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Advising the Unemployed to Just “Start a Business” is Totally Naieve

July 25, 2012

Over the past several years of seeing the U.S. unemployment rate remain high (around 8%-9%) and simultaneously delving further into the world of personal finance articles and blogs, I’ve seen the same advice to the unemployed pop up over and over again, in one form or another:

“If you can’t find a job, create one: start a business.”

“It’s unrealistic that you’ll find a job similar to the one you lost; why not start a business instead?”

“Bill Gates started Microsoft in a recession – you should consider this an opportunity to start a business.”

Does anyone else find this advice totally dismissive?

First of all, not everyone wants to be a business owner. Owning a business is often stressful, time-consuming, and exhausting. It’s not a lifestyle that everyone aspires to.

Second, starting a business almost always requires some type of start-up capital. If you’re unemployed, the last thing that you should be doing with your savings is starting a business that is, statistically speaking, unlikely to net a significant profit. You need those savings to stay safe so that you and your family can stay afloat. In the unlikely event that you have investors to provide the capital you need, I suppose this point is moot. But again, finding investors – out of the blue – is an incredible long shot.

Third, advising someone to start a business assumes that everyone has a “million dollar idea” up her sleeve. What if you don’t? Or what if the idea that you have isn’t feasible for the first and second reasons outlined above? What if someone else has already jumped on your idea while you were happily working for someone else? These scenarios are all possibilities.

Basically, telling people who have lost their jobs to just “start a business” is flippant and lazy as a solution to long-term unemployment. I’m sure that there are people who do view a layoff as the kick in the pants they need to get the business they’ve always dreamed of starting off the ground. But those people are an incredibly small minority of the long-term unemployed, and suggesting that they just, you know, create their own job serves to further demoralize them if that’s not in their life plan.

Don’t get me wrong, I’m no economist. I’m not sure how to get businesses hiring again. I’m not sure how to get back to full employment. But I know a blow-off suggestion when I hear one, and “just start your own business” is a totally blow-off suggestion.

What do you think? Am I wrong? Should everyone who’s unemployed just start their own business? Or should we be thinking more deeply about this problem? Discuss!

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I am NOT a financial professional, and any advice, thoughts, or comments shared on this blog should be taken only after careful consideration by the reader and consultation with her financial adviser.

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