Today's prospective entrepreneurs face an
extra challenge: A sluggish economy has made financial backing
more difficult to secure and competition for market share
fiercer than ever.
In every recession, entrepreneurship typically
increases as people lose their jobs, take matters into their
own hands and decide to start an independent venture. About
13 percent of those who lose their jobs ultimately decide
to become their own boss, Prof. Steve Rogers says.
During this recession, it's been no different.
"We're seeing an influx of people who
are looking at entrepreneurship as their next career,"
says Linda Darragh, adjunct assistant professor of entrepreneurship
at the Kellogg School and director of the Women's Tech and
Venture Program at Chicago's Women's Business Development
Center. She adds, "We provide a reality check. For about
65 to 70 percent of them, it's not the way to go."
But for those who've done their homework —
who have performed a competitive analysis and are realistic
about the amount of money, energy and commitment the venture
will take, the timing could be just right, despite the stagnant
"It's an exciting time for women. The
opportunities are endless right now. We are seeing businesses
in almost every imaginable industry form," Darragh says,
adding that time-tested ventures such as restaurants, interior
design firms, signage companies and others marketing decidedly
low-tech products seem to be some of the most popular.
But as banks, venture capital firms and even
individuals become more selective about investing and loaning
their money, the challenge for would-be entrepreneurs is finding
the funds necessary to get their businesses off the ground.
During these tight times, it's more important than ever for
entrepreneurs to "have some skin in the game," Darragh
says — to be willing to invest personal funds to cover
some or even all of the costs of a start-up.
Some of the vehicles for financing companies
are also beginning to change, she says, as angel investors
step up to cover some funding gaps left by banks and venture
Rogers points out that tight capital might
even be seen as a positive, since it forces prospective business
owners to carefully think through and fine-tune their plans.
"For those who are considering becoming
entrepreneurs I believe it's the best of times," he says.
"It's the best of times and the worst of times. Capital
is readily available for those who have great ideas or great
backgrounds in execution."