Some friends of mine (married couple) decided that it’s time to start a business. The idea is brilliant, the economics are sound, and they want to make a go of it in the next couple months. The motivation? Pregnancy. Soon-to-be mom is currently working. They can’t figure out any way for to meet their current bills with her not working, and she can’t really do her job from home.
Another friend of mine has been itching to start a restaurant for as long as I’ve known him. He says that when he was a kid, they played make-believe businesses- his was always a pancake store.
My wife was laid off of work back in January and is slowly, but surely, moving toward becoming a freelance graphic designer. She just can’t figure out a way to do the kind of work she wants to do under the employ of someone else.
I was at a networking event about two weeks ago and I met another dozen people who are in various stages of starting up a company.
At the bookstore I find that the motivation/management/business/investing section is overflowing with books about starting businesses. Meanwhile, meetup.com is flooded with groups devoted to startups, entrepreneurs, and business opportunities.
So… what’s going on? There seems to be a “perfect storm” (ugh, buzzword) of factors that all add up to this phenomenon. From what I can see, all of the following are contributors, and you can’t blame it on one in particular:
The economy, pt. 1 – People have lost their job, and are looking to do anything that might replace their income.
The economy, pt. 2 – People suddenly realize that starting a business is not inherently any riskier that being employed by a firm.
The economy, pt. 3 – People suddenly realize that relying on a lump sum of money in retirement (whatever that is) won’t work, and are looking to create streams of income instead.
The economy, pt. 4 – The greed (real and/or perceived) of large corporations and institutions is driving people to seek meaningful work, which they often have to create themselves.
The Gen Y/Gen X Cohorts – People under 35 are becoming increasingly aware that they simply don’t have the capacity (or the desire) to work for eight hours a day doing something they dislike. Maybe it’s laziness, maybe it’s wisdom- but I know lots of people (myself included) who have plenty of talent, drive, and ambition, but who are almost completely unemployable.
The Changing World – Possibilities are starting to seem limitless. It’s hard to want to work for a company when all the really cool stuff being done in the world is being done somewhere else.
Increased Connections – There have always been pioneering entrepreneurs. It has always been possible to rewrite the rules of the game… but the average person never found out about it. There was no chance to be inspired, no example to follow. Now, we can hear about it every day- they are our modern heroes, and a shining example for all of us.
Changing Ideas of Success and Competition – Let’s say you want to start selling vitamins online. Is your competetion the One-A-Day people? Probably not. Are you only successful if you drive GNC out of the marketplace? You wouldn’t even think of it. Most of these new businesses are trying to do one of two things (and sometimes both):
1) Do something the founder thinks is cool and meaningful
2) Provide enough income so that the founder can spend more time with friends and family
These goals are a lot more attainable then the “Take over the world” goals of large businesses, and people are starting to realize that they could be successful, if they just understand success in this new way.
Infinite Market – If your average customer buys $50 worth of vitamins each month, you only need about 85 customers to make gross over $50,000 a year. What kind of market penetration is required if the potential market is the billions of people who go online everyday? How hard is it to get 85 customers? People are starting to understand the economics of the Long Tail, and that’s spurring them into new businesses.
Lower Barriers to Entry – (This one’s my favorite) Technology has made it possible to start a seroius business very fast and very cheap. You can go from initial conception to launch within a week and with less than $100.
It is a crazy exciting time to be alive, to start a business, to dream big (or small) dreams about life and possibilities. But it’s also a time frought with dangers. This brave new world of ultra-light startups and independent consultants is a magnet for con-artists, pyramid schemers, fools, and plain old bad luck.
This week in the blog, I’m going to highlight some of the inherent dangers, and how to avoid them.
First up tomorrow: Is it really a business?
