PORTLAND — Some of the country’s most successful corporations were launched during periods of economic malaise.
Examples include General Electric, started by Thomas Edison in 1890 during a global recession, Toll House cookies, launched during the Great Depression, and Microsoft, which began during the economic stagnation of the mid-1970s.
Small-business experts say economic conditions are once again ripe for entrepreneurship.
And they say Maine has a host of government and nonprofit resources that can help fledgling businesses get off the ground.
Don Gooding, executive director of Maine Center for Entrepreneurial Development, said layoffs and slack employment growth have created a slew of “entrepreneurs by necessity.”
“When there aren’t many opportunities in the existing economy, people are more inclined to go out and make their own (opportunities),” Gooding said.
Gooding said economic conditions drive both veteran and entry-levels workers to become entrepreneurs.
“What have (workers) got to lose?” he said. “They are not turning down great jobs on Wall Street or in corporate America.”
According to nonprofit research group Ewing Marion Kauffman Foundation, Americans started 565,000 new businesses per month in 2010, the highest rate in 15 years.
And a 2009 Kauffman study found that more than half the companies on the 2009 Fortune 500 list were started during a recession or bear market.
It’s unclear how many entrepreneurs are in Maine, but the state has 147,000 small businesses, according to the U.S. Small Business Administration.
Valarie Lamont, director of the Center for Entrepreneurship at the University of Southern Maine, said economic slumps encourage entrepreneurship, but also can make starting a business more difficult.
“When the unemployment rate goes up and stays up, people look at different options and gravitate toward entrepreneurship,” she said.
“On the other hand, in this recession there has been difficulty getting access to credit. It’s harder to start a business and keep it going.”
There are other challenges.
Emily Adams, an entrepreneur who launched Dirt on a Cake last fall, found that running a cake company meant learning a whole new set of skills, like marketing and sales.
Adams wrestled over a marketing strategy before turning to the Women Standing Together networking group for advice.
The members encouraged her to sell to small retail shops.
Small business experts say entrepreneurs have drive and creativity, but often must seek outside help in tackling the nuts and bolts of business ownership.
“The biggest challenge is all the hats an entrepreneur must wear,” Nancy Strojny, chair of the Portland chapter of SCORE, a group that provides resources to small businesses. “As an entrepreneur, you have to be CEO, vice president of sales and controller.”
Strojny and others advise entrepreneurs to take advantage of the resources available to entrepreneurs in Maine, many of which are offered by government and nonprofit groups, often free of charge.
For instance, SCORE has seven offices statewide and offers face-to-face counseling. The organization’s low-cost business workshops teach about business plans, social media, Internet marketing and other topics.
“There are a lot of programs out there to take advantage of,” said Adams, whose ice cream cakes are now sold in a handful of southern Maine stores. Adams consulted with the head of the Maine Small Business Development Center at the University of Southern Maine.
Gooding said business people who launch traditional small businesses – restaurants or retail shops, for instance — have the benefit of selling established products or services. Price points are already set, and demand can be estimated.
Gooding said entrepreneurs selling new products face “market risk,” as in, “is there actually a market for the product and service?”
He said the best many entrepreneurs can do is develop hypotheses about demand and price.
“When you test those hypotheses against the real world, sometimes you are right, and sometimes you (must) adjust,” said Gooding. “You just don’t know until you are in the marketplace.”
He added that business plans are of limited value to entrepreneurs.
“You can put together a business plan, but it’s obsolete the moment you write it,” he said. “There are a huge number of uncertainties.”
Unpredictable businesses aren’t prime candidates for traditional bank loans, which can make it difficult for entrepreneurs to land start-up funding, said Strojny.
Many entrepreneurs therefore borrow money from acquaintances, which Gooding calls the “friends, family and fools round” of financing.
Entrepreneurs may also qualify for loans or grants from nonprofit groups like Maine Technology Institute, the Libra Future Fund and the Maine Angels, a nonprofit association of individuals who invest in start-up companies.
Gooding said breaking into mass markets can be difficult because consumers grow attached to established brands.
Therefore, he said entrepreneurs might consider marketing their products to “early adopters” — consumers who pride themselves on owning the latest products.
He said that strategy worked for Biddeford-based start-up Hyperlite Mountain Gear, which sells ultra-light hiking packs and tents designed for hard-core hikers, not day-trippers.
“Early adopters can get you off the ground,” Gooding said. “Then you have to shift gears to attract mainstream (consumers).”
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