunities and new jobs, this is a perfect recipe for a new startup.
What if there was a specialized platform that allowed unemployed people to connect and exchange ideas? To offer each other expertise and specific services that would foster a new business. To run zero cost business experiments by exchanging expertise, services, and resources. To network and build strong and lasting relationships.
Imagine a platform where unemployed people can gather to collaborate and experiment with concepts and ideas: ‘virtual startups’ all powered by the ranks of the unemployed.
This is the type of entrepreneurship that is spurred on by being unemployed. A massive outflow of talent towards the economies of a better state-where a meaningful fulfilling career IS an option.
In a June, 2010 article that appeared in the New York Times, it was reported that in 2009, according to the Kauffman Index of Entrepreneurial Activity, that this particular place in time was one of the strongest in both unemployment and new startups. New business startups had their highest peak in over 14 years, even exceeding the number of startups during the peak-1999 – 2000 boom in the area of technology. When new businesses are started it also gives graphic designers the chance to start new businesses. With every new business idea, you need to make a new logo and website to go along with that business. All startups and Entrepreneurs help the overall economy.
At first glance, this would seem to be a bit out of place. Usually new businesses take steep climbs when consumers are flush and banks are more than happy to lend. So why all of the entrepreneurship at this time?
In a word, unemployment.
With so many Americans being booted off company payrolls they had no choice but to sell themselves. And the meaning of the word “entrepreneur” is “self-employed.”
In the above referenced article, there was an analysis released by the Bureau of Labor Statistics that the ranks of the self-employed rose in excess of 8.9 million, another peak in numbers for that time frame. Self- employment in the 55-64 age group also was at a record high, as well as the people over 65 who were forced to do something to pad their wallets because their 401-k had shrunk and their homes were worthless. So, they too became entrepreneurs.
This could be viewed as a good thing. A deep recession is the mother of invention. These Americans were now liberated from their bureaucratic straightjackets that they thought they had to wear. They were able to fulfill their inner dreams and find their creative entrepreneur within. And the recession was just the kick in the pants that they needed.
The U.S. does have a program in place that encourages unemployed people to form startups, the Self Employment Assistance Program, however, it operates in only 9 states and has a small take up rate: fewer than one-tenth of one percent of regular unemployed recipients use the program. If only 1 or 2 percent of the unemployed in these 9 states were to access these benefits, this alone could lead to many new startups. Expanding a program such as this would foster an entrepreneurial spirit and create many new jobs.
The monthly increase in new business rose 12 percent during this period. More importantly the quality of new firms did not deteriorate; and there were no significant differences in the failure rate, growth rate, or the hiring rate in the new startups in particular industries where the program had the most impact. These unemployed entrepreneurs that started these businesses were very ambitious about their growing potential and the benefit of creating so many new jobs.
These overall positive benefits included shorter spells of unemployment and the creation of better higher paying jobs…all during a time of economic uncertainty.
You would think that during a time of economic unrest that the stories behind these new startups may not have a pleasant outcome, but between 2008 and 2009 close to half of the companies that were created were on the list of the Fortune 500.
Entrepreneurship is without a doubt inherently risky. Many years of research has shown that the survival rates of startup firms are very low and very few firms actually make it big.
But when faced with a “do or die” situation, like a recession, the number of startups that actually break even after 3 years is quite impressive.
Entrepreneurship is not a money driven venture but a passion driven one that encourages positive change in society. Industry experts say that any business that adds to the quality of life will see positive growth. Startups have the opportunity to grow and become big.
Entrepreneurship is not for everyone. But we could at least ask the unemployed to consider it, and see it as a possible alternative. There are certainly a great number of people who would make good entrepreneurs. But those who do not think they can, just won’t allow themselves the opportunity.