ATLANTA --- Georgians incorporated businesses at a slower rate during the first quarter this year than last year, according to figures released by the Secretary of State's Office.
New applications for incorporation dropped 11 percent this year compared with last year statewide. The number dropped 30 percent in metro Augusta, 22 percent in Athens and surrounding counties and just 7 percent in Glynn County.
That decline might be especially steep because Georgia experienced the highest rate of business creation in the nation during 2008, according to the Kauffman Index of Entrepreneurial Activity released last month. But even in that report, author Rob Fairlie, an economist at the University of California, noted the difference between entrepreneurs of "necessity" and those of "opportunity." He found that many of the new businesses are in industries that typically have low earnings.
Many people who get laid off wind up starting a business, according to Beverly Johnson, Georgia's assistant labor commissioner for field services. And the number of laid off keep growing, as shown when the Labor Department reported Thursday that initial unemployment claims rose 63 percent in April, compared with the same month last year.
"A lot of people have said, 'I never want to work for corporate America. I want to be my own boss,' " she said.
But research about the needed insurance, licenses and taxes ultimately discourages the majority of them, she said.
Plus, the difficulty in getting bank loans prevents the creation of many of the most lucrative types of businesses, according to David Lewis, director of the University of Georgia's Small Business Development Center in Brunswick. As a result, the types of businesses being launched now are services that don't require much capital, such as house painting, landscaping or consulting.
Is this a good time to start a new business to be poised for the economic recovery?
"There will be some opportunities as we come out of this because a lot of the previous competitors will be gone," Mr. Lewis said. But he might suggest waiting a little longer for the economy to improve.