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Recession produces spike in entrepreneurship

Tuesday, August 14, 2012 | 6:00 a.m. CDT; updated 10:30 a.m. CDT, Tuesday, August 14, 2012
MU researchers have found an increase in entrepreneurship among Americans in recent years, a trend they think could be related to the high unemployment rates.

COLUMBIA — Jeanie Nobis got laid off twice in five months — from the same job.

"I got laid off in August" 2008, she said. "... And then they called me back."

Nobis was rehired by the metal production company she'd worked at for the fall and holiday seasons. Then, in January 2009, she lost her job for good.

Her mother-in-law, Barbara Nobis, owns Grandma Barb's Pies. The two live next door to each other. While she was still employed, Jeanie Nobis liked to help her mother-in-law bake goods to be sold at local farmers markets.

"When I got laid off, we decided that I could go to Hannibal to try and make a little bit of money," she said. "It all started going from there."

Jeanie Nobis now owns her own business, C & J Baked Goods, with her 16-year-old daughter, Catie. The trio works together, baking six days a week for the two separate businesses, which they run out of Barbara Nobis' certified kitchen in Paris, Mo. 

Selling pies won't make her a millionaire, but Jeanie Nobis' hobby-turned-business provides her with a steady income — and work she enjoys. Her husband, Cory Nobis, is a truck driver, and she says she needs the extra money.

"I make enough to get groceries," she said. "And to keep me from going back to a factory job." 

Career paths such as Nobis' are becoming increasingly common, according to new research on rural entrepreneurship. MU researchers Thomas Johnson and Maria Figueroa-Armijos matched data from the Global Entrepreneurship Monitor survey and the U.S. Bureau of Labor Statistics with locations nationwide and found that when the economy struggles, "necessity entrepreneurship" increases. 

In their resulting study, published this year in the Entrepreneurship Research Journal, Johnson and Figueroa-Armijos define "necessity entrepreneurship" as businesses that are begun because their creators need income. Between 2007 and 2010, a period of economic recession, those sorts of enterprises grew from 16 percent to 28 percent of all entrepreneurship in the United States.

"From economic stress, great ideas are born," Johnson concluded.

For Grant Ballard, starting a business wasn't just about money. It was a lifestyle improvement. "I needed the work," he said.  

Ballard worked as a heavy machinery operator for a St. Louis-based union. The bad economy brought too many workers with the same skill set and not enough construction jobs to keep them all busy.

Ballard faced long stretches of time between jobs, and when there was work, it would require him to be away from his family. He usually traveled more than 100 miles for jobs.

"I have two kids. I wanted to be home and watch them grow up," he said. "I didn't want to be the dad on the phone." 

Ballard also coaches three sports: football, baseball and archery. He couldn't be as involved if he lived on the road.

In starting his own business, Ballard was able to come home for good. He now owns Ballard Welding & Fabrication, a Columbia-based welding company.

"A pretty good-sized shop went out of business in Columbia, so there was a considerable hole that needed to be filled," he said. "I already had most of the start-up tools, had some retirement and figured I would give it a go."

Ballard opened his doors Jan. 2. Business was slow in the spring, he said, but it gets better every day. 

According to the researchers, necessity entrepreneurship needs more support. With a bit of help, entrepreneurs can do more than just improve their own incomes. When they succeed, they can create jobs for other people.

"These necessity entrepreneurs could create ... economic growth for long-term prosperity," Figueroa-Armijos said.

Like Ballard and Nobis, entrepreneur Becky Henson started her business because of an unfavorable job market. She worked as a supervisor and poker dealer until her position was suddenly eliminated.

"They closed the poker room, and I was transferred to table games," she said. "I got transferred into a department that I did not care for."

She decided to take a risk and open up her own business. Now Henson is the proud owner of Dog Daze Playcare, a canine day care facility off Interstate 70. 

"I had experience with this before, so I wanted to get back into dogs full time," Henson said. "This is the first time I've worked for myself — it's a lot different."

So far, she enjoys working for herself, but she wouldn't say that she'll never go back to working for someone else.

"It's a little bit daunting at first — a lot of money going out and not a lot coming in," she said. "I'm having to learn all the financial things: taxes, payroll, hiring people. It's different when it's all on you."

The biggest difference between self-employment and her old job, Henson said, is "lots, lots more hours."

