I'm sitting in my home office and drinking a cup of coffee as I read a research paper from the Ewin Marion Kauffman Foundation entitled The Economic Future Just Happened. The purpose of the study was to answer one question: What effect do recessions have on new firm formation?
The news is good. According to the research, there are three major findings in the data:
1. Recessions and bear markets, while they bring pain and often lead to short-term declines in business formation, do not appear to have a significantly negative impact on the formation and survival of new businesses.2. Well-over half of the companies on the 2009 Fortune 500 list, and just under half of the 2008 Inc. list, began during a recession or bear market. We also find that the general pattern of founding years and decades can help tell a story about larger economic trends.
3. Job creation from startups is much less volatile and sensitive to downturns than job creation in the entire economy.
This is encouraging.
This follows what I was told many years ago by my dad when I was a student.
“Over 80% of business start ups are done by the owners not out of choice but necessity.”