Sometimes, people start businesses not because they want to, but because they have to. When jobs dry up, bills keep coming, or unexpected life changes hit, launching a business out of necessity becomes the only way forward. This is known as necessity entrepreneurship, and it’s more common—and more important—than you might think.
Defining Necessity Entrepreneurship
Necessity entrepreneurship means starting a business because other options just aren’t there. It’s less about chasing dreams and more about solving urgent problems.
Many who take this path do so after losing a job, facing discrimination in hiring, or being locked out of traditional work. They turn a tough spot into an opportunity to earn and support themselves or their loved ones.
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Why Do People Start Businesses Out of Necessity?
Pressure from life often forces people to act. Here are some big reasons why necessity entrepreneurs decide to work for themselves:
- Job loss or layoffs. Sudden unemployment can push people to find quick ways to replace income.
- Discrimination or exclusion. When traditional jobs aren’t available due to bias or social barriers, starting a small business becomes the next best option.
- Limited access in rural or underserved communities. Sometimes there are simply not enough jobs nearby.
- Need for flexibility. Parenting, health issues, or caregiving can make regular jobs impossible to hold.
People also start necessity businesses when they have a specific skill with no local job market or when they can’t get benefits like childcare or health insurance from traditional jobs.
What Kinds of Businesses Are Started This Way?
Necessity can spark all types of ventures. Often, these are small-scale operations:
- Personal and home services: Cleaning, childcare, handyman services, or caregiving.
- Retail: Selling crafts, baked goods, or other products from home or small shops.
- Online businesses: Freelance work, running an online store, or using gig apps like ride-sharing.
- Creative work: Monetizing art, writing, or content in the creator economy.
These businesses may start out of a need to make ends meet, but over time, some grow into true opportunities for wealth.
The Unexpected Power of Necessity
You might expect these businesses to always stay small, but necessity entrepreneurship often comes with hidden strengths:
- Grit and adaptability. When every dollar counts, owners find ways to keep going, no matter the challenges.
- Resourcefulness. With little to spend, necessity entrepreneurs make the most out of what they have.
- Connection to community. Local ties and personal service often become selling points that larger companies can’t match.
These traits can make necessity-based businesses essential pillars in neighborhoods, filling critical gaps in services or goods.
Who are Necessity Entrepreneurs?
This group is diverse, cutting across backgrounds and life stories:
- Many are women, launching businesses to balance family needs, even though their first-year revenues tend to be lower than men’s.
- Minorities and immigrants often turn to entrepreneurship when excluded from traditional job markets.
- People living in rural areas, where job options are fewer and further between.
Necessity entrepreneurship played a big role during the COVID-19 pandemic, with about 30% of new businesses started because people needed any source of income.
Challenges Faced by Necessity Entrepreneurs
Starting a business out of need comes with tough hurdles:
- Lack of capital: Most necessity entrepreneurs don’t have much saved up, so starting small—and often on the side—is a must.
- Few safety nets: There’s no sick leave, no employer-provided healthcare, and failures can be costly.
- Market risk: Without deep pockets, it’s hard to survive dips in demand or higher competition.
Still, many beat the odds with creativity and hard work.
How Technology and the Creator Economy Open New Paths
Digital tools have turned necessity into a new kind of opportunity. Social media, online marketplaces, and gig platforms let people reach customers quickly, often without big start-up costs.
During hard times, these platforms gave many people the chance to freelance, sell goods, or offer their skills worldwide—all from home.
What Do These Businesses Mean for the Economy?
Necessity entrepreneurship isn’t just about survival—it shapes communities and national economies.
- More resilient local economies. Small ventures make neighborhoods less dependent on a handful of big employers.
- Fresh ideas and diversity. Necessity pushes people to try new things and solve old problems in different ways.
- Policy gaps revealed. The growth in necessity businesses highlights the need for better support systems, like small business funding, affordable healthcare, and childcare.
When people support these entrepreneurs, everyone gains through stronger, more adaptable local economies.
Supporting and Growing Necessity-Based Ventures
Making necessity businesses more successful takes more than just grit. Key supports include:
- Access to low-interest loans and microcredit
- Business training programs
- Affordable health insurance and childcare services
- Networking opportunities with other business owners
With these, necessity-driven businesses can grow, hire others, and shift from just surviving to truly thriving.
Conclusion
Starting a business out of necessity isn’t always a choice, but it’s a path taken by millions when no other options exist. These businesses are about survival, grit, and taking control when life gets hard. They drive local economies, spark innovation, and often make the difference between struggle and stability for families.
By understanding and supporting these entrepreneurs, we open doors—not just for them, but for whole communities. If you’ve ever thought about launching something because you needed to, know that you’re not alone—and that sometimes, the drive to stay afloat is all it takes to build something great.