In addition to rural areas, the study found an increase in entrepreneurship among African-Americans.

Anthonwell Linzie, 32, prides himself on being a young black business owner in Columbia. But he didn't get there without first doing his fair share of odd jobs.

Over the course of several years, he held positions in a wide variety of jobs, including construction, hotel management and cosmetics.

"A lot of places, you bust your bottom for a little bit of nothing," Linzie said. 

What's more, in Linzie's experience, African-American men seem to have a harder time finding work than any other group.

Linzie continued searching for meaningful work until he realized he wasn't looking for a 9-to-5 job. Instead, he wanted work that would allow him to extend himself and grow.

He heard his sisters complaining about having to leave Columbia to shop for clothes. Suddenly, he saw an opportunity to fill that niche himself.

"I always knew I wanted to open up a store," he said. "I just thought it would be a men's store."

Linzie now runs Exclusive Closet, a women's clothing boutique, at 1205 Range Line St. It's right next to his sister's salon.

"It gave me a way and a platform to crash the stereotypes," Linzie said.

He works hard for his business but likes it that way.

"It's on me," he said. "The more I do, the more it will grow, and the more successful the company will be. The more successful the company is, ultimately, the more successful I will be."

But for Jeanie Nobis, material wealth doesn't seem to be the end goal. She said the paycut is worth having a job she loves and the freedom to spend time with her family.

Now that she has her own business, she said she would never go back to her former line of work. In fact, she didn't: Her employer called six months after she had been laid off twice and offered her a job.

"I said 'no, thank you' — because I really like what I'm doing."

Supervising editor is Hannah Cushman.


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Comments

Gary Straub August 14, 2012 | 9:27 a.m.

Thank you Kayla for a good article on a topic which should have much more press. This is how our country became great, not by corporations but individuals with enough guts to go for it. This is where funding needs to be available and this is what will bring our country back.

(Report Comment)
frank christian August 14, 2012 | 10:50 a.m.

G. Straub - This becomes ridiculous.

"This is how our country became great, not by corporations but individuals with enough guts to go for it."

When "individuals" become successful in their entrepreneurial endeavors, they Incorporate!

R. Reagan, during that recession, upon nearly every public appearance encouraged Americans to become entrepreneurs and start their own business!

This president installs regulation after regulation which tax and constantly counters the idea of start up of a new business, while to the wild applause of those who favor him, tells we all, "If you've got a business,- you didn't build that!!"

How can you describe the American dream, then call for more "funding" for it, from the President who is clearly intent upon the destruction of that dream?

(Report Comment)
mike mentor August 14, 2012 | 11:16 a.m.

^^^^^^^^
My thoughts exactly...

We can "fund" entrepreneurship by making sure we keep the tax burden as low as possible and by making sure costs for government mandates are necessary, clear and consistent.

(Report Comment)
Jim Michaelson August 14, 2012 | 11:19 a.m.

I find this story to be very misleading. This story implies that these businesses were the result of hard work, perseverance, and a willingness to take risks. But we all know that they didn't build that! Somebody else made that happen.

(Report Comment)
Mark Foecking August 14, 2012 | 11:49 a.m.

I find it interesting that none of the entrepreneurs in the article had anything to say about the oppressive rules strangling their businesses at every turn.

How corporations wind up forming is through consolidation of competing business. The economy of scale is a hard thing to fight, especially for manufactured goods, and over the years, through mergers and acquisitions, resulted in a lot of the large corporations we have today. In many ways these corporations did help build the country, and are responsible for a large chunk of GDP.

As far as the "you didn't build that", that's one of those out-of-context election year sound bites. What he meant was businesses don't succeed in a vacuum - they rely on a lot of publicly funded infrastructure to make the atmosphere in which they can succeed. Our main job-creating problem is globalization and our negative trade balance, not our entrepreneurial spirit or regulatory climate.

DK

(Report Comment)
Rich C. August 14, 2012 | 12:33 p.m.

DK,

Some conservatives are only capable of understanding a few words at a time. Don't pressure them into comprehending entire paragraphs.

(Report Comment)
Steve Spellman August 14, 2012 | 12:36 p.m.

I agree with Mr. Straub that this is a great story. Politics aside, individual people going from limiting their economic horizons within the bounds of only what an employer has to offer, to creating their own jobs, is a beautiful thing. How empowering and encouraging.

