How Laid-Off Corporate Workers Are Becoming Free-Thinking Entrepreneurs
In the fall of 2015, when Marty Mann’s boss at General Electric called him into the office, he knew his days at the company were numbered. For seven years, Mann had been a welder at GE’s locomotive plant in Erie, Pa. Built just over a century ago, the 340-acre complex originally employed and housed thousands of workers, and defined the city’s economic and social life. But layoffs had become common, and 2015 saw a downsizing of 1,500 employees. Mann was one. “Yeah, I was mad,” he says. “You used me and then got rid of me. But when it’s time to go, it’s time to go.”
Mann has lived in Erie his entire life, and everyone here -- his wife, kids, grandkids and friends -- knows him as a no-bullshit kind of guy. Middle-aged and meaty, he prefers oversize T-shirts and dirt-crusted work boots. His graying hair is rarely brushed, and his days are fueled by whole pots of sugar-saturated coffee, beer and drugstore doughnuts. But he’s a talented welder. So upon being shown the door at GE, he began looking for another job. Nobody in his field was hiring locally. A buddy told him about an opportunity in South Carolina, but Mann couldn’t imagine leaving his family behind. “What are you going to do?” he says. “Work in McDonald’s? Be a greeter at Walmart? At GE, I was making between $33 and $40 an hour, plus benefits.”
Mann started to struggle. His unemployment benefit was running out, he’d received no severance and his utilities were about to be shut off. Then, one night at a bar, Mann’s younger brother John, who had also been laid off from GE, suggested the two of them start a business fixing and outfitting motorcycles. Mann was a skilled mechanic and something of an artist when customizing bikes. But he was skeptical. The brothers had always worked for someone else. Neither had experience with small business. But Mann concluded he had no other option. “If you can’t get a job,” Mann says, “you’ve got to make a job.”
In July 2016, the brothers opened Mann’s Cycle Works. And in doing so, they became what economists call necessity entrepreneurs. It’s a term used to describe people who start a business because they struggle to find employment. Nobody officially counts how many people fit the description, but experts say the group is growing -- initially fueled by those who lost jobs during the recession and, today, by communities where once-dominant industries are fading.
Though necessity entrepreneurs may come from hardship, they’re an important group to watch. These are the people creating solutions to their own problems. “Just because a business starts in a recession or out of necessity doesn’t mean it won’t be very good or successful,” says Robert Fairlie, a professor of economics at the University of California, Santa Cruz. He found that while regular entrepreneurship goes down during economic downturns, necessity entrepreneurship goes up. And, he says, roughly half of all Fortune 500 companies were started during economic recessions.
That’s why, for an entrepreneur of any background, it can be helpful to see how a necessity entrepreneur succeeds. Starting a business from scratch is inherently risky, but it’s even more so when you lack resources, a financial safety net and business experience. Yet necessity entrepreneurs do it -- adjusting not just to the realities of business but to a new self-identity, all while under intense financial pressure. Mann has the scars to show it. His entrepreneurship nearly ruined him. His savings evaporated, his relationships were strained and he nearly closed up shop. But he didn’t quit. Instead, he turned necessity into opportunity. He drew upon his expertise, his creativity and his fortitude in ways he never thought possible. Like most entrepreneurs -- whether driven by necessity or opportunity -- he learned to reinvent himself.
Consider your relationship with the word entrepreneur. You picked up this magazine, so it’s likely you relate to it. Perhaps you see it as a goal or a calling, or maybe even an identity. But to understand a guy like Mann, set that all aside. He never considered himself an entrepreneur. He didn’t know anyone who did.
“Entrepreneurship means something bigger, sexier, techier than they would consider themselves,” says Lisa Hutson, director of Lorain County Community College’s Small Business Development Center, in Ohio. She learned this last year, after receiving a grant to promote entrepreneurship across her Rust Belt region. Visits to union halls, urban league centers and El Centro offices all flopped; she was met with skepticism or outright disinterest. When she offered an “Introduction to Entrepreneurship” class, almost nobody came.
It was a puzzle to her. Locals were entrepreneurial; they were talented and skilled, and many had side hustles. But as she came to understand, they didn’t see themselves as entrepreneurs. “Steve Jobs is an entrepreneur, not the beauty salon owner,” she says, explaining their mindset. Also, they weren’t acculturated to thinking of themselves as potential bosses and owners. For so long, a corporate machine provided stability in their community -- which meant individual success came by fitting into a system. Among the professional elite, “ ‘disruption’ means founding a successful startup,” writes law professor Joan Williams in her book White Working Class: Overcoming Class Cluelessness in America. “Disruption, in working-class jobs, just gets you fired.”
In Lorain, Hutson realized she needed to talk differently. She dropped the word entrepreneurship and began evangelizing “hustle.” Getting laid off from one factory and starting over in the next -- that required hustle. Managing a household budget when one or both parents were out of work -- that required hustle. And of course, running a side gig -- be it selling crafts on Etsy or brewing homemade beer to sell at the local farmers’ market -- was the result of hustle.
