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Kauffman Smallbiz Expert On Taxes, Fiscal Cliff

Q. Is this a good time or a bad time for someone to start a company?

A. My own personal view is that it's never a bad time to start a company. There are good cases to be made that starting in an economic expansion is great because consumer demand is high and people will spend money. There's arguments to be made that starting in a downturn, whether it's a recession or a bear market or a sluggish recovery is also a good time. If you're a tech startup for example, the demand for technology has been pretty constant the past few years. IPad sales went through roof at a time when the economy was deep in a recession. That's obviously a big company, but lots of other companies have glommed on to that heavy tech spending. There's also schools of thought that say if you start up in a recession, it's sort of a trial by fire. If you start up in hard times, and you survive, there's less competition and you come out of it stronger.

A few years ago, we did a count of Fortune 500 companies, and over half of them were founded either in recessions or bear markets. That's not simply a reflection of, well, they started in a recession, therefore they're better. I think it's a reflection of, if you have an idea or if you create an opportunity or if you're in a university and you've stumbled across some discovery, there is that entrepreneurial drive ... and the macroeconomic environment doesn't matter if you come up with that idea. There's not necessarily a one-to-one corresponding relation between the macroeconomic environment and the demand for and supply of new ideas and innovation.

Q. Given what has happened in the economy the last five years, is it going to be harder to be a small business owner and expand your company in the next five to 10 years?

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