The Kauffman Index of Economic Activity, another leading indicator of new business creation in the United States, found 21 percent of entrepreneurs last year had come directly out of unemployment (a slight dip from the year before but higher than prerecession levels).
"In essence, entrepreneurship looks more attractive when the next best alternative isn't so promising," said Donna Kelley, professor of entrepreneurship at Babson College. "People running their own businesses can have some element of control over their lives, particularly when the job market doesn't look so predictable or secure. Even if started out of necessity, some may have had ideas percolating and perhaps weren't ready to leave steady jobs with good benefits and pensions. But after losing a job and seeing few good prospects, their latent ambitions may get the push they needed to get started."
For some recession-era entrepreneurs, that was the case: Getting downsized became a catalyst to do something they'd only dreamed about, the opportunity to try a new adventure.
"No one really wants to get laid off," said Kevin Michael Gray, who launched software development company ApproveMe after being laid off from his job as an ad agency project manager. "What people don't realize
is that what the Renaissance period was to the arts, recessions can often
be for entrepreneurs. Recessions force entrepreneurs to re-evaluate
the financial security—or lack thereof—in the workplace."
Mitchell Stern, who left his job as a journalist in Washington, D.C., in advance of an impending lay off, moved to California as he tried to figure out what he wanted to do next. Intrigued by the new medical marijuana industry, he ended up taking a job at a licensed marijuana dispensary. There, he learned to grow his own plants and persuaded friends to invest $5,000 to help him start his own business.
Three years later, his Burning Bush Nurseries supplies licensed marijuana dispensaries with live seedlings and employs four workers. "Being able to be part of this new, growing industry and choose the direction of my company has been so freeing," Stern said. "Being an entrepreneur comes with stressors, but the rewards are so worth it."