Paul Burri: ‘Necessity’ Entrepreneurship Not Necessarily a Good Idea
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By Paul Burri, Noozhawk Columnist
Even if you're out of work, starting a new business requires homework, goals and objective assessments
Recently a fellow SCORE counselor referred me to a recent, interesting article about “necessity” entrepreneurship, which is the phenomenon of people who start their own business because they have been laid off from their regular job and can’t find employment. The idea of starting one’s own business is “preaching to the choir” when it comes to SCORE counselors who already are “infected” with the entrepreneurial bug.
I think that while this recession continues, we in SCORE can expect more clients in this category, if we haven’t seen them already. But I think we need to be cautious about encouraging those clients with little or no business experience. Starting a business because one can’t find a job is, in my opinion, a relatively poor reason for doing so. There is an old saying that most businesses fail because of lack of capital. On the contrary, I believe that most businesses fail for lack of business experience and when we encounter a client like this, our best advice should be to tell the individual to be very careful before jumping into a doomed-from-the-start business. We will save them endless wasted hours and untold dollars.
But if we come across a client who is business savvy (i.e., knows what it takes to start and to operate a business) and can start a small garage-based business with a modest investment, we should encourage and support that person. During the 1960s I started a small business with very little capital and lived off my unemployment checks while doing so. (I might add that I continued to look for a job during this same period.) By the time my benefits ran out, I was in a position to have the business at a point where it was generating enough for me to live on. The way I looked at it then was that the state of California was “subsidizing” me to get the business started. I think I later more than recompensed the state by way of the number of employees I hired and the payroll taxes I paid.
Later, a few years after the business got off the ground, I accepted a full-time job offer as the manager of the West Coast division of a large Massachusetts electronics company. I hired a manager for my own fledgling business and after work each day, I would stop in for a hour or so to check on things, make necessary decisions and solve problems. It meant that I was putting in 10-13 hour days but I continued to do this for several years until I finally decided it was too much of a strain on me and sold the business.
— Paul Burri is an entrepreneur, inventor, columnist, engineer and iconoclast. He is not in the advertising business, but he is a small-business counselor with the Santa Barbara chapter of Counselors to America’s Small Business-SCORE. The opinions and comments in this column are his alone and do not represent the opinions or policies of any outside organization. He can be reached at .(JavaScript must be enabled to view this email address).
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