The Kaufman Index of Entrepreneurial Activity indicates that 514,000 new businesses opened in 2012, an impressive number that experts say indicates a renaissance in the start-up market. The stats are slightly lower than in 2011, but the high numbers over the course of the last few years show that more people are attempting to make opportunities for themselves rather than rely on corporations to give them jobs. Many market observers agree that technological advancement, Internet growth and avenues of alternative funding are making it easier for a person to start a small business and that there has been no better time in history for trying it. For more on this continue reading the following article from TheStreet.
Being an entrepreneur is easier than ever these days, but is it a good time to launch a business?
Brandon Latham is a new business owner. As a franchisee in Austin, Texas for BodyBrite, which offers Intense Pulsed Light hair removal and other beauty treatments, he’s no stranger to working long days. Yet just six months after opening his franchise, Latham, 38, says it’s already worth it.
Business has been "steadily increasing every month," Latham says. "To get people in the door we did a Groupon (GRPN). I was hesitant because they take a good percentage of the profit, but it’s been great. We’re getting people in the door and our name out and we’ve had high retention."
BodyBrite is already established in Europe, the U.K., Mexico and Central America with more than 300 centers open, but is just getting started in the U.S., with just 10 locations here. The company plans to have more than 40 opened in the states in the near future.
"It’s been very rewarding," he says.
Prior to opening the franchise, Latham was working at his family’s insurance business in Amarillo, Texas, about 500 miles northwest of Austin. In 2009, the family sold the business and Latham thought it was a good time to try out life in a big city, despite the economic downturn. Latham says he dabbled in several jobs including real estate and retail, before deciding that he wanted to own his own business. Knowing that he was particularly interested in the beauty, health and wellness industries, Latham sought out franchises that would do well in Austin.
He decided on a BodyBrite franchise mainly because the $120,000 all-in start-up costs were lower than other wellness franchises, such as Massage Envy, where the upper end of start-up costs could be more than a half a million. But Latham also says there is a prime market of customers from the city’s large student body (The University of Texas at Austin has roughly 48,000 students) and professionals.
"I think I’ve chosen the right franchise for me," Latham says. BodyBrite has been "very supportive and helpful … The whole process of opening has been fairly smooth. I just wanted to get into something that I was truly interested in."
Latham’s story is indicative of the sea change the country’s workforce is going through that is placing a larger emphasis on entrepreneurial career options as big corporations look to remain lean and mean coming out of the recession.
Last year, roughly 514,000 new businesses were formed per month, a rate that is higher than pre-recessionary and long-term levels, according to the annual Kauffman Index of Entrepreneurial Activity by the Ewing Marion Kauffman Foundation. Given the improving economy though, the rate of new business formation actually slowed from the year before to 0.3% from 0.32% in 2011, Kauffman said.
Still, entrepreneurism is back in fashion. The U.S. has roughly 28 million small businesses and the Small Business Administration means to recognize them through its 40th annual National Small Business Week, which kicks off today. The week-long event will feature events and panels across the country related to entrepreneurism and small-business ownership.
So is now a good time to start a business?
Technology advancements as well as the advantages of using social media as a key element of marketing means "the opportunity has never been better" to launch a business, says Fran Tarkenton, the former Minnesota Vikings star quarterback and a serial entrepreneur.
"These people have more access to technology and marketing and access to knowledge and information," says Tarkenton, who has started a variety of technology, financial and business coaching firms over the past 20 years. "When I started it was much harder than it was today."
Tarkenton means to make it even easier for entrepreneurs to launch their businesses. He has partnered with Office Depot (ODP) to launch his latest venture SmallBizClub.com, a Web site featuring articles, multimedia content and custom-tailored advice from small-business experts to help entrepreneurs start, run and grow their businesses.
