Page last updated at 23:02 GMT, Monday, 18 May 2009 00:02 UK

Recession sparks new business ideas

By Ray Furlong
BBC Radio 4's PM programme

Jessica Lyons
For my particular business idea I think this is the ideal time, because there are more people than ever looking for work
Jessica Lyons, My First CV

Disney, McDonalds, Burger King, Procter and Gamble, Johnson and Johnson, Microsoft - what do they all have in common? They all started during a recession or depression.

The message, delivered to around 40 would-be entrepreneurs at a workshop in Stratford, east London, is clear: Don't let the bad economic headlines put you off.

Most of the people at this session are not aiming to create new multi-national corporations. But during the coffee break, they seem pretty confident that their ideas can prosper even in the current climate.

"I'm here to find out about starting up a business providing CVs to school-leavers," says Jessica Lyons, wearing a lapel badge with My First CV, the name of her future business, written on it.

"For my particular business idea I think this is the ideal time, because there are more people than ever out there looking for work."

Opportunities knock

The recession is causing a spike in interest in setting up small businesses. Newly jobless people, flush with redundancy money, are flooding to workshops on how to do it.

Stephen Walker, Business Link
There is about a 25% increase in people contacting us, looking at starting their own business
Stephen Walker, Business Link

Another hopeful wants to remain anonymous as she is still going through the process of negotiating her redundancy and does not want her old employers knowing that she'll soon be competing with them.

"I'm thinking of starting a legal consultancy, primarily because I was made redundant a short while ago and after the initial shock of the redundancy I think it's true that it is an opportunity if you can see it," she says.

This event has been organised by Business Link in London, a government-funded body that provides free business advice.

There are three of these workshops this month alone, compared to two during the whole of last year. They are all fully booked.

"Compared to this time last year there's about a 25% increase in people contacting us, looking at starting their own business," says Stephen Walker, a client services manager with Business Link.

"People have often had an idea for many years, but now they have redundancy money and they're going to use that to make it happen."

He says the most bizarre idea was from a gym instructor who wants to take his equipment to companies around London, giving people a lunchtime workout without them having to leave their offices.

Encouraging signs

Figures regarded as a good guide to the level of start-up activity show encouraging signs, given the worsening economic environment.

The British Bankers' Association (BBA) figures for "small businesses establishing new banking relationships" show 142,500 in the first quarter of 2009.

I was literally sobbing in my bank manager's office
Catherine Fitchie, runs children's hairdressers Glitterbugz

The same period last year saw 142,700.

Given the worsened economic environment, these statistics are regarded as highly encouraging.

"We're seeing the start-up sector being more resilient than we thought it would be," says Steve Cooper, Managing Director of Barclays Local Business.

"It tends to be resilient because most start-ups don't need cash to begin with. They start off pretty small. If they do need finance they usually get that from friends and family until they have an established business with orders on their books - then they start to borrow."

BBA figures also show a 5% rise in lending to small businesses in the first quarter of this year compared to the same period last year.

Passion and pain

But getting credit can still be hard, and Mr Cooper warns that only half of the hopeful start-ups of today will still be with us in two or three years time.

"I was literally sobbing in my bank manager's office," recalls Catherine Fitchie, who has run Glitterbugz, a children's hairdressers in Cwmbran, south Wales, since September 2007.

"The recession hit us really hard, and crunch time came to us in April this year. We had a couple of issues with the bank, and I had to sit down and have a long hard look at the business and decide whether to close or keep going," she says.

"It was painful and hard - the thought of losing something I'd put my heart and soul into. We needed some support."

Catherine changed banks and received the help she wanted, though she says she hasn't actually used a new credit line. Her story is a lesson to the enthusiastic people at the workshop in Stratford.

But so is her passion for the business: the walls are covered with fairies and princesses which she painted herself, there are shelves of Glitterbugz beauty products which she makes the labels for, and she ends the interview to start a face-painting session with 15 kids who have arrived for a sixth birthday party.

She says she works 70 to 80-hour weeks.

"I'm very lucky to do something I love doing," she says. "The recession won't last forever. I'm not an economist, but things will get better."


Entrepreneur battles to defy downturn

You can hear more of Ray Furlong's report on Radio 4's PM programme on Thursday 21 May, between 1700 and 1800 UK time.

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