Some might say that John Hidey, Nick Goossen and Michael Bird chose a terrible time to start their software architecture company. The trio launched Sharp Dudes LLC in December 2007, the month most economists pinpoint as the start of the recession.

Though the three men plunged ahead with their business, many other potential entrepreneurs are holding back.

Data from the Pennsylvania Department of State show that fewer people are starting businesses this year in Allegheny County than last year.

A total of 350 businesses -- excluding foreign corporations and nonprofit incorporations -- were incorporated in June 2009, a 24 percent drop from June 2008. There also were year-over-year declines in monthly business incorporations in January (20 percent), February (17 percent) and May (13 percent). March and April posted modest increases of 5 percent and 6 percent respectively.

This year's downward trend appears to be a continuation of a similar decline from 2007 to 2008. In total, 6,214 businesses were incorporated in 2007, dropping by 8 percent to 5,689 in 2008.

The data doesn't surprise Ann Dugan, executive director of the Institute for Entrepreneurial Excellence at the University of Pittsburgh's Katz Graduate School of Business. "There's a higher risk of starting a business because of the shrinking economy," she said. "People are thinking, 'If the existing businesses are having so much trouble, why would this be an opportunity for me to start one?'"

Ms. Dugan predicted that as the federal economic stimulus package takes hold, consumer confidence grows and credit becomes more available, the declining trend in business startups will reverse by early 2010.

Pittsburgh has never been a hotbed of business startups, said John G. Craig Jr., president of Pittsburgh Regional Indicators, an organization that compares the region with others across the country.

According to Pittsburgh Regional Indicators data, new businesses grew by 5.91 percent between July 2005 and July 2006, compared with a national average of 9.65 percent.

Despite being slow at forming new companies, Pittsburgh has a high rate of business survival. According to data from Pittsburgh Regional Indicators, 78.95 percent of companies that started in July 2004 were still in operation in 2006, compared with a national average of 76.3 percent.

Sharp Dudes is on track to be one of the success stories, said Mr. Hidey, principal architect and president. Last year, the company, composed of just the three co-founders, had a total gross revenue of $430,000 after designing software and developing applications for about 10 clients. This year the company hopes to hire additional employees and look into advertising.

"We consider ourselves to be doing quite well," Mr. Hidey said. "We didn't think we'd be as successful as we are as quick as we've gotten."