This reframing helped, but it wasn’t enough. Hutson also had to convince people that hustle was the same as creativity and innovation (and disruption!), even if it didn’t produce the next iPhone.
Jamie Smith remembers struggling with that transition. He grew up in West Virginia coal country, surrounded by people who thought coal was all they could do. He worked in coal as well, but he studied marketing and coding at night, anticipating that one day he’d be laid off -- and in 2010, he was. Still, he says, the idea of starting his own business seemed impossible. “It was shocking and scary,” he says. If it hadn’t been for the encouragement of his friend Jason Lockart, a graphic designer from New Jersey, who had not grown up in a one-industry town, Smith says he might never have taken the leap. In 2012, the friends founded Kid in the Background. Today they have a staff of four and work with national organizations like Boy Scouts of America. Still, Smith feels like an impostor at times -- as though this can’t be a real career. “I still second-guess myself,” he says.
As Mann set up his motorcycle shop, he faced these same cultural challenges. Nearly everyone in his family had been a GE employee. His great-aunt was one of its first local hires. His uncles did assembly work there. His mother wound coil and assembled circuit boards there until she died at 58. Mann himself dropped out of high school at 16, knowing he’d be able to find similar work. He spent 23 years as a welder at Ridg-U-Rak before moving to GE, where he worked on large trucks and locomotive fans. “It used to be nothing to walk out one [factory] door, go down the street and into another door and say, ‘Do you need a welder?’ ” he says. “We’ve been working at large companies for decades and decades.”
Now Mann had no choice but to try something new.
In big cities, first-time business owners have a fundamental advantage that they may not appreciate: They’re surrounded by examples of success. Entrepreneurship is visible there. That’s not always the case in working-class communities. “Everybody they know is in that blue-collar world,” says Hutson. “Without those mentors, they just can’t see themselves doing it.”
Community-based organizations are starting to fill that gap, says Hutson -- from SBDC offices and other agencies that offer free Skype consultations, to inexpensive business classes at community colleges, to local economic development offices that help new entrepreneurs find funding. Hutson often adopts the role of cheerleader for clients who have bad or no credit and haven’t really considered their financials. “I constantly reinforce that they know more than they think,” she says. “Getting organized and putting your thoughts on paper builds certainty.”
Mann would have benefited from a coach like Hutson, but that impostor syndrome kept him from seeking professional assistance. At the start, he was almost stubbornly resigned to his situation. Nobody’s going to help someone like me, he thought. I have to do it on my own.
But Mann did have another kind of support -- one that is absolutely an advantage of tight-knit, small towns: He knew a guy. Actually, he knew a few.
The first one helped out on real estate. Mann wasn’t a candidate for a small-business loan, and he couldn’t convince a landlord to rent him a space while he was on unemployment. But his friend Ron owned a defunct car wash down the street from GE. The place was a disaster. “You’ve never seen so many hypodermic needles,” Mann says. “There was rebar in the parking lot, no doors, no heat. They were bringing hookers into car bays.” Ron was happy to sell Mann the property, if only to see it cleaned up. And being sensitive to Mann’s finances, he set up the world’s most lax payment plan. “I pay when I can,” Mann says.
Then Mann hit another snag. The neighbors didn’t want him there. They worried his presence would attract even more unsavory types and filed a petition against him. So to prove his good intentions, Mann called in more friends. One buddy owned a blacktop company and helped Mann repave the parking lot at a steep discount. Another buddy owned a garage door company and installed soundproof doors. Mann also installed cameras on the garage to guard against illegal activity and built a bench at the edge of the property, where local kids could wait for their school bus. When he won 16 hams in a raffle, he donated them to families on his block. The neighbors were appeased.
In 2016, after less than a year of existence, Mann’s Cycle Works won the Commitment to Erie Award for new business. But he almost didn’t attend the ceremony. The idea of entrepreneurship -- of the power of entrepreneurship -- still hadn’t sunk in. “It’s just a bike shop,” he said at the time. “What’s the big deal?”
But actions like his radiate far beyond one store or neighborhood. Mann’s new shop had created a little business hub for bike enthusiasts. His friends soon opened a biker bar across the street, which then increased traffic at the convenience store and tattoo parlor on the same block. “As more people become aware of how small businesses invest in the community and [improve] the health of the environment,” says Maggie Horne, director of Gannon University’s Small Business Development Center in Erie, “they’re more willing to value what these businesses bring to the table.”
Which is to say that here in Erie, the eighth-fastest-shrinking city in America, where laid-off workers may be reluctant to open new businesses, Mann was starting to provide the kind of story that entrepreneurs in big cities see all the time: He was showing what’s possible.
