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Mon April 11, 2011
Recession Creates, Destroys Entrepreneurs
Starting a business from scratch is a mammoth undertaking. Starting a business in the midst of a bad economy might seem like an impossible task. But entrepreneurship traditionally spikes in any recession – and this latest downturn was no exception. WNPR’s Harriet Jones reports.
Christina Kazanas used to be the principal grantwriter for the City of Stratford. Her friend Rebekah Harriman wrote grants for the City of Bridgeport.
“Apart from our normal jobs, our nine-to-five jobs, we were getting requests for grant-writing consulting on the side, and at some point we looked at each other and said, you know, we could actually do this full time.”
They took the plunge last year, and HK Consulting was born.
“The demand was actually there for what we do because unfortunately what we do is a misery business. In bad economies when donations are down, returns on investments and endowment funds are down, there’s not as much local tax dollars to fund what municipalities need to do, they look to grants.”
Kazanas says for now, her business doesn’t lack for work, but small business chores like doing the books and writing a long-term plan are proving a challenge.
“My business partner has been an executive director before, I’ve been a chief operating officer of two non-profits. So we know the non-profit end. The for-profit is completely different. And that’s kind of part of the reason why I’m taking the FastTrac course is to sort of get a better handle on how to run a business, not just how to be a good grant writer.”
“Now let’s bring that back to this… I see a lot of opportunities here…”
Susan Cozzi is facilitating this FastTrac workshop in Shelton for 20 business owners or would-be entrepreneurs. It’s run by the Womens Business Development Council, WBDC, which has been providing services and support to start up businesses in Connecticut for more than ten years.
“There is a spark you can see in true entrepreneur, because it’s a lot of work. It’s easier to go work for someone else.”
WBDC’s Kenyetta Banks says she’s seen all kinds of ideas floated as possible businesses from decorative urns for pet ashes through gourmet cookies to aromatherapy.
“We tell people—don’t quit your day job, because you never know what might happen. So I tell them all the time either you’re going to not see your family or you’re not going to sleep.”
But for an increasing number of her clients in recent years, that day job doesn’t exist any more. People are being forced into entrepreneurship through unemployment.
“I think the last two years I’ve seen 50 percent of people coming back because of that simple fact, or they need a second income.”
The Kauffman Foundation keeps tabs on the data for start-up businesses around the nation. Traditionally, it notes an upswing during each recession. Researcher Dane Stangler says this latest one was no exception.
"What we did see was a spike in entrepreneurial activity driven by one person, one business, one job shops."
What was notable about this recession was the extent to which those businesses failed just as quickly as they started. The net number of self-employed people in America actually shrank between 2007 and 2009. Job creation among small employer firms also declined sharply. Stangler says it points to a problem in converting that one person shop into a viable, employer business that’s going to grow. Wallingford based entrepreneur Rich Mavrogeanes has experience of starting businesses in good times and in bad
"Particularly in a recession in bad times, customers, whoever they may be, are looking for value. And the larger companies tend to have larger overheads, larger infrastructures and as a result, charge more for their products. So it’s pretty easy to be competitive from a price and value point of view."
Mavrogeanes began VBrick Systems, now a hugely successful Connecticut company back in 1997. In the dark days of 2008 he branched out again with Discover Video, providing technology services for webcasting and live remote broadcasts. He says recessions sometimes make unwilling entrepreneurs.
"Perhaps he’s been laid off, unemployed, unemployment may be running out, you know and he sort of looks around and says, gee I guess I’ll start a business. I suspect those sort of entrepreneurs are more likely to fail."
But for others, unemployment may be a true opportunity…. so long as they have a passion for what they do.
"Those people who have that and have been waiting for the opportunity, you know perhaps they’ve got a little kick in the butt, right, getting thrown out of the nest, you know it’s fly. So those that are willing to fly I think are going to do quite well."
Back in Bridgeport, Christina Kazanas of HK Consulting says she hopes her business can beat the odds and be one of the lucky ones to grow. But whatever the future, she’s glad she made the jump.
"I like at the end of the day when I’m packing it up at 11 o’clock at night, I like going home knowing that this is mine"
For WNPR, I'm Harriet Jones