Opinion: Necessity entrepreneurs happy to be labeled
Monday, August 20, 2012 3:55 AM
I talked to a statistic last week. His name is Karl Bruning.
Bruning is among a growing number of businesspeople classified as necessity entrepreneurs, according to a new study released by the University of Missouri.
The study found between 2007 and 2010, when the country was in the throes of deep economic recession, the amount of necessity entrepreneurship rose from 16 percent to 28 percent of total entrepreneurship nationwide. Researchers define necessity entrepreneurs as those who start new ventures after losing jobs or experiencing pay cuts.
Bruning was laid off from Willow Brook Foods in 2008 – just months before the food processing company closed its doors in Springfield – and in June of that year he opened a mechanic’s shop at 2140 S. Campbell Ave. For 26 years, Bruning repaired Willow Brook’s transportation fleet, and he was running its truck repair shop in Billings the day he got the tough job news.
“At the moment they looked at me and said they didn’t need me anymore, I realized I wasted a lot of years trying to build something that ultimately could go away so fast,” Bruning recalls. “I decided that wasn’t going to happen to me again.”
Bruning’s research led him to an industry that was blossoming as cost-conscious consumers began to invest in automotive repairs rather than replace their banged-up vehicles. Family Auto Repair was born out of economic stress, a noted historical trend in the MU study.
“Many large, profitable businesses have been created due to entrepreneurship during economic downturns. Hopefully, that will be the case for this period as well,” said Thomas Johnson, study co-author and a professor in University of Missouri’s Truman School of Public Affairs, in a news release documenting the findings.
The study, which was published in the Entrepreneurship Research Journal, identified opportunity entrepreneurship as business ideas resulting from perceived opportunities, a more common experience during flourishing economic times. By contrast, necessity entrepreneurship results directly from a need to create new income streams, the study said.
MU researchers examined data from the Global Entrepreneurship Monitor survey.
Facing an income crisis, the nearly 54-year-old Bruning took roughly $15,000 in severance and cashed in his 401(k) to cover the nearly $60,000 in startup costs for Family Auto Repair. “I was committed. There was no thinking, ‘Maybe,’” he adds, offering a bit of advice for necessity entrepreneurs this economy might yet be chewing up and spitting out.
Entrepreneurship is not an easy road, and Bruning attests to that. Some of the hurdles he’s adjusting to: longer hours, unsteady income and capital headaches.
“I always tease – we work twice as hard for half as much,” he says.
The upside? A little more control of one’s destiny.
“As long as I can maintain my business, I’ve got a job,” Bruning says.
“I’m not Rick’s yet,” he jokes, referring to Rick’s Automotive Inc., the Springfield chamber’s reigning Small Business of the Year. “But at the same time, we’ve got three families that are supported by this business that we put together. I’m kind of proud of that.”
MU’s findings are supported by a May 2010 Kauffman Foundation report.
According to the Kauffman Index of Entrepreneurial Activity, 340 individuals out of every 100,000 in 2009 opened a small business, a rate 4 percent higher than recorded a year earlier. Kauffman’s 2009 data reveals there were 27,000 more small-business starts per month than in 2008 and 60,000 more per month than in 2007. The Kauffman study found 2009 to have the highest level of startups in 14 years, even outpacing 1999 and 2000, the peak of the technology boom.
“Some good businesses are going to pop out of this thing,” Bruning says. “People – probably a lot of them – are going to fall on their faces, and we may yet. At least you’re still trying. You’re not completely out of this thing just because you got laid off at work or your company folded. You’ve still got a job to do, so let’s do it.”
Springfield Business Journal Editor Eric Olson can be reached at email@example.com.