Dr Jeff Cornwall

I live in Franklin, Tennessee, which is located just south of Nashville in Williamson County.

Williamson County has traditionally had a much higher than average percentage of its workforce who are entrepreneurs.  We are now seeing a significant spike in self-employment and of ‘accidental entrepreneurs.’  Rather than sit around and wait for a job to come their way, they are taking a proactive approach and finding their own opportunity in the market. 

In fact, I am seeing people who are still employed looking at ways to forge out on their own because they have no long-term confidence that their current employer can be relied on for a job.

The Nashville Business Journal ran a story on this trend in our county:

As the overall economy worsened, new business starts in Williamson County continued to grow throughout 2008. In December, for instance, the number of new business licenses was more than four times higher than the licenses pulled in December 2007.

“We have a very resourceful workforce in Williamson County who still see opportunity and are willing to take a risk,” says Matt Largen, economic development director for Williamson County. “They likely have access to capital through their savings or from family and friends.”

[Randy] Blue is a perfect example.

The Brentwood resident had been director of IT portfolio management at HCA and spent months searching for a new job. With nine years of experience in management and consulting and 11 years in corporate management roles, Blue had never been unemployed previously for more than six months.

But he realized the severity of the recession limited his options. So he seized the opportunity to do something he’d always thought about — start his own business.

As I mentioned in a previous post, we are running a business plan boot camp down in Williamson County.  It is full of both aspiring and accidental entrepreneurs.  The people taking this seminar are incredibly optimistic — even those who had no intention of ever becoming an entrepreneur before the current economic mess.

As I stated to the author of the Nashville Business Journal article, these folks understand that this is a good time to start a business:

While conventional wisdom might be that recessions are bad times to start a business, Cornwall says many businesses were started during downturns. Recessions mean cheaper rent, equipment and start-up costs.

In my column this week in the Tennessean, I offer some more advice for the growing legions of accidental entrepreneurs.

The recession is creating more and more accidental entrepreneurs — those who suddenly find themselves out of work.

In my last column, I offered suggestions on how these accidental entrepreneurs can find ideas for self-employment. But not all of these ideas will prove to be viable business opportunities. Evaluating the “3 M’s” of an idea for a business can weed out those that are doomed to fail from those that have a good chance of success.

Is there a market?

The first step is to determine if there are enough customers willing to buy your product or service for you to make a living. Seek advice from people who work in the industry. Their knowledge can help you determine the market potential for your idea. Learn as much as you can about your potential customers. Talk to potential customers to determine if they will buy from you. Get to know your competition’s strengths and weaknesses. Focus research on how well they are meeting the needs of the customer. You should also investigate how well their businesses are doing during the recession.

Is there a margin?

Even if there is a market for your business, you still need to determine if it can earn you a living. The second step for evaluating an idea is to understand the basic economics of the business. How much will the product or service sell for and how much will it cost to produce the product or offer the service?

Do not try to develop a full budget — rather, you are forecasting the price you can charge and the basic costs associated with actually making the product or providing the service. Make sure that your costs include the salary you need to cover your basic living expenses. You may not be able to pay yourself from the new business right away, but it should be able to meet your needs before your savings have run out.

Is this for me?

The final step is to ascertain if the business is a good fit for you. As discussed in my last column, it is your passion that will carry you through the challenges of running a business. And it is your experiences, knowledge and skills that increase the chances of successfully launching and growing the new venture.

Evaluating the three M’s behind each idea for a new business will help increase your chances for success in a new career as an accidental entrepreneur.

Although you may feel that time is of the essence to begin to replace lost income, take time to ensure that the new venture you pursue will truly provide a real opportunity to make a living.

Stephanie Chen at CNN.com has a good story about “accidental” entrepreneurs making the best of the down economy.

As job security from corporate America fades, [many] see the economic downturn as an unexpected chance to transform hobbies or youthful fantasies, once-dubbed impractical, into grown-up careers.

“I’ve spent most of my professional life making money for other people’s companies,” says Laura Waldusky, who opened her own jewelry shop this month in Houston, Texas, after being unable to find a job in 2008. “Why not invest my talents in, well, myself?”

I told Ms. Chen that contrary to what many people think, a down economy can be great timing to launch an entrepreneurial career.  It is also a time when small businesses actual have an advantage over their corporate competitors.  From her story:

Jeffrey Cornwall, director of the Center for Entrepreneurship at Belmont University in Tennessee, says small business owners must be fiscally conservative and adapt to changing customer demands. Launching a business during an economic crisis can be a good time to steal market share from established yet vulnerable competitors.

One perk to being small: Since small businesses employ less people, enabling the organization to hunker down and reduce expenditures when the economy goes sour, he says.