You're in the Clovis: News - Clovis: Business section

Valley entrepreneurs try to survive recession

Wednesday, May. 06, 2009 | 09:50 AM

tool name

close
tool goes here
0 comments

It used to be that entrepreneurs were mainly eager opportunists, spying their chance to make money in a growing economy. No more.

During this recession, many startup business owners say they have been pushed into their ventures -- because it's the only way to survive a layoff or job insecurity.

Among them is Joey Escobedo, whose career as a real-estate agent sputtered as home sales plummeted amid a market freefall. So he opened a shaved-ice stand to support his growing family.

"Definitely with the baby coming, I have to get busy and get events going," said Escobedo, 33, whose girlfriend is pregnant with their third child.

Escobedo had been a mortgage broker for three years before he became a real-estate agent just as the housing market crashed. At first, his deals brought in commissions of $4,000 to $5,000 each month, but when buying slowed, he was earning that much every three or four months.

He pulled from his 401(k) account to support his family. The family also drew on his girlfriend's income from her job as a cell phone company sales rep.

It wasn't enough.

So Escobedo spent about $4,000 to launch his own business. Now he's doing his best to grow, rushing to sign up for events before other similar vendors.

He pays up-front for supplies and stall space -- from about $100 to $1,000 for large, multiday events -- without any guarantee of a profit. Some events bring in $700 in profit in one day. He has lost money on others.

He doesn't want to do it forever. This reluctant entrepreneur says he hopes to return someday to a full-time job, possibly in real estate.

It's easier now, expert says

Recession-driven entrepreneurs face different realities from those who leap into business during good times.

In some respects, they have things easier, said Tim Stearns, director of the Lyles Center for Innovation and Entrepreneurship at California State University, Fresno.

For example, there typically are fewer competitors during recessions, Stearns said. And businesses that do compete are more likely to be focused on survival, rather than investing money to make them more competitive, he said.

Some businesses that started in hard times have been remarkably successful. Microsoft is a notable example. Bill Gates dropped out of Harvard to found his company in 1975, when national unemployment rates were on par with today's.

But entrepreneurs face extra challenges during recessions, too -- particularly as people spend less across the board.

Stearns said that in his experience, the entrepreneurs who do best are those who go into business because they want to, not because they have to.

"They have a stronger commitment," he said. "They tend to have more passion about their idea. They will last longer in the trials and tribulations of getting the business up."

But any entrepreneur must be undaunted by the pitfalls and the naysayers, Stearns said.

Driven by family

Marty Verhoeven of Hanford isn't about to back down from the challenges of nurturing his new business, Verhoeven Dairy Farm Consulting, which he opened last month. He hopes to pass it down to his children one day.

Verhoeven's troubles started when he was laid off from a construction job in April 2008. He dabbled in starting his own business but was hired in June at a small dairy consulting company doing work similar to the business he would start.

By spring, his boss was telling him he wasn't sure how long he could employ him, and the stress was unbearable.

"It just came down to not knowing if I had a job next week, next month," the 49-year-old said.


The reporter can be reached at bclough@fresnobee.com or (559) 441-6431.

Similar stories:

  • From relief to despair: Varying views of jobs data

  • Valley dairy operators turn back clock with glass bottles, home delivery

  • Obama wants small-business bill this year

  • Teens eager to learn and earn in personal finance group

  • PAST, STRATEGIES, EXPECTATIONS

The Bee's story-comment system is provided by Disqus. To read more about it, see our Disqus FAQ page. If you post comments, please be respectful of other readers. Your comments may be removed and you may be blocked from commenting if you violate our terms of service. Comments flagged by the system as potentially abusive will not appear until approved by a moderator.

more videos »
Visit our video index