The AEC industry has shed over 30% of its workforce in 12 months

One topic I have been kicking around with some out of work architects is the question: is it a good time to start a new business?  Now, let me put this in to perspective.  I am not talking about Hyatt, FedEx, Trader Joe’s or Hewlett-Packard, although these companies WERE started during recessions, according to small business writer Jan Norman’s “Poll: Is Reccession a Good Time to Start a Business?”.  I am talking about starting a new freelance design or production business or hanging your own shingle, including hiring others to work with you.  After all, many of us share this goal. 

So is it the right time? According to AIA National, many of today’s dominant AE practices started during recessions.   The AIA just re-released a 2006 Best Practices piece titled “Seven Tips for Emerging Firms” which supports their view that now is a good time to start a business.

There are opposing views however.  Author Alexandra Johnson, writing for Inc. online, in her article “Is Now a Good Time to Start Up?” refers to a study conducted by the Kauffman Foundation that disputes the notion that a recession is a good time to venture out:

According to a preliminary study released by the Kauffman Foundation, the jury’s still out on whether a recession is a good time to start a business. According to popular theory, recessions breed entrepreneurship because there’s less to lose; if you lose your job, starting your own company is a good way to get one.  On the other hand, a recession results in limited availability of risk capital, and unwillingness to sell products and services in a weak economy.  According to Paul Kedrosky, senior fellow at the Kauffman Foundation and author of the study, an added complication to this conundrum is a lack of quality research on the extremely complex issue.  “There hasn’t been much research on the subject, and the data is crap,” Kedrosky explains. “It’s hard to do well, so people don’t bother.”

However, this negative view is directly contradicted in the article “Recession is a Good Time to Start a Business: Fair Attendees Told” written by Alexandra Ward for NJ.com, in which she states, 

Though one would expect the economy to be taking a toll on those interested in opening small businesses, now is the perfect environment to do so, according to Lou DeLauro, the chair of the Greater Princeton Area SCORE Chapter.   “It’s a golden opportunity to do things,” DeLauro said. “You can get good deals on buildings and rents. The economy will pick up again; it’s only a matter of time.”

The more you goggle, the more information you find on this topic.  The historic evidence though is that MORE studies and evidence conclude recessions ARE a good time to start new businesses.  There is also agreement that these new entrepreneurs and small business owners are often the first to lead us out of recession.  Therefore, we should encourage entrepreneurship in our industry as a means to and end, as well as, a new optimism for tomorrows successes.  Are you considering a start-up?