On a warm afternoon last fall, Mann stands by the open door of his garage, drinking strong coffee and shooting the breeze. His friend Tom sits in a folding chair squeezed in between half a dozen or more bikes, all in various stages of disrepair. “I’ve got to get these bikes out of here,” Mann says. “Otherwise I can’t get new ones in.” But he doesn’t expect that to happen soon. Many of their owners owe him money for parts. Until they pay up, he’s stuck.
“He’s got a community, you know?” says Tom, turning to me. “When they say they’ll pay, he tries to take their word for it.” Tom shakes his head like he both admires Mann and worries about him.
This community, largely a crew of middle-aged locals, was of course vital to helping launch Mann’s business. But it’s since become something of a liability. People hire Mann, unsure of when or if they can pay him. They’ve come in so often to ask repair questions -- treating him like a living YouTube instructional video -- that he hung a sign that says $75 shop minimum. Then he’ll reinforce it. “Questions are free, answers $75,” he tells people. But still, Mann can’t always draw a hard line. When a friend needed $6,000 to pay for his mother’s funeral, Mann declined to charge him for an extensive job. He did the same when this friend’s wife needed emergency surgery.
Mann knows most customers will try to make it up to him. But not everyone will. It’s something he learned the hard way -- most difficultly, he says, from his brother John, the one who encouraged him to open the shop in the first place.
At the outset, John said he’d handle all their company’s finances, and Mann agreed. Had they talked to experts, they’d have been advised against this. “In the beginning, people don’t want to talk about what happens if it derails or goes badly,” says Hutson. She always recommends that clients hire an accountant to manage finances and an attorney to draft a formal partnership agreement, even among family. But the Mann brothers didn’t.
In Mann’s telling, the relationship quickly devolved. John would come in late and then just sit at the garage desk, smoking and chatting up neighborhood characters. Then, in September 2016, they got into a big blowup at the shop about a contractor John had hired. “He started yelling at me,” Mann says. “And I said, ‘Why don’t you just shut the fuck up or get the fuck out?’ ”
So John did. A month went by with no sight of him. Truth be told, Mann was relieved. But one day, Mann tried to order some motorcycle parts and his debit card was declined. With a sinking feeling, he drove over to the bank. His account should have had about $20,000 in it, but it was empty. Mann says John took it all. Later, he says, he learned that John also hadn’t paid the business’s taxes -- and the IRS was calling. (John couldn’t be reached for comment, but two of Mann’s friends, who knew John and have been frequent visitors of the shop, as well as Mann’s daughter, confirmed Mann’s version of the story.)
“I didn’t think I was going to make it, to be honest,” Mann says. “It was devastating.” To survive, he expanded his business to start fixing snow blowers, which is useful during Erie’s heavy winters, and scored a $1,500 job from his mailman, which helped pay off some debt. He’s still digging out, but now he believes it’s possible.
This was Mann’s learning moment. He resolved to stop leaning on family and friends so he could stand on his own. He hired an accountant to get the books in order. He’s working harder to buy his building outright. “This year,” Mann says, his shop still full of unpaid work, “I’m starting over.”
Over the past two years, as Mann has become more comfortable with owning a business, something intangible but important has shifted: The man who never called himself an entrepreneur has started to talk and even feel like one.
“People need to wake up and see that the big businesses are dying,” Mann says. “The small shops, those are growing.” His friends now come asking his advice, inspired to follow his lead. In addition to the bar across the street, Mann’s friends have started a construction company, a landscaping business, an auto body garage and a concrete-laying company. And Mann, meanwhile, is starting to think bigger. He wants to open a retail space in Erie and expand Mann’s Cycle Works to warm climates -- South Carolina and Florida -- where there’s good winter business. His daughter wants to quit her receptionist job and work with him, and as soon as he’s making enough money, he says, he’ll welcome it.
The change is happening more broadly, too, according to people who work for small-business organizations. They credit entrepreneurship being in the American zeitgeist; it’s filtering into all corners. “Even 10 years ago, people didn’t tell their stories of entrepreneurship as much as they do now,” Hutson says. Kenneth Louie, director of the Economic Research Institute of Erie, says he’s seen many locals start a new business and transform as a result. “It takes a lot in terms of attitudes and motivations and assets,” he says.
There’s an old line entrepreneurs say about themselves: If we could do anything else, we would. That’s meant as a testament to passion. Entrepreneurship is so difficult, and can be so thankless, that the only people who do it are those who cannot imagine feeling fulfilled any other way. Mann, of course, came to it through a different kind of necessity -- less passion and more economics. “I’m still here” is about the best compliment he’ll give himself when you ask how business is going. He jokes that Ringo Starr’s “It Don’t Come Easy” is his theme song. But like anyone who sets out on their own, he’s now devoted to the road ahead. He appreciates its balance of risk and reward. That’s entrepreneurship. “I keep going,” Mann says. “I just keep going.”