The Greek philosopher Plato said necessity is the mother of invention. And in tough economic times, innovation is essential for job seekers. With 10 percent of the U.S. workforce unemployed, some entrepreneurs are seizing opportunity. For young people entering the labor market, creating a business can be an appealing option.
Zach Cutler is a 22-year-old recent university graduate who started a small Washington, D.C. public relations and business development firm last year. He says finding a job out of college was tough and contributed to his decision to start his own business.
"I think in normal times I would have probably had more opportunity in corporate America. I think because of the economy, there weren't as many openings. It was very challenging and I decided I didn't want to look anymore. So I created the Cutler Group," he says.
The Cutler Group works with clients to help their businesses grow through publicity and development plans. Their clients range from health care professionals to media groups and government officials. Although the job market influenced his career path, Cutler says that the poor economy has given him an advantage. "I think the economy has been good for my business because organizations or companies that in good times might look to hire a big PR firm or a big consulting firm, during these times, they don't have that kind of budget. Because I'm a new company, I really offer them a great deal," he says.
For recent college graduates, the road to owning a successful business can be rocky. Census data from 2007 and 2008 show that young people under the age of 25 make up less than three percent of America's self-employed.
Nake Kamrany, an economist at the University of Southern California, says entrepreneurs like Cutler do several things for a society.
"The entrepreneur creates a new product - it creates a new market; it creates a new source of supply; it creates new management. And it starts a new business. So they are the engines of economic growth throughout the world," he says.
Kamrany says entrepreneurs face two major challenges - creating an idea and securing funding for it. An entrepreneur's product or service must sound feasible and marketable, enough to convince people to become investors.
Often, an entrepreneur's ideas do not fit conventional wisdom or they seem unrealistic. This can make it difficult to find funding. Many entrepreneurs have to deal with a lot of initial rejection. And they face pressure to make money quickly, before others copy their ideas.
But Kamrany says persistence eventually turns many start-ups into successful ventures.
"Like for instance, there was a young person who came to me some years back and he said that he wanted to start a solar energy business. At that time, the solar energy business was such that it could not compete with oil and gas and oil. And therefore, when he went to banks, they would not give him any loans. And then last year when I saw him, he had a company and it was worth several million dollars," he says.
Some young entrepreneurs, like 22-year-old Andrew Hearst, say that the economy had no influence on their decision to start a business. Hearst and his partner, Ben Gluckstern, launched a bike-sharing program called NY Cycles in 2009. By 2012, they hope to set up a network of pick-up and drop-off locations for rented bicycles throughout New York City.
Hearst says that he and Gluckstern encounter the same difficulties all entrepreneurs face, but once or twice their youth created a small issue. Hearst remembers startling members of a consulting firm when they met for the first time.
"And these guys were in their 30s or so, and here I am with my partner. We're still in our senior year of college, and these guys show up and they were totally expecting someone older in suits. But we were just in a small little office that we were borrowing from Ben's boss. And I think they were a little disappointed. I'm not sure if that's the right word, but they were surprised nonetheless," he says.
Hearst says that the meeting went well. The consulting firm took them seriously when he and Gluckstern showed how much they knew about their market.
Andrew Hearst and Zach Cutler know their ventures will take persistence, something economist Nake Kamrany says all entrepreneurs need, regardless of age. And their success, he says, is crucial to a nation's economy.
"The point is this - the growth of a country is a function of how many entrepreneurs they have," he says.
In these tough economic times, Kamrany says the U.S. economy needs business innovation more than ever.