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ENTREPRENEUR MAGAZINE: "Creating Your Own Job"

Need a job? Even though many people lose their jobs during a recession, a recession can be a good time to create your own job. Small businesses and franchises pop up during recessions because people who have been laid off in the corporate world are sick of big-company bureaucracy and are ready to be their own boss. After years of hard work, overtime and dedication, out-of-work executives realize that big corporations do not provide security.

There are many benefits to opening a business during a recession. Entrepreneurs can take advantage of prime real estate opportunities, there is a larger pool of potential employees to choose from, and many suppliers are willing to negotiate prices to win your business.

But most of out-of-work executives have little to no experience opening their own business. Franchises can be very attractive because they offer the chance for people to own their own business but with the support and knowledge of a dedicated team working behind you. Franchises allow you to work for yourself with a guideline on how to be successful.

So why is the franchise industry experiencing an overall decline this year? As you may have guessed, it is the lack of financing available. The No. 1 source of funds to open small business has been home equity. The mortgage industry has tightened qualifications, and property values have dropped. It is difficult to refinance your home in this market and even more difficult to pull out a significant amount of cash.

Another source for financing a business is from savings and 401(k)s. After the drop in the market during the last year, many people have lost assets in the stock market that may have been used to open a business.

And of course, there are always small-business loans, right? You can get a small-business loan and help jumpstart this economy. Wrong! Guidelines for small-business loans are so strict that they eliminate access to cash for the people who really need them. Traditional bank loans from historic restaurant lenders such as GE Capital remain difficult to secure, and government-backed SBA loans are harder to obtain. (Unfortunately, instead of supplementing loans for creating small businesses and new jobs, your tax dollars have been spent helping big corporations whose top executives enjoy enormous bonuses and spa treatments.)

Last, but not least, there are private investors. Unfortunately, raising funds to open a business from private investors can be very difficult.

Some franchisers are helping to fight the credit crunch by offering discounts and some are even providing financing. Franchisers such as tumble & tea cafe and Red Mango are reducing their upfront franchise fee, reducing royalties or even offering buy-back opportunities to help people open their own businesses. Other franchisers, such as Marco's Pizza, a Toledo, Ohio-based chain, have raised a fund from private investors to lend to qualified franchisees.

I hope the government stimulus package will start helping small businesses get off the ground. Small business can stimulate this economy. Data and research funded by the Office of Advocacy shows that small businesses represent 99.7 percent of all firms, create more than half of the private non-farm gross domestic product, and create 60 percent to 80 percent of the net new jobs.

If you are thinking about opening your own business, don't give up because finding the financing is difficult. Do you want to stay in this recession or be part of the solution? It's the entrepreneurs of today who will get us out of this recession and create the jobs for tomorrow.