The Great Recession ravaged many of America’s normal behavior patterns - including business startups. In fact, according to a new study from Forrester Consulting, commissioned by security giant Symantec, the recession changed startup entrepreneurs themselves.
Necessity Is the Mother of Invention
The survey found that the “leaders of small businesses launched during the Great Recession are dramatically different than those who launched their company prior to 2008.” The report calls these new business owners “accidental entrepreneurs” and defines the term as a “company founder who started his or her small businesses out of pure necessity rather than a lifelong dream of ‘being their own boss.’”
A similar breed of entrepreneurs emerged in the early 1990s, also following a recession, albeit a much smaller one. That was America’s first white-collar recession, and the corporate executives who found themselves out of work turned to entrepreneurship in order to keep a roof over their heads.
Back then I dubbed them “corporate refugees.” They were smart, educated businesspeople who found a home in the then-relatively unknown land of entrepreneurship. These are the folks who launched the entrepreneurial revolution, who helped make starting your own company something to aspire to.
Technology Is the Difference
The accidental entrepreneurs of the 21st century share some similar traits: The survey found them to be “highly educated and battle-tested business professionals.” One difference is that today’s accidental entrepreneurs are “tech-savvy” and are adept at using today’s technology, which of course didn’t exist 20 years ago.
Brian Burch, Symantec’s vice president of marketing communications for SMB and Cloud, believes “accidental entrepreneurs are reshaping the SMB market, [by] growing significantly faster than the less technically confident, less agile, less ‘connected’ small business owner.”
There have been conflicting accounts of startup activity during the recession. However, according to the Kauffman Foundation’s Index of Entrepreneurial Activity, 60,000 more businesses were started a month in 2009 than in 2007. And the Forrester Consulting research shows that small businesses with 10-49 employees are especially “aggressively leveraging technology and poised for explosive growth.”
The Profit Motive
A deeper dive into the numbers shows that many entrepreneurs who started post-2008 businesses were motivated by profit, not necessarily passion. Most (54%) entrepreneurs who launched during the recession categorized their startups as “growth businesses (having an exit strategy) rather than lifestyle business, which is 15% higher than pre-recession companies.”
The “accidental entrepreneurs” are a bullish lot - 75% project revenue will grow more than 10% in the next two years. To help them get there, 46% plan to double their number of employees.
Comparatively, only 39% of owners of older businesses (those founded before 2008) expect to experience more than 10% revenue growth, and a mere 12% plan to double their number of employees.
One secret to success for newer startups is embracing technology. The survey reports that new businesses have taken “dramatic and immediate advantage of the cloud.” More than half of the accidental entrepreneurs use cloud-based software, 26% have turned to the cloud for security solutions, and 21% have no servers on premises. Among older businesses, only 39% use cloud-based software, 16% entrust their security to the cloud, and 5% have no servers.
Whatever your motivation for starting your business, it seems the “secret sauce” is pursuing sound business principles and taking advantage of tech innovations. And being ready to scale - from Day Two onward.
Image courtesy of Shutterstock.