The Entrepreneur Economy PT 2

BY: JASON DALEY

The other part of the equation is talent--with national unemployment rates around 10 percent and the rate for the under-25 crowd over 50 percent, hiring employees has become easier and less expensive. Even professionals with no long-term plans to stay in the freelance business are willing to consult while they wait for big business to start hiring again. "There are so many good, creative people on the sidelines right now," Gergen says. "Many of them are willing to freelance or work for commission while they wait for a headhunter to snap them up."

But many of those freelancers won't head back into mainstream corporate employment. That's partly because, besides the perks of being their own boss and controlling their financial future, entrepreneurship has gained status as a legitimate career path. Thirty years ago, the term "entrepreneur" conjured up images of men selling shrimp out of the back of trucks or get-rich-quick schemes preying on seniors. Now tech entrepreneurs like Steve Jobs, Bill Gates and Mark Zuckerberg are rock stars, and there's been a cultural shift as the public grasped the economic potential of highly motivated, idea-driven individuals.

For Gen Yers, more than any other group, entrepreneurs have become heroes. Entrepreneurship programs at accredited universities have jumped from just a handful 10 years ago to more than 200 entrepreneurship centers today, and more than 500 higher-ed institutions offer certificates, minors, or majors in entrepreneurial studies. According to one recent poll, 51 percent of teens hope to one day start their own business, and see it as a way to take greater control of their lives.

Of course, the big elephant in the economy of 2010 is still financing. The credit crunch has eased only slightly in the last year, and has been especially stubborn in the small-business sector. According to Scott Shane, a professor of economics at Case Western Reserve University and a writer for The New York Times website, the promised $730 million in SBA loans included in the stimulus bill for 2009 and 2010 is only a drop in the bucket and is unlikely to crack open the system. But historically, more than 50 percent of entrepreneurs have launched their businesses without loans, relying instead on the informal "friends, family and fools" formula for startup cash.

"People are assuming the ability to raise capital is more difficult and are approaching the process differently. It's a changing model," Shane says. "They are using more and more of their own money, so it's about redesigning a business.

"When an entrepreneur sees they need half a million to buy all the equipment and hire people to launch a business, they start thinking, 'What if I leased my equipment and paid employees on commission?' The percentage of people reporting that they don't need outside financing to start a business is higher now than before the recession."

Robert Fairlie, who tracks the demographics of entrepreneurs at University of California, Santa Cruz says the numbers bear that idea out. In 2008, more low-overhead, low-revenue businesses were launched than in previous years, and he expects the same when 2009 numbers are released.

Mike Michaud thinks his business wouldn't have gotten off the ground if he had started in a brighter economy.

In 2007, Michaud was fired from his job as a clerk at the Darien, Ill., Circuit City, for "making too much money." So, with two 20-something friends, he decided to take a chance on an idea he'd batted around the break room for more than a year. Funded by a $5,000 loan from a friend's father and part-time jobs, Michaud, Doug Walker and Mike Ellis started work on Channel Awesome, a web-based TV network that would host all original content.

Then one of their first sites, That Guy With the Glasses, featuring snarky movie reviews and question-and-answer bits starring Walker, went viral on YouTube. So they switched gears and tried to capitalize on the popularity of the character. A little more than a year after launching thatguywiththeglasses.com , they're averaging 16.5 million page views a month and making $150,000 in revenue.

"If I was working a job in commission retail, I don't know if I would have had the time or desire to do this--I know we wouldn't be making decent money already," Michaud says. But the economy also forced them to be smarter about the way they structured their business and approached advertisers. And Michaud thinks their small budget and frugal beginnings have given "That Guy With the Glasses" a competitive advantage in the fast-growing field of web video. "We've been cheap all the way through," he says, "and we'll be coming through as the economy picks up."

They're slowly diversifying their website too and circling back to the idea of a web-based TV channel. Already, they've launched shows dedicated to video games and bar reviews, and they're prepping sports and sketch comedy shows. In total, they plan to host 300 original content series.

Whatever curveballs the next year, or years, throws at the economy, it's clear that the landscape has changed. Instead of sitting by and watching their futures grow bleaker, companies and workers are harnessing impressive changes in business culture and technology to create a grass-roots economy--a broad swath of many small businesses that can bend with the changing winds.

"The entrepreneurial spirit is there," author Malone says, and it's going to be even stronger when the economy recovers. "There are certain things you can't change, and one of them is the zeitgeist that has developed around entrepreneurship over the last 100 years. America is populated by ambitious mavericks. The news events of today aren't going to change that."

SOURCE: www.entrepreneur.com