So often we hear about the men and women who start small businesses. Whether they need to rent a space brick and mortar style, or create a room in their house with an  office and go virtual, the success and failure rate  is hard to determine.

Let’s say one spouse doesn’t need the money as much as the other because that spouse is bringing in the dough to support the family.  Unfortunately you don’t see too much of this in the under 40 crowd.  Heck, I don’t see too much of this in the under 50 crowd as well!  Let’s look at these folks as the “Hobby Entrepreneurs.”  It’s just too tough to get hard numbers of the success rate on this group and the sole proprietor set up.

I recently read an article that stated less people are venturing off into their own businesses today than those of 10 years ago. With the recent recession, it seems as though there is a broad fear that has swept the nation.

If you think about people you know, can you name a few people that went past this decade and started a business on their own?

From a broad economic and sociological stand point we must take a look the reasons why we are seeing less people leave their jobs to live the “dream.” First and fourmost we have lost a vast amount of industries over the last few decades. When was the last time you saw a mom and pop video store open or even a computer repair place?  The idea of renting retail space for a business is slowly going by the wayside unless you are a larger corporation or franchise.

Nowadays anyone can advertise as a small business on sites like Craigslist or your local Pennysaver.  It would be absurb to rent retail space in many instances.  Some businesses will never go away and seem to be thriving such as the restaurant and hospitality businesses.  Here in Southern California we have seen a rash of Microbrew Eateries jump onto the scene over the past 10 years.  Although were always told it’s the hardest business to succeed in, the entertainment/eatery business has a great chance to make it if you are delivering what the local population is looking for.

Getting back to my topic.  Why are we scared to barge into our bosses office and tell him to “take this job and shove it ?”  Well, let’s write down a number of factors as to why this is tougher to do today.

  1. The cost of living is much higher than it was in the 1990’s. Investors during the last real estate bubble took to individual housing like never before. The old way was “if you wanted to invest in real estate you went to the wrong side of town to purchase a 4 family home that needed some repair work.”  The possibility of capital gain on the unit was small but the tax difference along with the possibility of positive cash flow was attainable. The 2008 way of real estate investing was with hedge funds purchasing foreclosures and short sale properties which were single family primary residences. If you take a look at California where much of this was done, there was a rebound in the real estate market by 2011. These percentage gains out performed much of the rest of the country.  Now, once again it’s very hard to own a home in more desirable parts of the country.
  2. Salaries are stagnant. I can remember my father telling me in the 90’s, “Son, I was making $700 a week delivering bread in the 70’s It’s hard to make that today.”  The old man said this 20 something years ago. Here we are well into the millennium and I still think this holds true.  We can take a survey around the country as to how many people can bring home (after taxes and health insurance which is somewhat of a tax now) 700 bucks a week.  My gut says it’s not as high of a percentage of American workers than it should be.
  3. Fear. This topic encompasses the last two points.  It cost so much to live and my salary is so low that it leaves me no money to save should I become unemployed.  Let’s say you have to send your kids off to college.  Starting a business with that weighing on your shoulders would keep anyone strapped to their seat at work.  If you are willing to go without “extras” in your life by living a very modest to meager lifestyle,  you could counter balance fear and attempt becoming a self starter.  The truth is, most people are into security even more so today with the unstable economic environment we live in.

There is an answer to all this.  Something else can be done. This something is in our control which can make (almost) everyone happier. Lower taxes. What more can be said? If you put more money back into everyone’s pockets then everyone has a better chance to accomplish their goals.  If government wants to regulate, then regulate salaries of government officials, overtime pay and frivolous spending.  With all of the obstacles that are faced in starting your own business,  at the least, they need give everyone a better chance to succeed.