A job that creates value to customers is good, and yields money for a paycheck. When the person that owns the enterprise is the one that does the work and yields the profits from success, it makes for great incentives to be flexible and responsive to customer needs. That esspecially includes finding those needs that other providers are not doing - like Mr. Linzie has gone for: finding a synergy with another family member's hair shop - all without the direction of "experts" or consultants from Wall St. (nor Washington). Main St. lives.

I also appreciate Ms. Nobis, who points out the quality of life her business providers her. That, no, she won't likely get rich, but her goals include something rewarding to do with her time, "I make enough to get groceries," she said. "And to keep me from going back to a factory job." That's a freedom that relatively few of us have a first-hand understand of these days. God bless her.

(Report Comment)
John Schultz August 14, 2012 | 1:21 p.m.

Mark, I'm not sure that the story is free of government regulations. Witness the brief comment about a "certified kitchen" early on. Columbia is somewhat lucky that it doesn't have some of the bogus regulations that larger towns do, such as restrictions on where or when food trucks (a new phenomenon here) may operate.

(Report Comment)
mike mentor August 14, 2012 | 2:24 p.m.

If we spin, "You didn't build that" in the best possible light, it still reeks.

This is our president, telling the people that finance the infrastructure through paying the vast majority of the tax burden and also carry out the bidding of the paid government project managers by actually doing a lot of the work that their contributions are insignificant and they need to contribute more.

IMHO, if he had an ounce of leadership, he would be challenging those that currently take money out of the rest of our pockets to stop complaining about your situation and make it better like all of the great folks mentioned in this article.

Have we really fallen so far in pandering to the takers that we can't even try to lead them out of their situations?

Hopey Changey remix;
You were blessed to be born in the greatest Country on Earth. We have infrastructure, rule of law, and an economy that provide the greatest opportunities for you to succeed on your own than anywhere else on the planet.

If you don't have the education and the will to forge a life for yourself in this Country, YOU built that and no one but yourself can make it better. We have an unbelievably generous society that gives more in charity and aid than any other. I will do what I can to help you, but the responsibility lies within YOU and not the government, which is in fact your fellow citizens.

Ask not what your country can do for you - ask what you can do for your country !!!

(Report Comment)
frank christian August 14, 2012 | 3:15 p.m.

Mark F. - I find it interesting that you would reach this far to show iyo that the regulations on businesses do not contain oppressive rules strangling business at every turn.

This is why a successfully started business man incorporates:
"The primary reason small business owners choose to incorporate is to protect their personal assets, such as their home, car or family savings. In the event of a lawsuit or if your business should fail, your personal assets can not be touched, assuming you have properly formed, capitalized and maintained the corporation."

Mr. Straub, as are you, was referring to the multi-national corps. that progressive's within the last year? have decided to demonize with the false assertion that "corps. are not people", though they, by and large, were started by those he chose to complement in his post and I have cited in mine.

In no way, was Obama taken out of context, in that speech. You have joined the time consuming job of the liberal crowd, which is continually having to sell us on what their leader, "really meant".

In this instance, I'll try to help. He was trying to show those who have not started or lead any great project or idea,that they have participated in the accomplishments and, thus should feel good or better about themselves. In doing so, he chose to denigrate, belittle and slander, every American business person who has gone to the lengths necessary to start and succeed in business. This what the uproar is about and it will continue. He said what he meant.

" Our main job-creating problem is globalization and our negative trade balance, not our entrepreneurial spirit or regulatory climate."

I don't know how to save these quotes, but I wager that if we clear the D's out of Federal control in Nov., within two years, I'll be wanting to throw this one at you. "not our entrepreneurial spirit or regulatory climate.", is absurd!

(Report Comment)
frank christian August 14, 2012 | 3:18 p.m.

frankchristian

(Report Comment)
John Schultz August 14, 2012 | 3:42 p.m.

Mike, I heard a couple sound clips from the campaign trail this afternoon on the way back to work. President Obama talked about how during Bill Clinton's term "we" put millions back to work. How awfully nice of those politicians to do so! The only politican that I can point as giving me a job was a couple employers ago that created software to ease the reporting burden to the SEC for public companies.

(Report Comment)
Corey Parks August 14, 2012 | 11:07 p.m.

"According to the researchers, necessity entrepreneurship needs more support. With a bit of help, entrepreneurs can do more than just improve their own incomes. When they succeed, they can create jobs for other people."

