Study: Tough economy isn’t boosting entrepreneurship this year - Kansas City Business Journal

When the going gets tough, the tough write a business plan.

So goes the conventional wisdom during periods of economic malaise: that people either out of work or fearing for their jobs will create jobs for themselves, following their dreams and starting businesses.

But it’s unclear whether that’s happening this go-round, and a new study shows that the nation’s entrepreneurial spirit is a little on the ghostly side.

Challenger Gray & Christmas Inc., a Chicago-based outplacement and executive coaching firm, on Monday released its survey of job seekers in the first half of the year, which found that an average of 3.7 percent planned to start a business. The company said it was the worst two-quarter period — 3.4 percent and 3.9 percent — for entrepreneurial activity since it began tracking such things in 1986.

By comparison, 7.6 percent of respondents in the first half of 2009 opted to start a business, and 9.6 percent planned to go that route in the second half of 2009.

The firm also pointed to recent figures from the U.S. Bureau of Labor Statistics, which show that 8.9 million people are self-employed — a 9 percent drop from 9.8 million right before the recession hit. It’s also less than the 9.1 million self-employed people in December.

John Challenger, the firm’s CEO, said in a release that he couldn’t tell what was causing the decline. He theorized it could be that more of the survey respondents were successful with their job searches and didn’t need to start a business. On the other hand, he said, the shaky economy could have potential entrepreneurs afraid to jump in the game or unable to open their doors because they can’t get access to credit.

“The decision of starting a business involves so many factors that trying to identify one or two is an exercise in futility,” Challenger said, though he added that new business creation could return as the recovery strengthens.

Dan Stangler, research manager for the Ewing Marion Kauffman Foundation, said the Challenger survey was just one of several showing activity within the entrepreneurial ranks. Others, such as the Kauffman index last year, showed the biggest increase in new business creation in 15 years, but census data have shown that entrepreneurial levels have remained fairly flat.

“We’ve sort of got numbers going in all different directions, and I don’t think we’re going to have a good idea on this recession until the dust settles,” he said.

He added that this recession is so much harsher than downturns of the past that the conventional wisdom of those recessions now may be a little less wise.

“Few people alive have seen the severity of this recession,” he said.

via bizjournals.com

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