Entrepreneurs of Necessity
A Sagging Economy, Other Forces Push Some into Business Ownership
February 15, 2010
By George O'Brien
Making the transition from employee to business owner is usually a scary proposition. What’s prompting more people to take such a plunge is the realization that the corporate world is no less scary and, in many ways, even less secure. But whether one chooses this route by choice or out of necessity, a challenging roller-coaster ride almost always awaits.
Trisha Thompson called it “working for the Mouse,” as opposed to ‘the man.’
That’s a phrase used by many of those who find themselves in the employ of the massive Disney Corp., which Thompson was, as executive editor of a Northampton-based monthly publication for parents called Wondertime.
Indeed, the corporation abruptly shut down the magazine roughly a year ago, despite what most all involved considered solid early success. “We made all our numbers,” said Thompson, referring to the start-up’s performance over its first several years. “We received some awards, we were on track with our circulation … we were a good magazine. We went from an original staff of seven to 32, but they decided to just shut it down.”
Fast-forwarding things a little, Thompson said this sudden, completely unexpected turn of events provided the rather violent push she and her husband, Fred Levine, then a freelance writer and editor, needed to start their own business venture, called Small Batch Books. Operated out of their home in Amherst, this vanity-press operation specializes in personal memoirs, family histories, and commemorative books.
It was launched last summer after some extensive job hunting and soul searching led the two to determine that this was the best, most practical route for them to take given their ages (Trisha was 49, Fred 52), their career aspirations, and the decidedly unsteady state of the print publishing industry.
“It doesn’t feel safe anywhere anymore — there’s no place to go that’s really all that secure,” said Thompson as she explained why she turned down a few other opportunities in publishing, including one in Iowa, and then stopped looking, even if that meant entering the often-scary world of entrepreneurship. “I thought to myself, I’m going to uproot my family to go to Des Moines, and then in a year they’re going to shut that down? No, thank you.”
And because no place is safe in most all sectors of the economy, many, like Thomson and Levine, have become what Dianne Fuller Doherty calls “entrepreneurs of necessity.”
Elaborating, Doherty, director of the Mass. Small Business Development Center Network’s western regional office, said that most who go into business for themselves do so out of choice or opportunity. But all economic downturns, and especially the so-called Great Recession, have seemingly removed choice from the equation for some who have found themselves downsized and with few, if any, attractive job opportunities.
“We’re seeing many people who are choosing this path out of necessity,” she said, “which isn’t always a good thing. Some people are cut out for this, and some people aren’t.”
Sometimes, such entrepreneurial leaps are brought on by other factors, such as a company’s relocation, discontinuation of programs, changes in administration at a company or institution, or others. For Dan Touhey, the ‘push,’ as those who have made this transition call it, came when his long-time employer, Spalding, which he most recently served as vice president of marketing, announced it would be moving out of Springfield.
The first announced destination was Atlanta, home to Russell Athletic, which bought Spalding several years ago, Touhey explained. But then, when Fruit of the Loom bought Russell, employees were told that if they wanted to stay in the organization they would have to relocate to Bowling Green, Ky.
And Touhey never gave that mailing address any serious consideration.
So after sifting through some offers from recruiters and rejecting them — none looked solid enough in these days of unrest and consolidation in corporate America — he decided to go out on his own last spring with DPT Consulting.
There are two aspects to this business. The first, concerning his primary client, the Berkshire Opportunity Fund, involves channeling small businesses looking for funding to that venture-capital outfit. The second is centered on offering Touhey’s vast experience in business and marketing to small businesses that can use it. These include a cycling-apparel company in Northampton and a start-up that manufactures a product called the ‘bunt-down bat.’
As in all cases when individuals mull the shift from being an employee to being self-employed, those who take this step out of necessity must still perform the needed due diligence, said Lyne Kendall, senior business advisor for the MSBDC, who has counseled many people weighing such a decision.
In short, such individuals must have a solid business concept and a plan of attack, she explained, but also the needed skill sets to be an entrepreneur (not everyone has them), and a passion for what they want to do.
“It can’t be something they just feel like they want to do or should do,” she explained. “And it shouldn’t be just a way to make money. It has to be something they’re passionate about. Without that, it won’t succeed.”
By the Book
This requisite passion was apparently missing the first time Thomson and Levine met with Kendall.
That was seven years ago, when they were pondering a different kind of venture, one involving custom publishing in the corporate realm, or what Thompson described as “extended advertorials” for products and services.
“Within about 10 minutes, she was giving us this weird eye, the stink-eye kind of thing,” Thompson recalled. “We were looking over our shoulders saying, ‘who’s she making this face at?’ It was us. She said, ‘do you really want to do this? I’m getting the feeling you don’t, but feel you could or should.’
