Pull yourself up by your bootstraps and.. start a business

May 21, 2016 1:07 PM

How easy/how common was it for a person to start their own business in the US in, say, the 1800s to mid 1900s? Are there good books or online resources about this?

It seems like there are a lot of stories that include middle-class, blue-collar joe schmoe starting his own business quite easily back then, or where everyone's dad or they had at least one friend whose dad started and ran a business. Or an immigrant comes to the country with a dollar, works hard and struggles, saves some money, and eventually starts their own successful business. This differs a lot from my own experience of middle-class America today.

I'm wondering how common and accurate these stories are (maybe the people who didn't start businesses just weren't as interesting to write about?) and what factors might have made this more possible in the past than today (for instance, the number of huge chain stores today make it hard for small businesses, or the number of documents and fees and legal hoops one has to jump through today vs back then), if in fact it was easier to start and run a business in the past.

posted by atinna to Work & Money (14 answers total)

I'm curious what you mean by "start a business," because store frontage was very cheap. My grandfather was an Italian immigrant and started a successful used furniture business in Chicago. It wasn't a very big deal, he just went around and tried to buy people's old furniture off them, then put it up for sale at his cheap storefront for a mark-up. He also worked as a part-time labourer and just closed his store when he had a labourer gig and couldn't get someone to cover for him.

I imagine a lot of 19th and 20th century "small business owners" followed more or less this mold.
posted by 256 at 1:42 PM on May 21, 2016 [2 favorites]

What do you mean by "business"? Until the end of the 19th century, you're looking mostly at farming in terms of how individual families made their money, and at various points we (as in the governments of the colonies and then the US) were actively trying to make more and more separate farms.

Anecdotal: my grandfather and his brothers started (and stopped) a wide variety of activities that you could characterize as separate businesses. They acquired things - a cart, some apples, a truck, a guy who makes ice cream - and then made as much money as possible till it ran out. There's no record of this beyond what they wrote in journals or told a census taker, but I know this is what they did from around 1910 to 1940 despite no government records of their activities.
posted by SMPA at 1:46 PM on May 21, 2016 [3 favorites]

My dad made a small fortune as an independent sales rep...pretty sure these opportunities are still in existence today. Though I'm not sure if this would qualify as a "small" business. Before he got established in business, he owned a gas station. My mom's father was a farmer. During the Great Depression my father's mother made ends meet by renting out rooms in her house. My uncle made a fortune with a drive-thru burger and root beer stand that was quite the teenage sock-hop hang-out. There are modern-day equivalents for all these examples (beside the gas station). Just about all the brothers in my father's family started off poor and died millionaires, just by cornering a Market share.
posted by zagyzebra at 2:00 PM on May 21, 2016 [1 favorite]

Best answer: A lot of working-class people were self-employed, due in part to the fact that the world was a lot less centralised. Supermarkets and IKEA didn't exist. Rag and bone men, costermongers, flower girls, night soil collectors, street kids who would sweep crosswalks of manure, the people who would "knock up" your door because nobody had alarm clocks -- these were all self-employed people. There were a ton of interesting jobs that no longer exist.

Some of these could grow; my husband's grandfather was a barrow boy, who eventually was able to buy a market stall. For an example of the empire progression of a shop boy to a grocery store baron, see John James Sainsbury; for retail goods, F.W. Woolworth's story is similar.

It is referenced in the rag and bone and flower girl links, but you may want to get a copy of London Labour and the London Poor. It is absolutely fascinating.
posted by DarlingBri at 2:07 PM on May 21, 2016 [7 favorites]

My dad did this in the 1950s. He went through way more paperwork than I did with my business, because the type of business was different. So you might want to consider that dimension. He was at higher risk (health care services) but came away with high net revenues. My business has been lower-risk, and my revenues are comparatively lower. However, once I hit my stride it has been a much more relaxed lifestyle business.

Have you looked into lifestyle businesses? You might be interested to find out how these start out, because they're doing it now and these aren't exactly battling legal hoops and big businesses all the time.

> for instance, the number of huge chain stores today make it hard for small businesses, or the number of documents and fees and legal hoops one has to jump through today vs back then

I had a few competitors who quit for the first reason you gave.

I also failed at my first business attempt because I thought I had to worry so much about the second reason you gave. Turns out that many, if not most businesses kind of start in a really low-key mode where suddenly people are lining up to pay them to do something, and they're looking around going "wait, this is all there is to it?" The trick from there is to turn the sudden influx (which feels great but may not equate to a good wage) into a reasonable living and working situation.

