Are Future Small Business Owners Fearful? {Part 1}

Joel Libava
Wed, 24 Sep 2008 06:25:00 +0000

Rieva Lesonsky, an AllBusiness.com writer, and former editor of Entrepreneur magazine started off her column recently with this:

The economy is in meltdown. Wall Street is floundering. Corporations are laying off thousands. The national unemployment rate is at a five-year high. But the New York Times thinks if you're an entrepreneur, you should close your business and get a job. Read.

She went on to share her feelings of anger at The NYT for only sharing stories of entrepreneurs who had to close down their businesses and were able to secure traditional employment successfully.
In the NYT article a couple of things do stand out:

1. There is no precise way to calculate how many people are closing their businesses and jumping to big companies.

2. THE unemployment rate rose to 6.1 percent in August. {A five year high}

We all know that the economic news has been lousy. We also know that the folks running for president are keeping the economy top of mind, as they should be, in their speeches. So does that mean that small business owners who are struggling should jump off a bridge?

I am a small business owner, myself. I own a small franchise consulting firm that was started in 1990 by my late father. I joined him in 2001. That was not a good year for several reasons. It certainly was not the best year to go into business.
2002 saw very high unemployment, but interest rates were pretty low, and the climate for business start-ups was getting a little better. My business is one that usually does better when unemployment is high, and hiring is light.

When there are lots of corporate downsizings, and not a lot of good jobs, more folks begin to think about non-traditional employment options. Some are able to leverage their most recent career tracks into freelance consulting projects that can either keep cash flow going until traditional employment options become more available, or can be the impetus for starting their own consulting firms.

There was a great deal of corporate downsizing in 2002-2004, and that did provide our firm with an above average amount of inquiries concerning franchise ownership options, and we were able to help several folks get into franchise businesses of their own.
Things are radically different now though…..

Here is Part 2

{Joel Libava is the President of Franchise Selection Specialists Inc. in Cleveland. Joel is a small business owner.}