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With the economy teetering, millions of Americans try to launch new businesses

With the pandemic raging and the nation’s economy teetering, now might seem like a curious time to start a business. But is it? Paul Solman asks the question, and answers it.
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  • Amna Nawaz:

    With the pandemic raging and the nation's economy teetering, this might seem like a strange time to start a business. But is it?

    Paul Solman considers this question as part of his regular series, Making Sense.

  • Paul Solman:

    Twenty-four-year-old Saida Florexil, deaf since birth, working at a hothouse for start-ups in Florida.

  • Saida Florexil:

    My company is Imanyco. It advocates for communication accessibility and delivers a live transcription technology to help people who are deaf and hard of hearing with communication.

  • Paul Solman:

    In short, an app that transcribes conversations in real time, tells you who's speaking.

    Florexil lip-reads easily, but how do you lip-read a group?

  • Saida Florexil:

    If my head is still that way, and then this person started talking, somebody has to tap me and be like, "Saida, I'm talking this way."

  • Paul Solman:

    And, of course:

  • Saida Florexil:

    Because of the pandemic right now, with COVID, like, everyone wearing face masks. I don't even know if you're talking or if you're not talking.

  • Paul Solman:

    Surprising, at least to me, is that Florexil is one of several million Americans who've tried to start a business since the pandemic hit, despite the economic anxieties of COVID.

    From April to June, 900,000 government applications to start a business, from July to September, a million-and-a-half. But, really, launch a company now?

    Scott Galloway, Author, "Post Corona: From Crisis to Opportunity": I would argue, as someone who started nine companies myself, that a recession is actually a fantastic time to start a business.

  • Paul Solman:

    Serial entrepreneur Scott Galloway.

  • Scott Galloway:

    I have had winners. I have had losers. As I look through all of them and try and determine the signal from the noise as to what is the best forward-looking indicator of success, simply put, it was where in the economic cycle I started the business.

  • Paul Solman:

    Booms go bust and busts recover, says Galloway, now a marketing professor. During the busts, start-up costs are low, the unemployed are cheap, and so is commercial real estate.

  • Annie Molnar:

    This building used to be a church built in, I believe, the early 1940s.

  • Paul Solman:

    In Veneta, Oregon, Annie Molnar gave me a tour of The Emporium, a brand-new marketplace for local artisans.

  • Annie Molnar:

    Right here is my product line.

  • Paul Solman:

    Molnar, who sells soaps, partnered with Aida Camalich Lough, who sells artisanal foods and bakeware. They rented this building for less than half its price pre-COVID.

  • Aida Camalich Lough:

    The building had been vacant. And we came in. It was perfect timing.

  • Paul Solman:

    Just down the road, Amy Wells, her husband, Cameron, and business partner Chris Archer are turning this abandoned site into Arable Brewing Company, at $870 a month, with an option to buy, and, crucially, no overhead.

  • Amy Wells:

    We aren't up against the same struggles that a lot of the other businesses out there are up against right now, because we don't have to serve the public currently. We don't have to worry about any of the lockdowns.

  • Paul Solman:

    And, of course, they're betting on a post-bust upswing, says Cameron.

  • Cameron Wells:

    If everything works out well with the vaccine, I don't think it could work out any better, because people are going to be tired of being in — socially distanced in their house for a year or and then some.

  • Paul Solman:

    In other words, pent-up demand for bellying up to the bar.

    Now, if you're thinking it's a long shot for folks who've never run a business to start a brewery or a crafts store during a pandemic, how about the hurdles Saida Florexil has faced since childhood?

  • Saida Florexil:

    I have never thought that one day I will be able to do something like this.

    I was not like other students. I had to spend extra time at home learning how to write, learning how to speak clearly. I spent hours, years going to speech therapy, learning how to pronounce my name.

  • Paul Solman:

    Florexil is saddled with student loans, car payments. But with so many lips impossible to read because of masks these days, she's hopeful. And in addition:

  • Saida Florexil:

    One thing I have learned is that a lot of big companies started during the recession, so why not take that opportunity?

  • Paul Solman:

    On the other hand:

  • Saida Florexil:

    Oh, my gosh. I still think I'm crazy for doing this.

  • Paul Solman:

    Now, some would say Florexil is crazy. Pandemic aside, half of new businesses fold within five years. And starting a business in America has become more and more dicey for decades, as even Scott Galloway acknowledges.

  • Scott Galloway:

    Over the last 20 or 30 years, it's actually a very difficult time to start a business.

  • Paul Solman:

    Reasons? One is the increasing market dominance of mega-companies like Amazon, Apple and Google, says Galloway.

  • Scott Galloway:

    It is very hard to get funding in an environment that is controlled by huge, dominant invasive species.

    So, I would argue that it's this continued march of monopolies that, if you will, is taking all the oxygen out of the room for small businesses.

  • Paul Solman:

    There's a second reason entrepreneurs often balk.

    There's more red tape these days, says researcher Sameeksha Desai, and so:

  • Sameeksha Desai:

    The complexity of navigating the business environment and the business process can contribute to people making specific decisions not to grow or not to expand in a certain way.

  • Paul Solman:

    But many would-be entrepreneurs are shrugging off these concerns because the pandemic has left them no other choice.

    Molnar and Lough opened the Emporium, because, with the usual venues shut down, they desperately needed somewhere to sell their soaps and bakeware.

    And Florexil started her app because she was a substitute teacher before the pandemic forced schools to close. And, when they reopened, students were required to wear masks, which obscured their lips.

  • Saida Florexil:

    So, I knew that was going to be very hard for me with communication, and that I couldn't do it.

  • Paul Solman:

    Scott Galloway, as usual, puts it bluntly. For entrepreneurship, he says:

  • Scott Galloway:

    There's nothing like desperation, there's nothing like need to create a certain level of innovation, a certain level of hunger.

  • Paul Solman:

    Of course, desperation doesn't mean success. But entrepreneurs are optimists. They have to be. And thank goodness, wrote the famous 20th century economist John Maynard Keynes, because – quote — "If spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die" — unquote.

    Florexil knows the risks, but, along with her optimism:

  • Saida Florexil:

    I'm scared of missing out, not doing it. That's my biggest fear.

    So, I feel like now is the right time. You can't buy time.

  • Paul Solman:

    No, you can't. For the "PBS NewsHour," this is Paul Solman.

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