Underground economy’: Entrepreneurs find creative ways to supplement incomes

CHRISTINE ROOK • CLROOK@LSJ.COM • JANUARY 25, 2011

Call it an economy within an economy. Or think of it as a job market created by the underemployed.

Meet Michigan’s new entrepreneurs. They’re working outside the traditional corporate grid creating their own kind of job security by hawking any ability they can – whether it be sewing a straight seam, making salsa or converting a snowblower from garage tool to plow-biz moneymaker.

This group isn’t interested in picking up a shift at Home Depot or in learning the intricacies of a fast-food fryer. They’re the niche makers, the mom-and-pop businesses of the new millennia. Experts say their numbers are likely to grow and that’s a good thing.

“There’s this sort of underground economy out there,” said Tom Donaldson, regional director of the Michigan Small Business and Technology Development Center in Lansing. “There are lots of side businesses and garage businesses.”

This past fiscal year, 46,867 new limited liability companies formed in Michigan, according to state data. A decade ago, Michigan logged less than 16,300 new LLCs in a year. LLCs help protect personal assets in the event a business is sued.

“People are learning a lesson that maybe you can’t depend on the corporation as much as you would like to,” said Ed Souders, a retired business owner and a volunteer at the nonprofit association SCORE, which offers advice to small businesses.

Lamar Knox, 50, learned that lesson. After more than three decades working for General Motors Corp., he’s facing an uncertain future and wanting to start his own company. The Holt man’s goal is to work with youths to help them get ready for the job market and to make money for himself instead of someone else. “I worked for GM for 31 years,” he said. “You never get ahead.”

Experts predict Michigan will see an ever increasing number of people such as Knox.

“It’s going to be huge until the economy gets back to where it was five or six years ago,” Souders said.

Already, Michiganders have a noticeable willingness to hold down second jobs, particularly those they create themselves.

In a national survey of 60,000 households, the percentage of Michigan families in which people held multiple jobs was 5.7 percent in 2007, up from 5.6 percent the year before. Nationally, the rate held at 5.2 percent.

Michigan’s increase in 2007 came at a time of significant job losses. The state’s annual jobless rate grew from 6.9 percent in 2006 to 7.2 percent in 2007. So it’s perhaps notable that amid a tighter job market, a higher percentage of people found secondary jobs.

Historically, Michigan has a strong entrepreneurial spirit – Olds, Ford, Kellogg.

“Being an entrepreneur is a state of mind,” said Doug Stites, head of Capital Area Michigan Works. “We need more of it – like oxygen.”

Stites said he wants to re-ignite Michigan’s fire and see the state train children to want to create companies, rather than work for them.

“We teach you how to weld,” he said, “but we won’t teach you how to be an entrepreneur,” he said.

The economy is only going to get worse, according to a state House Fiscal Agency report released this week.

Michigan’s unemployment rate, is expected to rise to above 11 percent this year. It was 9.6 percent in November. That’s likely to spur future entrepreneurs into action.

“You’ll see more of it,” Stites said, “as the economy deteriorates.”

Local Woman Turns Hobby Into Extra Cash

Anita Civils teaches dance, without a teaching degree or a fancy studio. She turned a hobby into a side job.

“I’m not going to get rich off of this,” said the 48-year-old Lansing woman, “but I’m making enough to get me my playthings.”

Those playthings come in the form of vacations, usually to the Caribbean.

The class is Basic Hustle 101, which she hosts once a week at Letts Community Center in Lansing. She also sells real estate as a way to diversify her income and not rely solely on her 30-year career with the state Department of Treasury.

The dancing started as exercise in 2007 and quickly turned from hosting classes in her home to accommodating up to 35 people per class.

The side jobs bring an extra 5 percent to 8 percent in income each year.

“Almost everyone I know,” she said, “has some side gig going on.”

Salsa May Become Another Sideline

Six-year-old Sophia Chevalier and her 3-year-old sister, Ava, get credit for their father’s emerging salsa business.

But it is Dad, Lee Chevalier, who is really pushing to make fresh salsa his latest money-making venture.

“That’s what got me going,” he said, explaining why he is pursuing the marketing of his recipe. “They’ll sit down and eat two bowls full.”

The Chevaliers – Lee, 46, and his wife, Keri, 41 – are Lansing entrepreneurs. Keri, who describes herself as a stay-at-home mom, cleans houses, and Lee works for Gordon Food Service. In addition, he rents out slushy machines, does some handywork such as painting and minor plumbing and makes salsa.

The salsa isn’t officially for sale, because he doesn’t have a commercial kitchen, but he’s in the process of finding a commercial producer to recreate his recipe.

He already has willing buyers – a foods distributor and dozens of word-of-mouth customers.

In all, the couple’s side businesses comprise up to 7 percent of the family’s income.

“Today, a lady called about plumbing,” he said. “Fifty bucks here; 50 bucks there. It will help pay a bill.”

Writing Skills Bring Extra Income To MSU Staffer

Trent Wakenight is in the news business – just not the traditional corporate type. There’s no sports section.

He has created his own thing, which he calls “event journalism.” The 37-year-old East Lansing man travels to educational and science conferences in places as far flung as Mozambique and provides summaries, in writing, as well as video and audio for paying customers.

Wakenight estimates this year he’ll make up to 20 percent of what he currently earns from his day job at Michigan State University, where he works as a project coordinator with the National Food Safety & Toxicology Center.

He said he invented his side job after seeing a need, not because he saw someone else doing it.

“It takes a little recognition of what skills one has,” he said, “but also what needs exist in the marketplace.”

He was trained as a journalist, having earned degrees in communications and public relations, but there’s a certain amount of re-inventing that an entrepreneur must do.

“We always have to go through that process,” Wakenight said.

 

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