“We said, ‘well, of course we do,’” Thompson continued. “But shortly thereafter, we found out she was right, but by then, we had already rented office space and spent money unnecessarily.”
Things were different when Levine and Thompson were again sitting across the MSBDC conference table from Kendall, this time explaining Small Batch Books. The two told Kendall (and BusinessWest) that they believed they had a somewhat unique concept — a soup-to-nuts vanity publishing operation — and something that they truly believed in.
This time around, the body language conveyed the necessary confidence and passion, said Kendall, who said she gave Levine and Thompson a homework assignment of sorts, one they ultimately scored well on.
“I gave them some tasks to do and things to think about, on both the personal side and the business side, and a few weeks later, they came back with those tasks completed and with the confidence that they could take the plunge,” she said. “On the personal side, they have to do what I call a personal retreat — do they have the personal wherewithal to do this? If they’re going to work together, what would the guidelines be for the home life and business life? On the business side, it’s more looking at skills, contacts, potential revenue streams, whether you really know the market, and whether you could, if necessary, live on a part-time job or savings for 12 to 18 months.”
Kendall has been assigning lots of homework these days, as she and others at the MSBDC handle a larger portfolio of cases than would be considered normal, mostly due to the recession.
Many of these cases involve businesses that are hurting, said Allen Kronick, senior business advisor for the MSBDC, noting that some wait too long to seek help. For these businesses he sometimes uses the term ‘dead on arrival’ to describe their condition, meaning that there is nothing he or anyone else can do for them. Many others can be helped, he said, adding that his own portfolio has many cases involving companies trying to find ways to hang on until the economy improves — and succeeding.
Meanwhile, many other cases involve startups, with a good percentage of them blueprinted by individuals who have been downsized and can’t find another job, or at least one to their liking, or who could perhaps find a job similar to what they had before, but are tired of what Kendall called the “rat race.”
Looking over his portfolio, Kronick said he has several clients that fit this description. They include everything from a former MSPCA employee — laid off when that agency shut down its Springfield facility — who is now making and selling cat scratch posts, to a laser engineer who knew his days were numbered with his now-former employer and started his own venture, to some other former executives at Spalding trying to figure what to do next.
Tuohey’s situation involves both the recession and general uncertainty about corporate America. He told BusinessWest that, in this economy, even though things have improved somewhat since last spring, opportunities in marketing, and especially senior marketing positions, are few and far between. But recruiters did call, he continued, and upon listening to what they were saying, he became increasingly convinced that there were few, if any, situations that provided the real security and peace of mind he was seeking.
“When I did find situations, they were less than ideal,” he explained. “They were too similar to what I had just left, and I knew how quickly things could change. I looked at a couple of situations, gave them serious consideration, and decided to decline.”
Eventually, he said he simply grew tired of waiting for the ideal situation to come about and for the economy to rebound, and started his own venture. The work with the Berkshire Opportunity Fund has been steady and has given him a solid foundation, he explained, adding that he’s slowly but surely building a portfolio of clients in sports-related businesses that can tap into his marketing and brand-building expertise.
VOmax, a Northampton-based cycling-apparel maker, is one such client. Tuohey said he recently helped the company secure licenses with the National Basketball Assoc., National Hockey League, and Major League Baseball, to make clothes with team logos and colors. Meanwhile, with the Bunt Down Bat venture, he is helping the owner build brand recognition and take manufacturing operations to a higher level.
Gifted and Talented
For Marge Slinski, the push into entrepreneurship didn’t come from the recession. Instead, it came first from a change of direction regarding the UMass program she had been involved with — one concerning youths at risk — and an informal policy at the school that acted as a career barrier.
Elaborating, Slinski said she had a position of authority with a national program, one that won several million dollars in grants to create and replicate initiatives involving youths at risk. She eventually lost that position when the school opted for a different course, and found out rather quickly that, to attain a position with similar responsibilities, challenges, and opportunities to grow, she would need a doctoral degree, which she didn’t have and didn’t want to put her life on hold to earn.
Instead, she went to the Smith College Career Center (she’s an alum) to get some counseling on what to do next. “I was essentially a person who lost a great job and had no way to replace it,” she explained, adding that those at Smith told her that she could take some of her strengths, specifically those in the arts, and what she called “collaboration building” and perhaps use them to start a business.
She took that advice and started Choices, LLC, a venture run out of her home that is focused on helping companies find appropriate gifts for their corporate clients.
Through collaborations with American artists such as Stephen Schlanser, Jennifer McCurdy, Geoffrey Smith, and others, she’s commissioned suitable, meaningful gifts for clients ranging from Fortune 100 companies to locally based banks. The recipients vary, from Mideast oil sheiks to Chinese businessmen to retiring employees, and the occasions vary as well, from celebrations of $1 billion sales (for those Fortune 100 companies, obviously) to employees’ 25th anniversaries.
