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When jobs are scarce, enterprising
types create their own

Unemployment was the push needed to launch their businesses

By Martha E. Mangelsdorf, Globe Correspondent, 5/25/03

Globe Staff Photo/Joanne Rathe Mark Anderson, who started his own business selling remote control-like devices for the game of laser tag, with his sons, James, 11 (center) and Sean, 8. Anderson developed the idea for TinyTag while he was laid off.

Melissa Wilbricht-Fristrom of Watertown knew her next step right away. After she was laid off in December 2001 from her job as strategy director at an Internet consulting firm, she decided to go into business for herself. ''I used my severance check to convert my attic into an office,'' recalled Wilbricht-Fristrom, now 36.

But for Jim Stewart, 48, the decision to become self-employed was ''a very gradual thing.'' Stewart, of Burlington, spent more than a year looking for full-time employment after he was laid off in May 2001 from his job as a senior project manager at Genuity Inc., a Woburn network services company. During that period of job hunting, Stewart also did some consulting. At some point, he realized he enjoyed the consulting and decided to pursue it full time. Early this year, ''I got my business cards and a laptop, and I never looked back,'' Stewart said.

Meanwhile, for Mark Anderson, 45, the idea for a business practically emerged from unemployment itself. In May 2001, Anderson was sitting in front of the television watching ''The Oprah Winfrey Show,'' with, as he puts it, no good job leads and no ideas. (He had been laid off from his job as vice president of business development at an Internet company earlier that year.)

Anderson's son Sean, now 8, playfully ''shot'' at his father with a laser tag toy. Anderson ''fired'' back with the TV remote control - and the idea for TinyTag, a laser tag game played with small infrared devices that use technology similar to a TV remote control, was born. Anderson, who lives in Westborough, turned to a neighbor who had worked at a Cambridge high-tech firm, as well as several freelance engineers and programmers, to design the product, which now has a patent pending.

Call it a sign of the economic times. Some laid-off workers, like Stewart, Wilbricht-Fristrom and Anderson, are deciding to try to create their own jobs by starting businesses.

That's probably not surprising, given the state of the Massachusetts labor market. According to Paul Harrington, an economist at the Center for Labor Market Studies at Northeastern University, ''Massachusetts is actually leading the nation in job loss'' by percentage of jobs. Massachusetts, he said, lost about 5 percent of its jobs between January 2001 and March 2003, which translates into a decrease of almost 170,000 jobs in the last 27 months. And, Harrington said, an increasing number of the unemployed are exhausting their unemployment benefits.

Statistically, what Harrington sees is a growth in contract work, or ''contingent-type'' work, where workers are getting some part-time, part-year work, often as contractors.

''There's a lot of that going on,'' he said - and it's one factor that keeps the official unemployment rate lower than it might be. But, he thinks, once the economy recovers, most workers who are now working part time as independent contractors are ''going right back into that wage-and-salary job if they can.''

But for some people, getting laid off may be the push that causes them to act on a desire to start a business. Steve Spinelli, director of the Arthur M. Blank Center for Entrepreneurship at Babson College, said that one common driver of entrepreneurship is at least 10 years of experience in a specific industry. After a person has that experience and knowledge, something triggers his or her decision to start a business - and that can be a layoff.

For the laid off, ''the opportunity costs are a lot lower'' for starting a business, Spinelli said.

And some of the downsized can and do start businesses with staying power. Just ask Ken Silva. Silva, the associate director of corporate and professional development at Bridgewater State College, has been teaching entrepreneurship courses to unemployed or underemployed workers since 1992.

Originally, the courses were offered through a group known as the Southeastern Massachusetts Partnership, Silva said. Today, he teaches an entrepreneurship class through the City of Taunton, with funding from the US Department of Housing and Urban Development.

Silva said that between 60 and 70 percent of almost 700 graduates over the years not only went into business for themselves but remain in business. One key? He enrolls only about half the people who apply. If he senses people really aren't committed to entrepreneurship - and are trying it just out of a lack of job options - he tries to discourage them upfront.

