America may be in a recession but that is not stopping thousands of would-be entrepreneurs from using their severance pay or savings to do something they've always hankered to do: be their own boss.
Even as more and more large companies hand out pink slips, budding entrepreneurs are starting new businesses — some of them far different from the jobs they used to hold.
A former Wall Street executive is walking dogs instead of making deals.
A laid-off banker is offering soothing massages.
Small businesses have long been a key part of America's economic make-up, representing the majority of the jobs created in the country. Even now, as big businesses shed thousands of workers, small businesses are shrinking at a slower pace.
Chunk of new jobs
Small businesses have been “more resilient'' in creating new jobs, “and the past year has been no exception'', says Richard DeKaser, chief economist at First National Bank, part of Pittsburgh-based PNC Bank.
According to the Small Business Administration (SBA) Office of Advocacy, data through the end of the third quarter of the 2008 shows that the number of self-employed remained constant.
Since the mid-1990s, small businesses have generated 60-80 per cent of net new jobs, the advocacy office says.
The International Franchise Association (IFA) says small businesses are experiencing a “modest'' decline. For 2009, the IFA projects a loss of 207,000 jobs.
The federal government defines a small business as one that has fewer than 500 employees.
But of the 6 million small businesses with employees in 2006, 5.4 million had fewer than 20. Some 2.9 million had four or fewer.
And those statistics don't include some 21 million “non-employer'' firms, single-person shops or small partnerships.
Thousands of Americans are considering starting their own business.
Franchises appeal to people who are accustomed to working for an established company.
“It attracts those who have more operational experience, are averse to risk and want to work with a formula'' — and be the person executing that formula, says Rich Sloan, cofounder of StartupNation.com. His website offers services to individuals who want to start a business.
Angela Dillen, who worked for 15 years at Citigroup in Dallas, attended a “discovery'' day for Massage Heights.
It is a franchise business that offers people with an opportunity to start their own small spa business.
She has set up her business in Keller, Texas, a suburb of Fort Worth. Despite tighter bank lending standards, she was able to secure a bank loan guaranteed by the SBA.
Office at home
Running a franchise also appealed to Vickie Tompkins of Beaverton, Oregon, who spent 30 years in production manufacturing and as a quality-control supervisor in the chemical and circuit-board industries.
After losing her job, she bought a franchise from Synergy HomeCare, which provides non-medical help to people in their homes.
Deborah Jack of Fort Lee, New Jersey, also wants to help people — and their pets. In 2006, Jack lost her job on Wall Street in a restructuring.
In May 2007 she purchased a franchise called Fetch! Pet Care. Now she walks dogs and employs people who provide petcare services.
According to the SBA Office of Advocacy, of the estimated 27.2 million small businesses, 52 per cent are home-based.
Brad Dinerman of Ashland, Massachusetts, was the vice-president of a Boston-based information technology (IT) company but he was laid off.
Then he formed Fieldbrook Solutions, which provides IT support and back-up to small- and medium-size businesses.
Since Dinerman has virtually no overhead, he can charge less than his competitors. “It is going pretty well. Some days I have more work than I can handle,'' he says.