Lawton Ursrey, owner of green clothing manufacturer Indie Peace and a product marketing manager at cloud-based invoicing, accounting and collaboration tool Sage One, agrees. He says using Web-based tools like Shopify to create his online store and Odesk for outsourcing administrative tasks is crucial to his venture’s success.
Web-based tools are a "great complement for someone that needs to wear a lot of hats to their business," Ursrey says. "You’re able to run a cleaner, lighter business model with cloud technology being a huge part of that."
And what about the current economic environment?
Industry observers say with the advent of alternative funding models, in particular, the potential for crowdfunding, small-business owners are no longer beholden to banks for their capital needs.
Mark Cerminaro, senior vice president for sales and marketing at alternative lending company RapidAdvance says his company is seeing more small-business owners eager to grow.
"Many of the small business owners we work with, including those as early as a year into their founding, are reaching out to purchase new equipment, ramp up their marketing efforts and expand into new areas," Cerminaro writes in an e-mail. "We also are seeing established businesses using our capital to open new locations. Overall, they are expressing greater confidence in a future where consumer confidence is trending higher and the economic outlook is brightening."
"That confidence and those gauges should have no less influence for the first-time entrepreneur looking to start a business," he adds. "Our experience is that the optimal time to start a business is in a strengthening market — not at the bottom or at the top. All indications are we are somewhere in that sweet spot right now."
Tarkenton, now 73, notes that one of the biggest groups who are launching businesses are baby boomers and seniors, who are living longer and in some cases aren’t ready to leave the workforce.
"This is a great growth market," Tarkenton says. "We’re not talking about [a group that wants to] start Google (GOOG) or Microsoft (MSFT) or a high-tech company that needs venture capital. We’re talking about Ma and Pa [who] needed to start something" to continue their cash flow as they live their senior years.
Another group is military veterans.
Veterans are more likely than those with no active-duty military experience to be self-employed. Approximately 2.4 million, or 9%, of small businesses are veteran-owned, according to the SBA. That number is expected to rise dramatically as more than 1 million veterans are expected to transition out of military service by 2015, the International Franchise Association has previously said.
The SBA, the U.S. Department of Veterans Affairs as well as trade groups, like the IFA are looking to encourage more veterans to own their own business.
Franchising is a particularly good choice for veterans returning to civilian life, the IFA says.
Owning a franchise means following a plan and structure that has already been laid out and proven successful by the parent franchisor, similar to life in the military. A number of franchises also take part in the IFA’s VetFran program to offer discounts and other resources to returning military vets looking to become franchisees.
Still, business owners say not to jump feet first into just any industry. It’s important to look for opportunities where small businesses can fill a specific need.
Brian Altomare, co-owner of LugLess.com, a small luggage shipping company, which was featured on ABC’s "Shark Tank."
Altomare ultimately didn’t get chosen by the show’s investors but said that business has jumped 150% since being on the show. The show also caught the eyes of Caeser’s Hotel in Las Vegas and the Professional Golf Association, both of whom want to form partnerships and offer LugLess’ service to their guests and pro golf players, respectively.
In the travel industry, "there is a lot of growth and potential for a lot of new products to speed up the travel process to make it easier and more enjoyable" for travelers, Altomare says. "We have a great situation with the airline industry nickel-and-diming everything. That opens up opportunity for someone who wants to do it better."
Araya Clean franchisee Dana Litman recently purchased his second franchise location, roughly 18 months after opening his first location.
"We’ve been growing like crazy. We’ve already quadrupled our sales for last year and it’s the beginning of June," Litman says of the commercial pressure washing franchise. "We added 10 new technicians to the cleaning staff and [are] in the process of adding more."
The Minneapolis-St. Paul-based franchise owner is the highest performing owner for Araya Clean.
"I think this is a uniquely good time to start a business," he says. "I think the economy is starting to turn around. If you can find an industry or niche where you can be successful now while people are still little bit [tepid] then when the economy is really rolling you will be in a unique position."
This article was republished with permission from TheStreet.