Startup Activity Among Unemployed Hits 25-Year Low -- Lowest Level On Record

The number of unemployed managers and executives starting their own businesses fell to a record low in the first six months of 2011, according to a recent study by Challenger, Grey & Christmas, Inc. About 3.3 percent of job seekers decided to launch businesses, down from the previous low of 3.7 percent in the first half of 2010. In the second quarter of 2011, that startup rate hit its lowest level -- 2.5 percent -- since the survey originated in 1986.

"We are slowly coming out of the deepest recession this country has seen in decades. While some large and medium-sized companies are finally beginning to see the effects of an upturn, conditions are still very tough for small businesses and would-be entrepreneurs," John A. Challenger, CEO of Challenger, Gray & Christmas, said in a statement.

While the rate of startups among the unemployed was notably higher in the previous recession -- as high as 9.6 percent in 2002 -- Challenger pointed to lack of funds as a major obstacle in this recession. "Lending is still extremely tight and for many of those wanting to start a business -- funding the venture with credit cards or through a home equity loan are no longer viable options," he said. "Then there is the difficulty of finding customers. Even medium and large companies are having a hard time doing this, as consumers and businesses continue to keep a lid on spending."

It's not just the unemployed who seem turned off -- self-employment in general has decreased significantly during the recession. According to the U.S. Bureau of Labor Statistics, there were 8.6 million self-employed Americans in July 2011, compared to almost 10 million in June 2007, prior to the recession.

Despite the sobering numbers, Challenger remained optimistic. "As the economy continues to gain strength, start-up activity may begin to grow again, as conditions for such ventures become more inviting," he said.

Comments

[Moose Luck 99]

03:17 PM on 09/02/2011

KILL THE EMPLOYER!!

Rather than thanking Gibson for its entrepreneurial spirit and being an ambassador for the US everywhere guitars are played, the Obama Administration has used a book of dirty tricks to stymie Gibson. Gibson’s factories were raided two years ago, when government agents seized valuable inventory, yet the government never brought charges and refused to explain why it was still keeping Gibson’s property. When Gibson sued the Federal Government for its right to private property, the Obama Administration responded with last week’s new raid. One theory posits that Gibson is being targeted for retribution after it moved its factories from union friendly Michigan to right-to-work Tennessee – just as Boeing is being sued for opening a factory in South Carolina.

The government’s motivation to punish a US manufacturer for using small amounts of rare woods is open only to speculation, but its tactics are textbook. Unlike any other litigant, the government has enormous advantages when it sets it sights on a victim. The government can confiscate any property it wishes without probable cause, as Gibson has learned. Such victims must sue to prove their innocence, which can take years. Meanwhile, the government’s victim may not be able to continue to earn the profits required to defend itself.

http://www.redstate.com/shoutbits/2011/08/29/if-gibson-is-not-safe-nobody-is/

[des946]

11:59 AM on 09/02/2011

This sort of reminds me of the joke about "how the operation was successful; but the patient died." They used the TARPs (the one issued by congress and then the Fed's quasi-TARP) to save the financial institutions, Wall Street, and the major car manufacturers; BUT they failed to do anything to stimulate samall businesses, which account for a FULL 90% of the jobs in the USA . . . . so, the TARPS were relatively successful, the financial institutions are reprotedly 'flush with money" as are most of the large corporations; BUT the small businesses are dying on the vine; and there is a negative growth in the number of small businesses (employers).

They "saved the financial infrastructure; but killed the econmy and the small businesses . . . which were the key to jobs creations. In essence, they "saved the wealthy; and impoerished the middle and lower classes". That IS the bottom line of what has happened. Eventually, the unemployed who have exhausted their unemployment benefits and who are no longer counted in the statistics, will become such a large mass of hungry and desperate people that they will no longer be able to be ignored . . . andthat day IS COMING within the next two years. We are all in for a rude awakening AFTER the elections of 2012.

[dadw5boys]

02:36 PM on 09/02/2011

Robbing the American People of equity with the 3 pronged attack of Pre Approved Credit Cards, Sub Prime loans that reset to fast and high, then changing the Bankruptcy Laws that made Unsecured Credit into Secured Credit !

On top of that stripping away the Banking Laws that had kept the USA safe for over 70 years meant the Death of the USA as we knew it. Will Billions of Sub Prime Loans full of Fraud, so much Fraud the FBI had to limit the investigations to $200,000 Loans or more, Commercial Sub Prime Loans for 5 or 6 times what the real value of many Building was.

[Algo]

11:40 AM on 09/02/2011

And profits at health insurance companies hits 25 year high. CEOs at major health insurance companies were pleased that they could participate in the destruction of the middle class. "If an entrepreneur wants to take risks, we can help - i.e., direct a large percent of your income to us or go without health insurance". Such an approach helps the entrepreneur understand and better manage risk. The interview was interrupted due to a lunch meeting with a lobbyist . . . .

[tolerantvoice]

10:48 AM on 09/02/2011

Most small businesses are in existence because of big businesses. As big business outsources, small businesses will decline. The engine for economic health is manufacturing. Its continued decline will affect all aspects of life in the US. Unless US laws are changed to apply to products SOLD in the US not just MADE in the US, manufacturing will continue to decline and our national financial health will continue to decline.

[thefacts22]

02:12 PM on 09/01/2011

As the economy starts growing again? great deduction......Do we need Nostradamus?

[thefacts22]

02:09 PM on 09/01/2011

Only 25 years ago?all the old timers say EVER

[BinghamLofts]

12:50 PM on 09/01/2011

it takes a lot of money and regulations to start up anything, unlike when out grandparents did it back in yonder... you must have at least half a million to start a small buisness.

[TFDNYC]

05:52 PM on 09/01/2011

Not true. I started mine with $6k. Revenue FY1: $97k. Projected revenue FY2: $140k.

Still not profitable but that's to be expected for the first few years. he key is to reinvest every single penny of profit back into the business and live like a poor person's mentality: I don't have any money and therefore can't spend any money.

There is a difference between excuses and explanations. What's yours?

[Gottlieb]

09:13 PM on 09/01/2011

Good luck with your business but it sounds like you are making your own luck. It helps to be in good location and to know what to do in a start up. More power to you. BinghamLofts seems to have no clue about business or how you grow your business. Hope you are wildly successful and have to hire many people.