By Jennifer Wang
It’s not the $700 billion bank bailout. And no, it’s not the $787 billion American Recovery and Reinvestment Act of 2009. The real economic stimulus is … wait for it … the recession. That’s right, the Great Recession. This upside-down economy is creating entrepreneurial opportunities aplenty, so long as you can deal with a situation about as stable as a lava flow.
Results from Challenger, Gray & Christmas’ job market index revealed that 8.7 percent of job seekers gained employment by starting their own businesses in second quarter 2009–way, way up from the record low of 2.7 percent during the last quarter of 2008.
Even in finance, confidence and risk tolerance are on the rise. IbisWorld, an industry market research firm, expects that after a great purge, loan brokerage services will see 40 percent growth in 2010.
Sunwest Bank, a community bank that caters to entrepreneurs, upped its total assets by more than $150 million during the worst of the financial crisis–and that was before acquiring two failing banks in July and September. “We were picking up good clients left and right,” says CEO Glenn Gray. “Business owners are still seeing opportunity.”
Delve further into the numbers. It appears startup rates remain steady through recessions. “Ten, 15 years from now, there will be a slew of companies that we’ll point to and say they started in the recession,” Kauffman Foundation senior analyst Dane Stangler says. “You don’t see them yet, but you can be sure they’re out there.” In fact, more than half of today’s Fortune 500 companies were founded during a recession or bear market.
Austrian economist Joseph Schumpeter once described entrepreneurial innovation as a “perennial gale of creative destruction,” forcing existing companies to adapt or fail. “Economic progress in capitalist society,” he declared, “means turmoil.”
Well then, we must be on the right track.