Will the next bubble be the collapse of small businesses started during an entrepreneurial gold rush?
This thought has been brewing in my mind for a while now but it was brought to the fore by this Jack and Suzy Welch article in the July 13,2009 issue of BusinessWeek Magazine. The particular quotes that caught my eye were:
Look, this recession has really shocked people…. The result? Many people have come to the conclusion that they don't want to work for "the man" anymore. They want to work for themselves or someone they know and trust.
To be someone else's employee, people are telling us, is to be at someone else's whim.
If anything, starting a business puts you at the whim of more people rather than less. Investors, customers, employees, suppliers, service providers, and others all place demands on business owners that must be addressed. Abandonment by any of these groups could be disastrous.
Also starting or working for a small business involves a substantial amount of risk and provides little insulation from economic downturns. In fact, I suspect that the current downturn has had the greatest impact on small businesses.
Jay Goltz's New York Times blog post, The Dark Side of Entrepreneurship, captures both of these issues well.
To be clear, I am a proponent of entrepreneurship and think that starting a business can be liberating. But to be successful I don't think liberation can be the only goal and I fear that many people are going into small business without the right expectations.
If that is true then what will happen if many of those businesses begin to fail in a couple of years? Do they represent a new form of systemic risk to the economy?
