NEW YORK (Reuters) - Rachel Dooley quit her high-paying job as an attorney a month ago to launch a jewelry business, and her friends think she is crazy.
Her friends may be right, according to statistics showing that small and entrepreneurial businesses are suffering at record rates in the recession. But struggling as they may be, many entrepreneurs say they prefer working on their own, launching a small business or promoting an original idea.
In fact, others' job losses, layoffs and workplace anxieties made the move easier, said Dooley, who creates and sells the Gemma Redux jewelry line.
"Watching my friends' careers go up in smoke and watching tons of people getting laid off gave me the strength," she said. "I thought, 'Who knows when that's going to happen to me?'"
But does she panic? "Probably once a day," she said. "Looking at my bank account and seeing this is where we're at, and the only way this grows is if I do it, it's daunting."
Only two-thirds of small business start-ups survive two years and fewer than half survive four years, according to the U.S. Small Business Administration.
Also, the U.S. self-employment rate in nonagricultural industries last year was 6.9 percent, the lowest on record, the U.S. Bureau of Labor Statistics said.
"Given the turmoil in the credit and financial markets, it doesn't appear that currently it would be a very good time to start a business," said BLS economist Steve Hipple.
Katie Danziger, who launched a New York-based business selling removable, washable infant car seats, in June, concurred.
"I can't say it was a great time to launch a business," she said. "People for so long were in the mentality of hitting home runs. Now you have to think of it as incremental wins."
Roughly 16 million to 21 million people in the United States are self-employed or have a business with no employees other than themselves, according to government statistics.
In terms of start-ups, expert Scott Shane said about 55 percent are gone in five years and 71 percent in 10 years.
From August through December 2008, the nation lost some 800,000 self-employed workers, said Shane, professor of entrepreneurial studies at Case Western Reserve University in Cleveland, Ohio and author of "Illusions of Entrepreneurship."
"I could close up the business and then try and find a job that I don't necessarily love or I can ride out the storm and see how it goes," said Jill Frechtman, who makes hand-dipped chocolate-covered Fretzels pretzels.
"Part of me thinks I'm better off staying where I am, trying to come up with more ideas on how to save money, make money and function in this economy," she said.
For Michelle Madhok, who runs the fashion website Shefinds.com, the downturn, with its lowered prices, has silver linings. She can hire more writers, rent better office space and employ a top-notch agency to redesign her website.
"We are feeling very fortunate because everything has gotten cheaper," Madhok said.
So new is Anne Maxfield's business, itsallaboutaging.com, that her website prototype is being readied this week. It will feature information and tools for coping with aging parents.
"I'm so happy that I'm out there trying to build something," she said. "Right now it's just me and that's okay.
"Great companies have started in recessions and depressions," she added. "I believe it is small business that's going to create jobs and get people back on their feet."
Editing by Michelle Nichols and Eric Walsh