Entrepreneurship Heats Up In The Bay State | New business starts increase in 2010
Is the economy recovering from the recession? Ask economists, business owners or regular workers and you’re likely to get responses suggesting cautious optimism. Businesses are rehiring, a few employees at a time. Investors are loosening their purse strings a bit. Families that weathered the last few years with jobs intact are breaking out the credit cards again.
But for people starting new businesses, there’s rarely room for half measures. Even in the best of times, the typical startup requires a huge investment of money, time and effort, and even then there are no guarantees.
Venturing Forth
Yet people are doing it. In the six months from Aug. 1, 2010, to Jan. 31, 2011, 14,747 new business incorporations were filed in Massachusetts, 584, or 4 percent, more than in the same period a year before. For the entire year, new business filings were up more than 7 percent.
Not all incorporations are new businesses. Some reflect the reorganization of existing companies, others the formation of community groups or other non-business entities. But, taken as a whole, they give a sense of the climate for new business starts.
“I think it’s a more favorable outlook now than it would have been a year-and-a-half to two years ago,” said John Rainey, regional director of the Clark University-based Central Massachusetts office of the Massachusetts Small Business Development Center Network.
Rainey said one specific niche where some new businesses are flourishing is the installation of solar panels, with subsidies making it cost effective for businesses to generate their own solar power. In general, he said, it looks like a good time for technology-heavy companies, including those in fields like alternative fuels or biomedical products.
One technology entrepreneur who’s undaunted by a difficult economy is Mark Hall, who founded a company called xPeerient in Natick. The company, formerly known as Rational Markets Inc., intends to change the way IT vendors sell their services, providing a virtual marketplace where buyers and sellers can meet. It got started in 2009, but formally incorporated in Massachusetts in 2010. Hall said marketing efforts based on traditional advertising, cold calls and spam are increasingly antiquated.
“It’s growing less and less effective,” Hall said. “It may work for consumers, but it really does not work in enterprise IT.”
Hall already founded one business, CIO Executive Council, a company he refers to as “eHarmony for tech executives,” so he’s not a babe in the start-up woods. He said getting together the funding for the new company during a “really lousy recession” was hard, but the company ended up with a bit under $2 million in start-up capital over the past two years, starting with angel investors before moving on to a venture firm.
But in terms of selling its product, Hall said this is the perfect time for the company to be moving forward. He said some companies have held off on IT projects until they felt more comfortable about their financial situation, and now they’re moving them forward.
“There’s no better time to start a marketplace then when the economy is just beginning to warm up again,” he said.
Twelve people are now employed at xPeerient, all but two of them in Massachusetts.
“We’ve done our part of taking people off the unemployment rolls,” Hall said.
Low Overhead
On the other end of the financing spectrum, there’s Sullyvan Mendes, who helped start a two-man construction company, J&B Construction Service Corp. of Framingham, together with a former co-worker. Mendes said start-up funds for the company haven’t been an issue because they haven’t got much of a budget.
“You just need a few tools,” he said. “You don’t need a lot of money. Anyone can do it.”
Mendes said the fledgling company has been able to find work, but prices are low. And he said it can be dicey paying for expenses like insurance without a reserve to fall back on.
“We’re confident that we can get some work, can get going, just chipping away.” Mendes said. “But who knows? It’s a tough time.”
Rainey, of the small business development center, said some people have actually been pushed into entrepreneurship by the recession.
“What’s been happening is people have been realizing, ‘I’ve got to create my own job,’ ” he said. “I think some of that is being forced on people.”
Ivette Olmeda, the program manager for the Worcester office of the Center For Women & Enterprise, said she also sees prospective entrepreneurs coming from the unemployment office. In many cases, she said, they’re people with years of experience working in corporate settings. She said people in that position can be successful as consultants, but they have to accept that starting a business requires different skills.
“Somebody can feel like they know everything and they can just jump immediately to do the business,” Olmeda said.
She said she tries to push them to develop a business plan and develop entrepreneurial skills to complement their areas of expertise, and most who do that can be successful.
But to Mendes, part of getting started in his new business is not spending too much time dwelling on the problems he could face.
“If you take it that way, you’re never going to do anything in life,” he said. “You’re always going to find problems.”
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