The legal stuff and competition stuff can really be more of a perceived reality.

I started my current business the easy way and it was pretty similar to what 256 described above. When sales came, I did that work. Work didn't come, I worked for other people. When work got solid and my competitors were buying office space, I decided to work from home. I printed up business cards my third year in business. I got a CPA in my 10th year in business.
posted by circular at 2:14 PM on May 21, 2016

My teen daughter just started Her first business - she created a business plan, purchased insurance, searched and registered the business name, signed a lease document (lawyer fees to review), paid $3,000 for certification, researched zoning, created marketing materials to advertise widely (both physical and Internet/social media marketing) and has had to research all the different ways people may like to pay (cash, debit, credit, Bitcoin, Apple pay) that all require different technology to be purchased.

When my dad opened his first business mid-century he rented a storefront cheaply month to month and just started working.
posted by saucysault at 2:17 PM on May 21, 2016 [6 favorites]

Immigrants are still much more likely than native-born Americans to start businesses, for what it's worth.

I think it was pretty common for mid-19th to mid-20th century immigrants to start businesses. That's true for a lot of reasons: starting a business was a way to get opportunity in the context of widespread employment discrimination; startup costs could be relatively low, especially if they started out as a peddler or working out of their home; they could often use ethic and family networks to get startup capital, find suppliers, and recruit employees; they could often fill needs in ethnic communities. A lot of those businesses seem extraordinarily exploitative by today's standard: they relied on child labor, for instance, and/ or didn't pay employees a living wage. It's also true that a lot of those businesses struggled and failed, and you only hear about the successes. My great-grandparents apparently owned a grocery store that catered to the small Jewish community in their Southern town, but I only recently heard about it, because it failed.
posted by ArbitraryAndCapricious at 3:45 PM on May 21, 2016

The time period you ask about covers a huge amount of time, from nearly the beginning of the country through the 'opening' of the West through 2 world wars. I think you need to be more specific.
posted by bq at 3:58 PM on May 21, 2016

Best answer: Qualifications weren't as necessary and regulations were not as strict in the early-mid 1900s. My father left school at 13 but had many non-concurrent businesses ranging from an all-hours cafe in the 1930s through to a government-contracted engineering company in the 1950s. He was, at the end of his life, a nationally respected engineering consultant but he had no engineering qualifications per se. He couldn't cook either.
posted by Thella at 4:45 PM on May 21, 2016 [2 favorites]

Best answer: One of the things I study is the food businesses of immigrants in the late 19th/early 20th century in mostly Eastern US urban areas. It was much easier for people to get into the food business then than it is now. As someone above mentioned, many food businesses started as a cart. It was possible, if you could scrape up a small investment of capital, to get up early in the morning, go to a terminal market and buy wholesale produce, then haul it back to a neighborhood and start vending. If you did well at it a stall or storefront was the next step and not a difficult leap. Among the companies that started exactly that way are Stop & Shop and Progresso Foods. Overhead was lower than it is now - reasons include that there were no OSHA and safe building requirements, no forms of insurance coverage were required, advertising was mostly unnecessary until you sought to expand, formal accounting audits were not required, and many did without benefit of electricity and phone service until late in the period. Loans were often obtainable through family or ethnic networks, bypassing banking systems entirely (since banks often discriminated against people, especially blacks, Jews, and Italians). Labor costs were low since once a staff was needed, labor was often supplied by family members who were not paid wages, but benefited as a family unit from business proceeds. For many, especially specialty food producers like bakers and butchers, the greatest business cost was equipment (ovens, slicers, scales).

I watched my brother and SIL open a simple restaurant a few years ago. Compared to what I know of similar food startups 1880-1930, they were in an entirely different world. Both regulations and expectations have scaled up dramatically in volume and complexity. Inspections, engineers, architects, tax accountants, lawyers, licenses, zoning boards, supplier contracts, logo designer, printers, linen service, required equipment such as a high-temp dishwasher with chemical sanitizing system and stove hood ventilation system, insurance including workers' comp, payroll service and of course minimum wage. So, insofar as the food business is concerned, your perceptions are correct. It is not only more difficult and time-consuming to open a food business now than it was 1880-1930, but it is many, many times more costly, requiring the type of investment few people drawing only a middle-class income could manage. Even farmer's market businesses that grow into a branded product have many more hoops to jump through than anyone did in that period of the past - licensed prep kitchen, health regulations, insurance. Immigrants still do open a tremendous number of restaurants but they often do have access to capital through their relationship networks, and often also go for cheaper franchise agreements. Some, like many basic take-out Chinese restaurants, are financed through some rather exploitive systems.
posted by Miko at 5:47 PM on May 21, 2016 [4 favorites]