Trying to start a business with that motivation ''is not a good idea at all,'' he said, noting that discouraged workers who aren't getting responses to their résumés don't need another experience of failure. ''Not every one is cut out to be an entrepreneur,'' Silva said. And, he argued, it's far better for people to figure that out without investing money or emotions. He also asks people about their economic needs, and how they plan to sustain themselves while starting a business.

Of course, different types of small businesses require different amounts of capital - and different amounts of risk. Stewart estimates that he has spent less than $5,000 so far on start-up costs, although he's still incurring some. His new business, Project Management Associates, is probably a common form of start-up among laid-off workers: a consulting business in the founder's area of expertise.

Stewart is working a couple of days a week consulting and teaching project management, and he thinks it'll be another year before he's earning what he considers a living. (He has health benefits through his wife, a teacher.) ''If I earn $25,000 this year, that's a lot,'' he said. ''Oddly enough, it doesn't bother me'' right now. And, he said, he's happier consulting than he was looking for a job. ''A couple of days a week [of work] is much better than zero,'' he explained. ''It feels good to work.''

In some cases, laid-off workers may reposition their skills into new niches.

Wilbricht-Fristrom's career includes stints in consumer marketing, working on positioning products like cereals and toys. But, she realized, her favorite type of work is mentoring the people who worked for her and with her. She also had an interest in counseling - she's doing graduate work - and experience editing résumés for pay while earning an MBA at the Harvard Business School. So, instead of positioning products, she said her business, Core Allies, aims to help position individuals for success in their careers, through coaching. ''I feel like I'm very fortunate because I have plenty of clients,'' said Wilbricht-Fristrom. Even with the extra taxes self-employed people pay, ''I'm making pretty close to what I was'' earning before being laid off.

The down economy is a possible factor. According to Wilbricht-Fristrom, about half of her clients are seeking advice because of the economy. And she notes that she has a strong network of contacts, and a natural tendency to network.

Networking - and having a good network of contacts - is key for those trying to launch a business. Ask Spinelli, who was a founder of Jiffy Lube, to recommend resources for entrepreneurs and his first answer is, tap into a network of industry expertise. He advises would-be business launchers to think of the smartest people they know in the industry, get in touch with each one, and offer to buy him or her lunch. Over lunch, get a critique of their business plan - and listen to the advice.

When it comes to financing start-ups, people who've been downsized sometimes have to juggle different types of work. For example, Anderson is working part time while launching TinyTag.

''It's a survival strategy,'' said Anderson, who tried to raise capital for his business, which is named SeanO Corp. He ended up with a 3-day-a-week job in marketing for an environmental company in West Boylston. He also has obtained a loan backed by the US Small Business Administration.

Anderson has a lot riding on his start-up. His loan comes with a personal guarantee and a lien on his house. And he said that, in April, his wife was laid off from a company where she had worked for 15 years. He said he now has hundreds of stores signed up to buy the product, which should be shipping any day now, after being available in only a few stores late last fall.

Clarisse Cowdery, buyer for Learning Express Inc., a 112-store franchise chain of toy stores based in Ayer, said her stores are all ''itching'' to get TinyTag shipments, after one store that had the products in November had good sales results with them. ''We're getting behind him as much as we can,'' Cowdery said.

Cowdery acknowledged that Anderson has ''got a long road ahead of him'' to try to build a business in the toy industry, which she described as ''a very tough business'' where knock-offs of products are common.

Anderson admitted he's taking a risk. ''I bet all my money on Cisco [stock],'' he said. ''Now I'm betting it all on SeanO.'' He's hoping for a strong holiday season for the game, which will retail at about $14.95 or $15.95. ''Hopefully, Christmas is good.''

Martha E. Mangelsdorf is a business writer and editor. She can be reached at m_e_mangelsdorf@hotmail.com.

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