By Elizabeth Montalbano, contributing writerJanuary 14, 2010: 12:17 PM ET
http://money.cnn.com/2010/01/14/smallbusiness/startup_growth_in_recessions/index.htm
In this article, according to a report of Kauffmann Foundation, the numbers of new businesses established annually in the U.S. are remarkably consistent over the years. Based on the data crunched by researchers Dane Stangler and Paul Kefrosky from the U.S. Census Bureau, the Small Business Administration and the Bureau of Labor Statistics, covering 1977 through March 2009, about 600,000 new businesses were formed each year. This is a surprising find, which contradicts to the prediction of some experts, like Rhonda Abrams, founder of entrepreneurial consulting firm The Planning Shop; he expected there would be more new business start-ups in 2009. Generally, experts believes that under the condition of recession, it would stimulate more people, who lost their jobs, to launch the entrepreneurial activities that have lingered in their minds for years. Another favorable condition to promote one’s own small business during a recession is the lower cost of entry of new companies, and recession also make customers more willing to explore less-expensive alternatives to products or services supplied by entrepreneurs.
In summary, so far, researchers have not found evident reasons to explain this surprising phenomenon and figure out how to make people feel confident enough to initiate their entrepreneurial activities. It is not sure that whether more people would notice this opportunity if given more time or there still exist other endogenous variables that constrain entrepreneurial activities.
http://money.cnn.com/2010/01/14/smallbusiness/startup_growth_in_recessions/index.htm
In this article, according to a report of Kauffmann Foundation, the numbers of new businesses established annually in the U.S. are remarkably consistent over the years. Based on the data crunched by researchers Dane Stangler and Paul Kefrosky from the U.S. Census Bureau, the Small Business Administration and the Bureau of Labor Statistics, covering 1977 through March 2009, about 600,000 new businesses were formed each year. This is a surprising find, which contradicts to the prediction of some experts, like Rhonda Abrams, founder of entrepreneurial consulting firm The Planning Shop; he expected there would be more new business start-ups in 2009. Generally, experts believes that under the condition of recession, it would stimulate more people, who lost their jobs, to launch the entrepreneurial activities that have lingered in their minds for years. Another favorable condition to promote one’s own small business during a recession is the lower cost of entry of new companies, and recession also make customers more willing to explore less-expensive alternatives to products or services supplied by entrepreneurs.
In summary, so far, researchers have not found evident reasons to explain this surprising phenomenon and figure out how to make people feel confident enough to initiate their entrepreneurial activities. It is not sure that whether more people would notice this opportunity if given more time or there still exist other endogenous variables that constrain entrepreneurial activities.
Interesting article. I think this is a matter that needs to take into account some psychology and experiment-taking. One possible example for why the number of start-ups hasn't increased significantly is the lack of confidence consumers have in a recession, not only in a buying sense but in risk-taking all together. The consumer confidence in February of 2009 was the lowest its ever been, down to 25. This may be correlated with the fact that more start-ups aren't being started.
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