What kind of support do they mean?

(Report Comment)
Mark Foecking August 15, 2012 | 8:27 a.m.

Here is the context of the "you didn't build that" speech.

http://www.politifact.com/truth-o-meter/...

I don't think he's saying that to belittle or slander anyone at all, and I don't think he is saying that their contributions are insignificant. He's simply saying that there are a lot of things that all of us pay for (in one way or another, and yes, of course the rich pay a lot more, but still) that make it easier for businesses to succeed.

A lot of people can't make it in business, and 9 out of 10 small businesses fail in the first year. This makes the accomplishments of those that succeed all the more significant, but the world needs employees too. Again, Obama wasn't talking about givng money to people. He was talking about how public projects make it easier for businesses to succeed. I don't think you can read anything more into it than that and stay fair.

If regulation is strangling small business, why are there so many more of them starting up? Actually, by OMB figures, the number of regulations under review in Obama's watch are about the same as under W. Statements that Obama is regulating us to death are simple partisan hyperbole.

John, the "certified kitchen" rules are similar to rules under which a restaurant kitchen operates, and they're concerned with things like keeping bugs out of the food and making sure disease bacteria have a hard time growing. I don't think a lot of people would want to eat at uninspected restaurants, and this is a similar element of assurance for people that buy the kitchen's products that they're being held to certain standards. We certainly have no shortage of restaurants.

There's a lot of regulation that has imporoved our quality of life. Clean air, water, workplace safety, and employment practices were all pressed for because people felt there was a need for them. We have some of the least regulation in the first world, and I don't think many of us would want to live and work in a place like China, even though it has many fewer regulations, and is an easier place to start a business, with about half the unemployment of the US. Some European countries have far greater regulatory burdens (and taxes) than we do, and their economies are outperforming ours (e.g. Germany, Norway, Switzerland, and Denmark). Our regulatory burden is not a big reason for our sluggish recovery.

DK

(Report Comment)
Michael Williams August 15, 2012 | 9:16 a.m.

DK: I checked out your link.

At best, the President chose his words unwisely; if he had said his words to me in a private conversation, we would have had an argument about "If you’ve got a business -- you didn’t build that. Somebody else made that happen."

At worst, the speech was his underlying vision of a "It takes a village" socialistic utopia.

This particular President consistently ignores the fact that, although we do many things together, somewhere along the line a rather independent brain has to decide to create something, to commit to a course filled with risk and financial danger. Government can build roads/bridges, construct fire/police departments, build and fill city halls, put up electrical lines, etc., but these things are only a base upon which people DO things independently.

Each and every one of us start with the same "infrastructures" noted above, yet there are different outcomes among us. Why?

It's because of the individual decisions we make. When the President says, "Someone else made that happen", he ignores those highly individual and risky personal initiatives and decisions; indeed, he insults and diminishes them. I fully understand the sentiments of the Georgia lumberyard owner who, with a very public billboard, tells the President to "Kiss my ass!"

To me, this President consistently advocates a sort of milque-toast society where outcomes are rather homogeneous, and "fairness" is measured not by opportunities but by those leveled outcomes.

In this particular case, I do think the President was attempting to rah-rah the "We're all in this together" concept. But, when this speech is taken with the totality of his various speeches and actions, I think he shows an underlying disdain of individual initiative.

(Report Comment)
Michael Williams August 15, 2012 | 9:33 a.m.

DK:

Further, let's look at the opposing sentiment.

The President says, ""If you’ve got a business -- you didn’t build that. Somebody else made that happen."

So who's to blame if the business fails?

I'll tell you EXACTLY who is responsible if my business fails: ME!

The President and others of his ilk cannot have their cake and eat it, too. He/they cannot tell me that all of my past and all of society are responsible for my successes, but any failure is my own.

His speech is more about acceptance of personal responsibility than anything else.

(Report Comment)
John Schultz August 15, 2012 | 9:38 a.m.

Michael, thanks for putting it better than I could. I had a thought of the similar vein, if all of this "stuff" was made for us, why do some businesses fail and others succeed? Obviously, it must be something additional than just the "stuff" that others built or provided that allows "us" to build businesses.

(Report Comment)
Gary Straub August 15, 2012 | 9:40 a.m.