IMO, a lot of your question hinges on what it means to be an entrepreneur, starting a business. We think of it today as taking risks and starting new markets. Maybe the easiest definition going that far back is simply how many people started businesses employing other people. In which case, you're basically asking for the history of the industrial revolution =)

I'm wondering how common and accurate these stories are (maybe the people who didn't start businesses just weren't as interesting to write about?) and what factors might have made this more possible in the past than today

Well, America was a very unpopulated country for much of your time range, with lots of opportunities lying around. And a lot of the immigrants were middle class, people who could afford to ship themselves across an ocean, and buy capital assets in the new country. Sure, you could buy stock in railway companies to achieve the effect, but history is littered with failed rail companies, and neither modern portfolio theory nor low commissions were available to produce an index to invest in 'America.' Brothers who immigrate provide benefits to both sides of the ocean -- access to information, investment opportunities and trustworthy counterparties, in a time where free banking was the norm.

Little House on the Praerie gives a fictionalized account of the westward expansion, suitable to liberatarian agendas in some places, but the facts and lives those books are based on demonstrate how small business was the norm on the frontier. Farm hands weren't hired off the side lot at Home Depot, as the claim system produced very small farms, about a tenth the optimal size. Instead farmers traded labor with neighbors.

So you can start to see, homesteading was a risky business, but doesn't fit into our normal model of venture capital funded startups hiring a bunch of people, designing a big new thing, and then selling it to the public.
posted by pwnguin at 9:42 PM on May 21, 2016

This is perhaps more a question of finding the right economic niche at the right time. There's a really heartbreaking discription of the efforts of local people in Manchester around 1900 in Robert Robert's 'The Perfect Slum' trying to get out of the abject poverty by trying to set up shops in their front rooms. Few manage it, party due to the fact that they have no money to invest and their neighbours have no money to buy.
posted by Middlemarch at 3:01 AM on May 22, 2016 [1 favorite]

Just anecdotal, but my great grandparents both grew up in the country and moved to the city (Milwaukee) after they got married. Their first business was a small grocery, and from the way I heard my grandmother talk about it, it wasn't much of a leap to get set up for yourself this way. It sounds like you had to be pretty entrepreneurial at that time. This would have been about 1900, and neither of them came from families of any means, so they wouldn't have had much of any capital to invest. They had the store until my grandmother was in her early teens, and then her father was able to get a more lucrative job at the rail yard that allowed him to support the family and her mother could stay home.
posted by amusebuche at 5:45 AM on May 22, 2016

Best answer: I research San Francisco history as a hobby, and I see these stories from time to time in the newspapers of the time.

From the San Francisco Call, December 20, 1901:

Bernard Katschinski, Proprietor of the Splendid Philadelphia Shoe House, Starts Career With One Assistant, and To-Day His Staff Numbers Ninety


Twenty years ago today, on December 20, 1881, Bernard Katschinski, proprietor of the Philadelphia shoe house, first opened his store and laid before the people a very tumble display of boots and shoes. The store was a wooden frame building eighteen feet wide and forty feet deep. The merchant had just come from Sacramento, where, as a barber, he had accumulated a capital after eight years of hard work amounting in all to $2300.

He saw at once that energy was the quality required to build up a trade, and with one assistant, Fred Meadows, he turned up his sleeves and turned in to fight his way to the top of the commercial tree. How successful he has been is well known to the citizens of San Francisco, for on that same site there now thrives the same Bernard Katschinski, with a handsome store and a staff of ninety employees, among them the faithful Fred Meadows, who from a three-dollar-a-week shop boy has grown up in corresponding importance with the owner.

Also, Miko's got a great point about family members helping staff a small business. Looking at old San Francisco city directories from the late 1800s and early 1900s, I see tons of businesses - grocery stores, sister seamstresses, a whole family of butchers (like, six brothers, I think) - with multiple family members, often both working in the same business and living in the same house.
posted by kristi at 10:50 AM on May 25, 2016