BusinessReport.com

Forget the recession, or that Don Jones is 58 years old or this could be one of the most challenging times for a startup.

Jones had retired from Dow Chemical in December as a safety engineer shortly before the company downsized its U.S. operations and some of his fellow workers were laid off or took early retirement packages.

He “piddled around” for a month before combining his 35 years’ experience in petrochemical safety engineering, a master’s degree in business administration and an established network of contacts into a business plan and deciding there was no better time than now to start his health and safety consulting business.

By January, he was president of Comprehensive Safety Solutions.

“If you want something, you’ve got to go out there and do it,” Jones says. “The economy never deterred me from what I wanted to do. I try to stay on the positive side.”

Jones was driven by the belief he could find opportunity in the economic downturn.

Companies that were trying to control costs likely would want to outsource safety services, so Jones decided to make that his niche. He has since lined up a client and has been conducting OHSA Voluntary Protection Programs workshops.

And as a client of the LSU Small Business Incubator, Jones’ business has received much-appreciated support in an otherwise challenging marketplace. Because he’s on his second career, he doesn’t feel as pressured as other entrepreneurs in the incubator to succeed. Still, he’s just as excited about the potential of building his business.

“It’s great to have the freedom to do something you really want to do,” he says. “A lot of people would have the perspective that it’s not the best time to start a business, but when is it?”

Jones’ dream company represents a wave of startups that typically accompany a recession. Despite researchers’ worries there won’t be as many of them because the financial crisis hurt investment dollars, they’ve filled up the incubator at LSU.

These startups, many of them microfirms with less than 10 employees, are like plants sprouting from the earth because they represent job-generators at a time when the nation is approaching double-figure unemployment.

Charlie D’Agostino, the incubator’s executive director, sees the growth. Jones’ business was among the last tenants to get in before the incubator was fully occupied.

At the same time Jones was retiring, D’Agostino was worried about filling 6,000 square feet of office space after the graduation of two large businesses. Soon after, as the Capital Region began to feel the effects of the recession, the incubator was deluged with requests for space. In the past two months, it has added more than 30 startups, which are being assisted on an outreach basis.

Most of these incubator entrepreneurs are following the national trend, with four to five clients and about 10 outreach clients in technologies like renewable energy. They also play off LSU’s strengths—environmental engineering, coastal management, restoration, energy and biotech—that build on a national agenda for greener technologies.

“This year has been wild for us,” D’Agostino says. “This is the time when the economy is tough with layoffs and people step out into entrepreneurialism.”

As job creators, startups have history on their side.

A Kaufmann Foundation analysis of U.S. Census data shows startups accounted for 3% [about 600,000] a year of jobs created yearly from 1980-2005. Three percent is large compared to the average annual net employment growth of the U.S. private sector for the same period [about 1.8%], highlighting the importance of business startups to job creation in the U.S.

In firms younger than 3 years old, Louisiana ranked No. 13 from 2000-05. During that time, Nevada, Idaho, Wyoming, Montana and Utah took top positions for having the highest numbers of them, and the District of Columbia ranked last.

“It is striking that business startups remain robust even in the most severe recession over the sample period [in the early 1980s],” the report states. “The procyclicality is more apparent for microfirm [10 or less employees] business startups. The robustness of startups to cyclical contractions is of clear interest given the current downturn.”

For New Orleans-based HydroFlame Technologies and its sister company, HydroFlame Production Co., a lab in the LSU incubator, finding investors was a challenge.

But company spokesman Jim Landry says there’s money for energy technology, and they found it New Orleans. HydroFlame is developing its oil-extraction technology on solid investment instead of a shoestring budget as often happens with startups.

The technology is based on a downhole speed generator designed by the Department of Energy in 1982. Landry says HydroFlame has improved upon the technology, which could attract federal funds as the Obama administration promotes secondary recovery techniques to lower oil imports, and is just weeks away from testing a prototype at the lab and in the field.

“It’s not like in this terrible economy if we sit in a fetal position all the time things will get better,” he says. “We’re going full steam ahead and hope the economy catches up with it.”

So far, HydroFlame investors have remained calm, even after a roller-coaster second half of 2008 when oil prices reached an unprecedented $150 per barrel in July and plummeted to less than $40 in just five months. The silver lining is the ability to get oil fields at lower prices, improving the profitability of using the HydroFlame steam tool to extract 15% to 30% of heavier oil that typically remains in existing wells.

Landry says he’s been an entrepreneur all his life, surviving three oil busts. So he’s not intimidated by a recession.

“I know that nothing lasts forever—good or bad times,” he says. “When you look at the light oil available in the world today, we don’t have enough for future growth. The world economy will improve and, as it does, the requirements for oil and gas will go up. When there isn’t enough supply, the price will go up again. In the good times prepare for the bad, and in the bad prepare for the good times. That’s what we’re doing.”