Okay, open any telephone book in any city to the yellow pages, count how many business' are corporations and how many are not. It is the very small business that are the real backbone, true many grow and decide to incorporate to get a cash infusion but they are still outnumbered by far. Exception is the LLC's which are formed only to protect the individuals, not to raise capital.

AS for the speech, I believe he is more referring to his desire to pump more money into rebuilding our crumbling infrastructure that all business requires to some extent. Yes, we did build the infrastructure through our government with our tax money. Unfortunately there are too many people who think that the government is a separate entity and is the source of all that is evil in this country, therefore resist using our money to fix our roads, our bridges, our water systems, our sewers even though we are hired to do the work. I don't see any of the mega corps stepping up to the plate. In fact they are the first to complain, they won't put a plant in an area unless the infrastructure is in place that they need, but won't pay for.

(Report Comment)
mike mentor August 15, 2012 | 9:47 a.m.

Mark, good post. I disagree, I still feel there is an agressive tone behind "you didn't build that", but we can move on.

I would suggest that IF we had a Dem House, we would be in a world of hurt right now. I think the mid term elections and rise of the tea partiers stopped the Obama tax hike train in it's tracks. The left bemoans the Tea Partiers, but IMHO, they have only themselves to thank. There would be no Tea Party at all if we didn't have Obama, Pelosi, Reid ready to tax us in to oblivion to buy votes from the 47%. I really do hate to think what the business environment would be if Obama, Pelosi, and Reid were running the show. Yikes!!!

The Dems seem to think that redistributing via higher taxes and increased welfare is the way to go. I can't disagree more! I strongly feel that we need to support the business environment right now more than anything. Not just big, well connected, business, but the small business's like we see in this article. I would feel better about my tax money being "spent", either in actual outlays or tax reductions, to help folks like we see in this article than to continue enabling the welfare system. This is what will provide jobs and economic growth!

If we can get the senate back under the R's and an R president come November, we will get a budget passed. It might not be the budget that the Tea Partiers want. It definitely won't be the budget that the Dems want. But, it will lay out the environment for business's which IMHO will be the best thing we can do to help grow our economy and get us back on track.

In order to right our economy, we need to deal with our budget like adults and that is not happening right now on the left side IMO. I think our economy is our superpower. Reagan won the cold war without firing a shot! Others wanted what we had. IMHO, we still have what we had then, it's just buried under a big heaping pile of whining and entitlements! We need to unleash the giant by again admitting that, Yes We Did and Yes We Will!

(Report Comment)
Michael Williams August 15, 2012 | 9:54 a.m.

Gary: You think the telephone book is a great data base for telling you the incorporation status of a company?????

You think the main reason companies incorporate is to get capital?

Do you know the difference between "going public" versus "incorporation"?

Do you even know the difference between a C corp versus an S corp, and the reasons for doing one or the other?

(Report Comment)
Ellis Smith August 15, 2012 | 10:24 a.m.

@mike mentor:

What you need to consider is that when you attack the tactics of those Dems you are attacking their RELIGION as well. We're discussing the church of "Our Lady of the Endless Free Lunch."

Americans who work hard for a living, or currently retired Americans who used to work hard for a living, need not apply for membership; however, those folks are fully expected to "tithe" (and then some!) for the maintenance of "Our Lady."

As they say, South of the Rio Grande: Los Tontos.

(Report Comment)
frank christian August 15, 2012 | 10:39 a.m.

G. Straub - "Unfortunately there are too many people who think that the government is a separate entity and is the source of all that is evil in this country, therefore resist using our money to fix our roads, our bridges, our water systems, our sewers even though we are hired to do the work"

A Democrat Congress gave B. Obama 870B$ to create jobs in our recession by "repairing infrastructure". After the money is gone and no infrastructure has been repaired, we get "Obama smiled and interjected, "Shovel-ready was not as ... uh .. shovel-ready as we expected."

This, for many, is reason enough to believe that government "is the source of all that is evil in this country". Yet you and yours never blink an eye and continue to defend the liberal agenda foisted upon this country. Some may still have heads stuck in sand, but this number reduces each day, as the tragic results of that agenda become more and more evident. Why do you ignore them? Are you in truth, satisfied with the state of our Nation?

(Report Comment)
frank christian August 15, 2012 | 11:44 a.m.

Mark F. - Here is the text of the speech in question, so you won't have to depend upon the interpretation of others.

http://www.whitehouse.gov/the-press-offi...

(Report Comment)

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