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February 29, 2009

Sky's The Limit
- Established ventures illustrate potential in forced entrepreneurship
Crain's Business Magazine

By JOEL HAMMOND
4:30 am, February 9, 2009

Layoff got you down? Want better control over your future?

It’s not a pipe dream, according to some Northeast Ohio entrepreneurs who started their own ventures following a layoff.

With hundreds of thousands of job losses nationwide, these so-called forced entrepreneurs can serve as models for displaced workers — or at least represent another option.

“Elective entrepreneurship probably won’t be as prevalent as it would be in good times because optimism fuels that,” said Steve Millard, president and executive director of the Council of Smaller Enterprises. “But coerced entrepreneurship will increase for folks who are out of a job and need something to sustain their family. You’re going to find people move to entrepreneurship who are being downsized.”

That move won’t come easy, of course, but it can be done, said Mark Hauserman, executive director of John Carroll University’s Entrepreneurs Association.


Mr. Hauserman, who dismisses the notion that 80% of startups go out of business within a year, said the key is to develop a business model that reaches a revenue-generating stage quickly.

How to do that?

“You can’t start from scratch,” said Ron Finklestein, president and CEO of Akron-based business and executive coach company Akris LLC who in 2001 was laid off from Xerox Connect in Garfield Heights. “You have to partner with or seek out someone with institutional knowledge, so you can short-circuit the learning curve.”

There’s also an attitude shift, said both Mr. Finklestein and Mike Berlin, founder and managing member of BriteSkies LLC, a downtown Cleveland-based software integration outfit.

Mr. Berlin, laid off in 2000 from Internet consulting company marchFIRST, started BriteSkies with the four-week severance he received and the laptop and domain name he then bought.

“If you’re great at what you do, that doesn’t mean you’ll have a good business,” Mr. Berlin said. “Technical expertise is not business acumen. I had to go from a computer guy to a business owner.”

Taking the good with the bad

Fear never registered for Patricia Klavora, the owner of Cleveland-based Marketing 360 Group LLC, who said she has found more stability in her new role — providing small and midsize businesses with marketing assistance. Ms. Klavora was laid off in 2005 from her marketing specialist position at FirstEnergy Corp.

“I’d already lost my job; how much worse could the fear get?” Ms. Klavora asked. “It’s up to me to get the business, and you never lose it all at once. Ironically, there may be more stability in this line of work.”

Linda Winick, who started Cost Control Consultants in 2008 after 13 years at AT&T, touted that control as a major benefit. Ms. Winick’s department was eliminated, and although she was offered a job in a different area of the company, it would have meant a commute that was 45 minutes longer and a 40% pay cut, she said.

In the end, Ms. Winick, whose company audits businesses’ utility and telecommunications bills, said she was lured by the idea of making her hard work and long hours pay off for herself, not another company.

“Loyalty’s a one-way street,” Ms. Winick said. “The timing was right; I needed to control my own destiny. I directly benefit from what I do. I can make my own schedule and decide who I want to work with.”

While the control that comes with forced entrepreneurship can be a positive, the responsibility involved can be a negative.

For example, gone are the days of turning off your cell phone when you get home, said Kristy Amy, president and founder of OnMark Solutions, an e-marketing company in Westlake.

She started the company after she was laid off while pregnant with her second child, and she has since had a third.

“There’s no such thing as maternity leave when you work for yourself,” Ms. Amy said. “If you want to keep the business going, you have to keep working.”

The same outside forces that resulted in entrepreneurial candidates’ job losses can also play a role in startups’ success or lack thereof, a struggle Joel Libava fights.

Mr. Libava, the president of Cleveland-based Franchise Selections Specialists Inc., said he has long bemoaned the region’s stagnation. Typical of many entrepreneurs whose roles require them to create their own businesses, Mr. Libava said clients aren’t always beating down his door, especially in the Cleveland area.

“Being in an area that’s not dynamic is frustrating,” Mr. Libava said. “People are not moving here; people are moving away. It’s frustrating that we live in a fairly conservative area that needs help.”

Even at school

In a unique twist, even college students are being forced to consider all their options, including entrepreneurship, said Julie Messing, director of Kent State University’s Center of Excellence for Entrepreneurship and Business Innovation.

Ms. Messing said students are seeing job opportunities dwindle by the day, and pay for existing jobs is not in line with what they want.

“Typically, students are here to learn about entrepreneurship, then plan on joining the work force for five years to gain experience, learn protocol and build their network,” Ms. Messing said. “Instead, they’re looking at this as a potential opportunity.”

John Carroll’s Mr. Hauserman said some consider entrepreneurship because of their parents’ troubles.

“Kids have parents getting laid off from National City, and they worry” Mr. Hauserman said. “They’re seeing it as a lot of work, but they want to work for themselves.”