After citing the latest unemployment statistics, many media reports add a note about the number not including “discouraged workers.” Those are people who gave up after months of unemployment. But there is another, much smaller group of people who have decided to make their own jobs, by starting a business.
In fact, the state is encouraging these so-called “Accidental Entrepreneurs.”
Holly Morin’s house in Keene is a clean, cozy space that celebrates her three, fuzzy Keshound dogs. The walls in the dining area are covered with a series of colorful ribbons they won from competitions all over New England. But just down the hall a spare bedroom houses the seeds of her new business venture. A pet retail store called—appropriately enough—The Fuzzy Dog.
She chuckles as she opens the door to this makeshift warehouse.
“This is The Fuzzy Dog…in holding pattern!"
Right now she’s traveling the competition circuit selling her wares. But she hopes to get a loan soon. Morin has her eye on a spot for a brick-and-mortar store in Fitzwilliam. Looking out over the piles of totes, boxes, and dog beds, she sees her future.
“I’m going to have a little area called 'The Two-Legged table,'" Morin says. "That are going to kind of have, you know, cute little whimsical things that people are going to want to buy that focus on the dog."
She opens a small black box wrapped in plastic.
“So this one here, you know, it’s a wine topper that says ‘Wag more,’ that I will bring to Manchester to hopefully get some of the competitors there to purchase for Christmas gifts," she explains.
Morin is one of 45 people across New Hampshire who has qualified for the state’s new Pathway to Work program. The governor signed it into law in July over opposition, mainly from House Republicans. Now a small number of unemployed people can keep getting their weekly benefits while still working full time to start and run their own businesses. Among other things, the Department of Employment Security looks at each applicant’s former job, and where they live. After crunching some numbers, the department gets an idea of whether a comparable job will likely be available. If not, there’s a good chance that person could qualify.*
In Holly Morin’s case, she worked as a territory sales manager for a pet food manufacturer.
That was--until this past August.
“I looked at my phone on a Monday morning, like I always open up my phone at 7:00 am and my husband was standing in the kitchen," Morin says. "And I said, ‘Oh my gosh! I just got a letter of termination!’ And he’s like, ‘No, you didn’t!’ And I said, ‘Yeah, I did. Here’s the email.’”
Without warning, Morin had lost a job that paid more than $50,000 a year.
“There was definitely a few days of shock, like ok, what are we going to do? How are we going to pay the bills?" she says.
Within a week, Morin made it through the initial selection process for Pathway to Work, and the Small Business Development Center took over. Mary Collins is State Director of the Center, and is based at UNH. She says after a final screening, the Center advises people on how to do things like gather market data and write business plans. Pathway participants have to prove they’re working full-time setting up their companies. And that’s why, Collins says, they give lots of homework. But she says that only goes so far.
“The biggest stumbling block for someone starting a business I think is, perhaps, if they have worked for an industry, not understanding that they have to make it happen," Collins says. "It has to come from them, internally, inside them, the desire to work whatever it takes, you know, whether it’s 80 or 90 hours a week to get that business up and running.”
Back in Keene, Morin says things are going well. But unemployment benefits don’t nearly cover all of her living and business expenses. In fact, her husband just sold his motorcycle. They’re both cutting back on little things, like eating out. And family is helping them out, too. They can make the bills…but it’s tight. The business isn’t profitable yet, and likely won’t be until she can open a real store. But banks are still skittish about offering loans in general. And even if everything falls into place, Morin knows she probably won’t make as much as she did at her old job. But there’s still a bright side.
“I’ve always wanted to open up my own retail store,” she says.
“Well over half of the American people will tell you that at least one time in their life, they’ve had an idea for a company…or a startup, that they thought would make a good company and wished they’d done it,” he says.
Fairbrothers says figuring out trends from business filings is tricky, even in good times. Nationally, even as we hear more stories of unemployed people starting businesses…as NPR recently reported, filings have actually been on the downswing for 25 years.
In New Hampshire, things have been a bit steadier. It took longer for the recession to really hit, and that shows in the business filing data from the Secretary of State’s Office. The number of filings didn’t hit its low until 2010—at about 16,500. But since then, things have been slowly picking back up. By 2011, the latest full-year data available, that figure inched up to about 17,000. That was also the year when new business filings started outpacing closures. Still, it’s quite a way away from the high in 2005 of 22,500 new businesses. But how much of that is unemployed entrepreneurs?
“While it’s hard to find it in real data, it only stands to reason that when people’s degrees of freedom shrink in something like an economic downturn, more of them are going to fall back on that idea they once had," Fairbrothers says. "Actually, you see a real bloom in startups in good times as well.”
And he points out there’s a world of difference between a Facebook-style startup that draws venture capital and eventually employs thousands of people, and a bed and breakfast.
That also doesn’t show up in the data.
Which means it’s hard to say how much of an impact Pathway to Work—and its 45 would-be entrepreneurs--will really have on the state’s economy. Or if they will even succeed. But for Mary Collins at the Small Business Development Center, it’s about more than numbers.
“Very often what will happen in unemployment is if they can’t find jobs in New Hampshire, they’re picking up entire families and leaving," she says. "So I think what we’re looking at is the opportunity to retain people in the state that are contributing, viable members of our communities, that they will eventually hire people in these jobs, in these companies.”
And that’s the hope—though coming out of the Great Recession—it’s still ta few years off to see whether a program like Pathway to Work will prove to be part of the solution.
*Another major qualification is that participants must have 18 to 26 weeks of unemployment benefits remaining.