The pandemic has disrupted businesses across industries. Over 22 million people lost their jobs last spring and while over half have been regained, the recent resurgence of the virus has led to more shutdowns and layoffs, especially in the leisure and hospitality industries. U.S. employers cut 140,000 jobs in December, reversing an already sputtering economic rebound. 1.15 million workers filed for state unemployment benefits during the first week of the new year.
It’s been an especially difficult time for small businesses – about 30 percent were closed for good at the end of the year compared to January 2020, based on data from Opportunity Insights at Harvard University. But there seems to be a small silver lining as start-ups are surging during the pandemic. The U.S. Census Bureau reports business applications were up over 43 percent in 2020 over the same period in 2019.
Lessons from the Great Recession
What’s sparking this seed of entrepreneurship during such uncertain economic times? We can look to the most recent economic downtown for some answers.
In the “Great Recession” of 2007-2009, 8.8 million people lost their jobs as thousands of businesses closed or filed bankruptcy. At the same time, entrepreneurship rose by 17 percent from 2006 through 2009. But there are some differences between now and then. Home equity enabled entrepreneurs to access home equity loans to launch businesses during the Great Recession. Since home ownership is down now, entrepreneurs will need to look elsewhere to fund their start-ups. The CARES Act eliminates the early withdrawal penalty for retirement savings so that could be one place where people turn to for funding.
Additional educational programs such as the Goldman Saks 10,000 Small Businesses are a resource for entrepreneurs. This nine-month program teaches practical skills such as business plan development, financial statements negotiation, marketing, and employee management. Look for organizations in your area that support new entrepreneurs. In Chicago, 1871 is a nonprofit for founders and corporate partners. Members not only have access to a community of fellow founders, startups and resources, but they have opportunities to meet the mentors, universities and corporate partners that can propel your business forward.
Is it a Good Time to Start a Business?
I’ve noticed more career coaching clients broaching the idea of entrepreneurship in our sessions over the past year. One client is considering starting a professional organization business. Another is looking for his exit strategy out of the IT industry. Regardless of the business ideas they bring forward, we always discuss their vision and values. I ask them to think about:
- What do you want your life to look like?
- How will a new career support that life?
- Is entrepreneurship the way to help you achieve that life?
No matter where they are in the process, I always encourage them to talk with other entrepreneurs, though not necessarily in the same industry. I suggest setting up an informational interview, connecting to entrepreneurs via LinkedIn and joining networking groups or business associations such as BNI (Business Network International) for support. Entrepreneurship can be a lonely road, so it’s important to have a network of people you can turn to as you build your business.
I help JMA’s career discovery clients focus and clarify their vision, even when their ideas are in the early incubation stage. Someone may think they want to start their own business because they are simply tired of having a boss. But there’s so much more to successful entrepreneurship. You should be able to define your goals, even early on. Ask yourself:
- How many employees do you want?
- What kind of partnerships do you want to form?
- Is this a side gig you can do out of your basement on your own or a viable business idea that can scale?
Once they have solid answers, together we articulate the steps they would take to put that vision in place.
Related: 4 Surprising Insights the Highlands Ability Battery Can Reveal
A Time of Self Reflection
We are all experiencing a bit of self-reflection time during this pandemic which could be spurring some idea generation. Some people may have more time on their hands if they aren’t working or perhaps, some are simply saving time by not having to commute to the office. It’s a time to think about what you want your life to look like and maybe make a change in a different direction. I’ve had clients tell me they no longer want to work hard to fill the pockets of someone else, but rather have decided that now is the time to follow their dreams.
The current climate and constant changes in social justice weigh heavily on some people and are contributing factors for them to stop and think about their purpose in life. People are asking:
- How am I showing up?
- What’s my voice in this world?
- What do I want to bring to the table?
- How can I contribute?
- How can I add value not only locally in my community but perhaps even globally?
Millennial Mindset
I especially see this sense of growing responsibility when I work with millennials. They seem to have a very deliberate way that they want to choose the work that they will do. They have watched their parents work hard and still struggle, and they want something different for themselves.
I recently started working with a college senior named David (not his real name) who majored in environmental engineering thinking he would spend his career protecting the environment. He’s recently realized that the job is really about protecting humans from the environment as it’s just algorithms and pushing paper rather than creative problem solving. He has an intense desire to be able to affect change and have some meaning and impact in the world. We are now working on creating opportunities, including possible entrepreneurship, so that David can have the impact that he wants in his life.
Ideas Spark New Ideas
Trends that were already underway but have been accelerated by the pandemic, such as home cooking, consumer package good sales and tech companies are springing up to solve problems in the market.
The Hatchery, a food start-up incubator which opened in 2018 in Chicago, reports through WBEZ that more people have expressed interest in starting food companies during the pandemic, but that the focus in direction has shifted. Typically, half of the ideas are for brick-and-mortar businesses but now, 80 percent have to do with ghost kitchens or meal delivery. Ghost kitchens exist in restaurants that have closed due to indoor dining restrictions but are being used as a shared kitchen by different food businesses as a way to reduce overhead.
Businesses are also pivoting to be able to connect with consumers online. The Chopping Block, Chicago’s largest recreational cooking school which has been in business for 24 years, is now teaching people how to cook virtually through interactive Zoom lessons. Farmer’s Fridge which has automated smart fridges featuring chef-curated meals and snacks in downtown Chicago lost 85% of their revenue last year but switched their model to offer home delivery which has been a huge success.
Tap into Moral Code and Convenience
Entrepreneurs seem to be willing to take risks in this uncertain economic climate, but they are also relying on the shop local mindset. As we witnessed over the past holiday season, consumers want to do the right thing and support small and local businesses so it’s a great time to tap into that moral code. However, you have to also offer convenience in order to be able to compete against companies like Amazon.
Balance the Fear
In some ways it’s a cautionary time, but it’s also a good time to be an entrepreneur and make some bold moves. There are some clear winners in this environment such as Zoom, mask and Plexiglas manufacturers and ultra-cold storage logistics, but we’re seeing this period of disruption is yielding opportunities.
Starting your own business and funding it with your own money right now can be downright scary. To address this fear, I work with my clients on their self-talk. Are they simply afraid of the unknown, are they concerned that they don’t have what it takes or is there a legitimate barrier to making this career move? We talk about the conversations they have in their heads and where those words are coming from. We explore ways to help stabilize the fear so that it’s not paralyzing their dream of entrepreneurship.
The Shark Tank Syndrome
We watch Shark Tank and think entrepreneurship is nothing but an exciting life, but most people don’t understand how much work goes into it. One of the most critical components to success is taking a hard look in the mirror and asking yourself if you have what it takes to be an entrepreneur. We use an assessment in our career discovery work that allows our coaches to ascertain which of the four quadrants someone is best suited for employment:
- Entrepreneur
- Freelancer
- Non-profit organization
- For-profit organization
The individual’s characteristics and traits such as fortitude and their risk profile help determine whether they will make a good entrepreneur. The areas that come into play, and actually eliminate most people from entrepreneurship, are the uncertainty of income and the financial risk that you have to take. Entrepreneurs must have the cash to run the business (often without paying themselves for a while) as well as funding growth opportunities and sustaining downtowns.
There will always be a fear of the unknown, especially right now. The pandemic has revealed that in the “before times” we had a false belief that we could plan, predict and control our lives, and we simply cannot right now. But for those with a business idea that solves a problem in today’s new world, it could be the perfect time for a bold move.