“I had a new mission,” said Slinski. “Instead of youth at risk, I’m getting corporations to value American arts and crafts as key corporate gifts for their VIPs.”
Starting with a few leads given to her by her husband, who’s in business, Slinski has managed to steadily grow the company over the past few years, and is now looking to take on a partner and take it to the next level.
Meanwhile, Levine and Thompson, who worked in Western Mass. several years ago, then relocated for other job opportunities before returning nearly a decade ago, told BusinessWest that they’ve pretty much understood for some time that they would likely have to go into business for themselves, given the rocky state of the publishing industry in recent years.
“We knew when we moved back here that staying in publishing is not the best place to be, and that we’d probably have to come up with something on our own at some point,” said Levine. “We were lucky along the way in that we did find some staff jobs and we were able to cobble things together with freelance work. But after this last round, with Trisha getting let go, and with the economy taking a huge, huge bite out of print publishing in general, we knew we’d have to do something on our own that would be more stable.”
Over the past several months, they’ve been able to approach stability through several projects involving personal or family histories or other legacy initiatives, most all of them for customers outside the 413 area code; one current work in progress is for a client in Australia.
“There are many who won’t have fortunes to leave behind, but will have thoughts and memories and words,” said Thompson, noting, as one example, the remaining World War II veterans and Holocaust survivors, many of whom, as they approach or reach their ’90s, are thinking about putting their stories into something that can be preserved for future generations.
“They have a legacy to leave behind,” she said, adding that this phenomenon certainly provides some growth potential for their fledgling business.
When asked about making the transition from employee to employer, or sole proprietor, those we spoke with said there is a definite learning curve that is part and parcel to such a career shift.
There are things to absorb, especially on the financial side of things, and there are some trade-offs. There is no steady paycheck anymore, said Thompson, stressing, as she did repeatedly, that there are no sure things in the corporate world either in this day and age. But there is freedom, more responsibility, and, in general, a pride in ownership that doesn’t come with working for someone.
“It’s very freeing, but it’s also a little scary when you’re not working for the mouse,” said Thompson, who noted that, without the strong push that came with the closing of Wondertime, she and Levine may have not made the leap. “It’s freeing because you have as much autonomy and decision-making power as you do responsibility, and that’s unusual. There’s no one else to blame if something doesn’t go right.”
Said Levine, “on the days when it gets dicey for us and we start to get a little scared, we take a step back and look at the people we know from the long careers we’ve had who have stayed with a large publishing company and lost their jobs because the magazine got sold to some other huge conglomerate. It isn’t always better on the other side.
“But maybe the biggest difference for me is realizing how much energy you spent in a staff job just dealing with personalities and the whole political machinery of it,” he continued. “Now, you can take all that energy and put it into building your business, and also on the creative side as well. Just think about all the time you lose sitting in meetings.”
Roughly a year after he made the transition, Tuohey has no regrets and isn’t looking back, only ahead. He, too, likes the freedom and greater sense of satisfaction that comes with business ownership.
“You definitely make your own breaks,” he said. “The thing about what I’m doing that’s so fulfilling for me is that I’ve earned every penny that I’ve made doing this, and I’ve become much more well-rounded of a professional. I think I’m more determined, and more confident in my abilities.
“Those are the absolute positives,” he continued, “plus I don’t have to jump on a plane every week and fly off and not see my kids.”
Slinski said her background has been in program development, not business management, so she has had to learn many of the basics, from balance sheets, which she’s still mastering, to pricing.
“The hardest thing to learn was to ask for the money I deserved; I would tend to underprice, but I’m getting better at it,” she said. “Overall, I was never a business person; I was great at creating things and developing things systematically, but the business side was all new to me, and I had to learn.”
All those who make the transition to business owner, whether by choice or out of necessity, should be prepared for what Tuohey called a “roller-coaster ride.”
“There are a lot of ups and downs and emotional swings,” he explained. “Most of all, people have to be prepared to work hard and have some determination and some perseverance; it’s not an easy ride by any means.”
The Bottom Line
Touhey says he still hears from recruiters.
“I get calls once in a while,” he said. “I tell them that I’ve stopped looking for a job, but if they want to talk to me, and there’s an ideal situation, I’ll certainly listen.
“But I’m going to be the one dictating the terms; I’m not just going to jump back in,” he continued. “I’ve found something I think I can grow, and in the meantime, I’ve proven to myself and my family that I’m capable of providing for us with this, and there’s a certain amount of accomplishment in that.”
In other words, a former entrepreneur of necessity is now one by choice — and he’s not alone.
George O’Brien can be reached at email@example.com