With many Californians out of work these days, and an unemployment rate of 12.5 percent, it's easy to get discouraged about the prospects of finding a job. But, the trends show that there are a significant number of individuals who have not lost hope or even motivation. The Kauffman Index of Entrepreneurial Activity, a leading indicator of new business creation in the U.S., reports that the number of new businesses created during the 2007-2009 recession years increased steadily year-to-year. It's not clear why there would be so many new startups in the midst of a deep recession, but the trend could suggest that many new business owners are people who have been laid off from conventional jobs and are becoming entrepreneurs out of necessity. "Either these people can't find jobs, or they're incredibly motivated to start a business," says Bob Litan, vice president for Research and Policy at Kauffman. "I suspect it's a combination of both."
Entrepreneurial activity often rises when traditional jobs disappear, but the past few years have been exceptionally tough on small businesses. Despite these challenges, the California Secretary of State recorded 93,519 new business incorporations in 2009. Although this number is lower than the previous seven years (all over 100,000/year) it still demonstrates that 93,519 entrepreneurs in California were committed to building a business. In addition to these incorporated businesses, there are many new businesses that operate as sole proprietorships, making the total number of new entrepreneurs in California even greater.
One factor persuading entrepreneurs these days may be the relatively low barrier to entry of starting a new business. Servers and computers are cheaper. The Internet allows business owners to reach customers and promote their products and services more cost effectively. And with commercial rents coming down, it's more affordable to lease space. No matter what the motivation, one thing holds true-50 percent of all new businesses fail, especially if they lack the right tools and know-how to navigate and weather the storm. It's more important than ever for entrepreneurs and small business owners to seek out and leverage any available support to keep their businesses afloat.
This is where our EWD programs and services can help businesses greatly. In this edition of GROW California, you'll see firsthand how we've helped entrepreneurs and small businesses across California, in spite of these turbulent times.
Our commitment to you in 2011 is to continue to leverage resources, so that you can focus on what you do best-running your business successfully. For a no-cost consultation on how we can help your business grow, go to www.CCCEWD.net.