I’d seen this a few weeks ago and intended to post it here then, but lost track of it. So when it appeared in my email again last Friday, I got it. This is what Business Insider calls THE SCARIEST JOBS CHART EVER. It comes as one of their Chart of the Day charts.

This worries me. What do you think?

I don’t get it. I believe it, but I still don’t get it. John Tozzi posted “Startup Activity at Record Low” today on his New Entrepreneur blog on BusinessWeek, quoting outplacement firm Challenger, Gray & Christmas. Here’s his summary:

Challenger says just 3.7 percent of job seekers leaving its outplacement program are going into business for themselves in the first half of 2010, compared to an average of 8.6 percent in the full-year 2009.

I found this note particularly fascinating. John quotes Challenger:

Startup activity tends to drop at the beginning of a recession, spike at the end when unemployment is highest, and drop when hiring resumes.

This shows up clearly in this fascinating chart, startup rate vs. unemployment. What bothers me about it, however, is that I thought I remembered the great recession of 2008-2009 fairly clearly, and I don’t remember a big spike in startups as shown here. I remember a credit crunch, a drop in SBA loans and a drop in startups.

But I don’t mean to imply that I don’t believe the data here. I do. I guess what happens is we all react to these trends at different points in the cycle. We get behind sometimes. We see the startup rate shoot up as the unemployment rate shot up; and then it goes down.

What does make sense here is the phrase “pushed entrepreneurs,” as in pushed off a cliff. People who go out on their own because they have to. We heard a lot about pushed entrepreneurs as the green line above shot up in 2009. And some of them make it and stay in business, and some don’t. And the turn back downward in startups isn’t (presumably) those same people making it or not making it; it’s fewer startups happening because more people find jobs.

How does this affect you and your startup? It doesn’t. Macroeconomics doesn’t drive startups. You do. You’ll start your business, or not, because it’s right for you. You have plans, customers, resources and the will to do it. Or not.

It reminds me of this quote I picked up from Fred Wilson, on his blog, which actually originated in Twitter:

There’s a good piece on WSJ.com today on Small Business Economic Indicators that may be setting the tone for the new year.

Author Diana Ransom looks at how these larger indicators affect startups and small business. She says:

In the absence of your own economist or strategic planning office, what indicators should you keep an eye on? Here are five that often matter most to small firms.

She looks at consumer confidence, producer price index, the US dollar, and the unemployment rate, with some analysis of how they might affect small business.

Steve King of Small Business Labs has a nice post Wednesday on necessity entrepreneurs. Citing UC Santa Cruz professor Robert Fairlie, Steve says:

Fairlie is the lead author behind the  Kauffman Index of Entrepreneurial Activity and a leading entrepreneurship researcher. His work shows that self-employment increases during times of economic stress and flattens out during good economic times. This is due to necessity entrepreneurs returning to traditional employment.

So no big surprise here. People are starting businesses because they have no other choice. Several million people have lost jobs in the current recession, and unemployment is higher than it’s been in decades (where I live, in Eugene, Ore., our local paper said yesterday we’re over 14 percent.) So not only are people getting laid off, but there are a lot of people already out looking.

Sure, all of that sounds pretty bad, but Steve offers some good news, too, in his post:

The good news for necessity entrepreneurs is that the cost of starting a small business, and especially a small business based at home, is lower than ever before. Technology has become inexpensive and, in many cases, even free.

And while most necessity entrepreneurs will return to traditional jobs, our research indicates that a growing number of displaced workers find they prefer self-employment. The reasons given by these people for preferring self-employment are the same as other small business owners. They prefer working for themselves, job and work flexibility, passion for their business and work/life balance reasons.

I also think it’s good to acknowledge that a lot of startups are spurred by more than ideas, passion and entrepreneurial spirit. At some point you also ask do you have a choice? And, if you don’t, you deal with it.

Or, maybe, even enjoy it.

I guess this isn’t really news, because it’s pretty much what everybody expected. But still: The ADP National Employment report came out again today. The part that interests me most, the small business portion, shows yet another 284,000 jobs lost last month in the small-business portion of the economy–businesses with fewer than 50 employees.

That’s the worst yet. The number was 270,000 for February, and 232,000 the month before that.

How bad is it? I downloaded historical data to produce this a chart of small-business job growth and loss over the last 24 months:

You can click to get a larger view of that. The hard-to-read vertical axis shows job loss or gain in thousands, with a high of 78,000 jobs gained in November of 2007, and a low of 284,000 jobs lost last month.

Joel Prakken, chairman of macroeconomic advisors, said:

“Despite some recent indications that stock prices, consumer spending and housing activity may be bottoming out, employment, which usually trails overall economic activity, is likely to remain very weak for at least several more months.”

The New York Times had an article last week about how laid-off workers are taking matters into their own hands. The article talks about when, in a recession, do people start thinking about starting a company vs. just sending out resumes and trying to get a job:

Economists say that when the economy takes a dive, it is common for people to turn to their inner entrepreneur to try to make their own work. But they say that it takes months for that mentality to sink in, and that this is about the time in the economic cycle when it really starts to happen — when the formerly employed realize that traditional job searches are not working, and that they are running out of time and money.

I know there are a lot of people in this boat right now – laid off for a few months, no prospects in sight, and money is starting to run out. If you find yourself in this situation, why not think about starting a new company? What do you have to lose? Think about what skills you bring to the table, what you are REALLY good at, and figure out what services or potential products you can offer to people. It’s better than sitting around waiting for something to happen to you. Funny how people say that the harder they work, the luckier they get!

Food for thought!

Sabrina Parsons aka Mommy CEO

Honestly, I wasn’t paying much attention to these ADP reports until the downturn really went sour last September. I posted on them a couple of times when small business employment grew, slightly, in the midst of bad news almost everywhere else. And now it seems like cheating if I don’t keep up with it, as the bad news rolls in.

Small businesses lost 281,000 jobs in December. That was 80,000 in manufacturing and 201,000 in services. By the way, ADP defines small business as having fewer than 50 employees. That works for me.

The source document is at www.ADPemploymentreport.com.

I downloaded some statistics as an Excel file available from that site. It turns out that goods-producing small businesses have lost more than half a million jobs since the high point of January of 2007, when they employed 8.1 million people. Service sector small businesses have lost more than half a million jobs since their high point of just last April 2008, when they employed 43 million people.

What’s surprising to me, also, is that this new data isn’t surprising. I’m not sure I’m going to continue to post these monthly results. I don’t want to be predictable.