Signs Of Life In A Recession | In the worst economy in 70 years, entrepreneurship carries on in Central Mass.
Photo/Livia Gershon
Tuan Q. Nguyen struck out on his own with a hair salon in Acton despite the difficult economy.
With the economy still contracting and plenty of bad news about employment and consumer spending to go around, it might not seem like the best time to go into business.
But for some in Central Massachusetts, the first half of 2009 has brought a successful start to new enterprises.
Larry Marsh, director of the Small Business Development Center at Clark University in Worcester, said fewer businesses have been popping up lately than in better times, but incorporations certainly haven’t come to a screeching halt. He said many of the new companies are the result of workers leaving the corporate world for one reason or another and hanging out a shingle as an independent contractor or consultant in the same industry.
“Quite a few of them have a fair size pot of money because of the packages that they received from industry in leaving,” Marsh said.
Leaping Into Full-Time
Faith Venier of Lancaster has been freelancing as a graphic designer for several years as a sideline to her regular part-time job at a Hudson printing company. In early January, she was laid off from that job because work had slowed down.
“I decided it was a good time to pretty much go full-time with my own business,” she said.
By the time she officially got Venier Design Inc. off the ground, she already had a network of contacts from the part-time work, and soon she found others that needed help. She said she has no trouble staying busy full-time with work from Framingham-based TJX companies Marshalls and Home Goods, as well as other businesses and a number of local community organizations.
“Companies are looking for more freelancers it seems, because then they don’t have the overhead involved,” Veneir said.
Marsh said that some companies are outsourcing work to the very people who were victims of corporate downsizing. In some cases, he said, that allows for a smooth transition as new businesses start out with at least one potential client already in mind.
“That can give them a jumpstart,” he said.
Marsh said he sees more new entrepreneurs these days starting out by buying a business instead of starting one from scratch. That was the approach that Tuan Q. Nguyen, a 17-year veteran hair stylist, took when he bought a successful salon in Acton, doubled the employee count to six and shifted the focus to a more modern, upscale style.
The doors at Salon Tuan Design Studio Inc. opened in March, and so far business is good, Nguyen said.
“It was very scary at first because of all the economic difficulties,” he said.
In particular, it took longer to get a bank loan than he had hoped, and he worried for a while that the credit crisis might make it impossible to get financed.
Marsh said the perception that there’s not enough credit available for new businesses is a common one, but it’s really not the case. While national banks may not be making many loans, he said smaller regional banks are happy to lend money, though with perhaps a bit more scrutiny to a new enterprise’s business plan than in the past. That’s a marked difference from the recession of the early 1990s when almost no one was lending to startups, he said.
Physicists For Hire
Still other entrepreneurs are using the current economic slowdown to reinvent themselves and their companies. The father-and-son team of Hugh F. Stoddart and Hugh Adam Stoddart started Shirley Research Corp. when the pair essentially lost their jobs, not at a corporate office, but at the company they had formed 15 years ago.
The two are physicists, and their old company, Neurophysics Corp., manufactured and sold nuclear brain scanners. The business made decent money for a while, the younger Stoddart said, but it eventually slowed down, and, in the current recession, “kind of fizzled out.”
Shirley Research is designed to be a more flexible sort of company. It’s devoted to contract research, and currently works on devices measuring oxygen in the human brain during surgery for Michigan medical device company Somanetics.
Stoddart said Somanetics and other similar companies are doing reasonably well despite the recession. And, he said, Shirley Research can change direction if necessary to do work for whatever companies are thriving.
“We’d like to get involved in the money that President Obama is making available for energy research,” he said. “We’re pretty flexible. We’ll go where the money is.”
Having a strong, realistic plan is an obvious key to success for a new business, and it may be a good sign that, according to Marsh, new startups are watching their finances more carefully these days. Instead of renting an office right away, he said, more consultants are starting off from home.
“I think they tend to be more conservative when they start up in this environment because they’re very aware what the economy is like,” he said.
Venier took that sort of approach. She works from home and kept her investment in the new business to a computer and some new software. She said running a business full-time is still expensive in terms of the time she has to spend on paperwork and other administrative tasks, and in terms of the health insurance that her family now has to pay for out of pocket. But she said she’s not looking to go back to being someone else’s employee any time soon.
“I really like what I’m doing now,” she said. “It’s working really well for me and my family."
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