Entrepreneurs start businesses more on personal factors than the economy

Charles Epstein is starting his business because he got an idea for selling communications services. Maura Cassidy wanted work that was emotionally and professionally fulfulling. And Doug Strachota was having a hard time finding something in his field.

JOYCE M. ROSENBERG, AP Business Writer The SF Chronicle

Personal and business reasons are usually the big motivators when entrepreneurs decide to begin new ventures. So for many people who started companies this year the slowly improving economy was barely a factor — and sometimes the economy’s weakness was actually an incentive.

"I’m not sure where the economy is right now," said Epstein, who’s in the process of setting up BackBone Inc., a Boca Raton, Fla., communications consulting firm.

Epstein, who already has an 8-year-old marketing firm, said he decided to start the company when he realized small businesses needed help sorting through the various options in wireless and other telecommunications. "They spend an inordinate amount of money," he said.

Cassidy had left full-time work in the spring of 2002 and was in search of another, more satisfying career when she came up with the idea this past April for Go Ask Anyone Inc., which markets decks of cards designed to be conversation starters. Cassidy said she finds fulfillment working for herself and manufacturing the cards, which have titles such as "Go Ask Your Mother."

The economy’s weakness, not its nascent recovery, did give her some pause, and Cassidy, who lives near Boston, asked herself, "If you start a new company in a bad economy, are you just shooting yourself in the foot?"

For Strachota, fallout from the downturn was the impetus for him to start his own business — he was laid off from his high-tech job in Indianapolis and couldn’t find another. So in June, he and three partners started Get Digital Inc., a service that converts audio CDs to MP3 format.

He’s optimistic the economy will improve in the coming year and his company will prosper. "There couldn’t be a better opportunity to get something started," he said.

Entrepreneurship actually gets a boost from downsizings that leave workers like Strachota jobless. They tend to have cash from buyouts that they turn into financing for new companies.

And a weak economy is actually a good time to start a company, said William Dunkelberg, chief economist with the National Federation of Independent Business, an advocacy group based in Washington, D.C. "Everything you need to start a business is cheap — money is cheap, space is cheap, equipment is cheap, labor is cheap," he said.

Some new businesses find opportunity in a downturn. Amalgamated, an advertising agency that opened in June, was started on the premise that in the changed economy, businesses want to spend less on ads.

"Clients needed or wanted a certain level of dedication in the creative and strategic side, but were completely unwilling to pay for the layered bureaucracy of traditional shops," said Charles Rosen, a co-founder of the New York-based company, "We opened because of this current economy, not in spite of it."

Rich Polt, who recently started a Boston-based public relations firm, also said the weak economy pushed him toward starting a business. At the company where he previously worked, there was a freeze on promotions and a pay cut several years ago that was never reinstated.

But a greater factor was being his own boss.

"I’m having the time of my life, for the first time in 10 years to have the ability to be master of my own destiny," said Polt, whose firm is called Louder Than Words.

Entrepreneurs are famous for their willingness to take risks and to keep looking for new challenges. That was some of the motivation for Paul Kesman and his partner, who have a 5-year-old marketing firm in the Detroit area and who branched out with a staffing firm that specializes in the mortgage business.

Kesman said the timing of Mortage Group Staffing, which opened in April, was actually less than optimum — "it would have been better to have done it a year and a half ago, with interest rates so low" — but the company is structured to adapt to the cyclical nature of the mortgage business.

Eileen Rochford, who owns a Chicago-based public relations consultancy, The Harbinger Group, quit a secure job last spring because she realized she could do financially and emotionally better on her own. It took her a year to make the decision to leave, but she also believed she had a niche to fill, with more companies seeking smaller PR firms to handle their accounts.

So far, she said, it’s been a good move. "I’ve definitely replaced my income and I’ve been able to support the people who are doing work with me."

Many entrepreneurs just shrug off the economy because they’ve wanted to start a business for years and it’s now or never.

"You’re going to be 54 this year, you gotta go, you gotta try it," New York-based Marvin Berger told himself as he decided to start his own company, Rosa’s Original Horchata, a bottled Mexican beverage.

Berger, who has worked in the food distribution business since college, thought the time would be right to sell a bottled specialty beverage, considering the popularity of drinks like Starbuck’s Frappuccino. But, he said, "the reason I did it was out of passion."

http://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2003/10/22/financial1646EDT0312.DTL