The recent economic downturn is spawning a variety of cottage industries -- people forced out of the workplace and now starting their own businesses out of their homes. Childcare, auto repair, remodeling, repping and distribution of various products ... you name it ... it is happening.

I applaud folks who are taking this as an opportunity to do their own thing. I think that is wonderful. Over the years, I have advised many people who were starting new businesses.

But we need to realize a couple of things:

1) Cottage industries, operating with lower overhead, do displace workers from traditional workplaces, exacerbating the current high unemployment levels. Most people, when starting a business and working for themselves, will have the ability to do the work of two, three, or even four people in the traditional workplace.
2) Many times these entrepreneurs do not have the skills or knowledge to take their businesses to the next level when the economy does improve.

I am not saying that either of these is "bad". They are just realities. I am all for entrepreneurism. However, these are just things that we need to be aware of and, in my opinion, states need to be aware of and plan for. For one thing, providing low cost business training to these new entrepreneurs would be a great place to start so that at least some of them will be prepared to build bigger businesses down the road.