In a post-election survey sponsored by the Small Business & Entrepreneurship Council (SBE Council), respondents were not overly optimistic about the outlook for entrepreneurship and the U.S. economy. However, given the fragile state of the economy it wasn’t total doom and gloom.
When we asked participants (800 actual voters) this question: In thinking about entrepreneurship and the future of the U.S. economy, what best describes your outlook for American small business ownership?....the responses were as follows:
33 percent felt that the American Dream of starting and growing a successful small business is alive and well.
55 percent felt that the American Dream of starting and growing a successful small business is on life support.
8 percent felt that the American Dream of staring and growing a successful small business is dead.
(Small business owners in this post-election survey pool, responded similarly – 36 percent said “alive and well”, 57 percent “on life support”, and 9 percent said the dream is “dead.”)
Indeed, as most entrepreneurs can attest, it’s pretty rough out there. Yes, opportunities certainly exist, but the risks are much greater. Several reporters have asked me over the past five or six months about how the economy is impacting entrepreneurial activity and business start-up overall. While I responded that we don’t have data (which usually lags) in order to accurately answer that question, I surmised that given deterioration in the economy and other conditions, we might see less start-up activity overall, and more “necessity entrepreneurship” as a result of multi-year layoffs trends, and downsizing in general.
Now, the latest Global Entrepreneurship Monitor (GEM) report from Babson College and Baruch College supports my observations. The GEM report finds that the percentage of Americans engaged in starting or running a new business declined from 12.4 percent in 2005 to 9.6 percent in 2007. In addition, “necessity entrepreneurship” in the U.S. increased from 12.1 percent in 2005 to 15.6 percent in 2007. Of course, it will be interesting to see how 2008 stacks up – my guess is that the U.S. will continue to see growth in the number of people starting businesses out of necessity, rather than opportunity.
The findings of this survey are critically important, and should concern U.S. political leaders. After all, small business owners and entrepreneurs are central to getting our economy back on a healthy, growth track. Their collective role as chief job creators and innovators in our economy is more important than ever, and policymakers and elected officials need to focus on their needs and concerns rather than spending most of their time (and taxpayer dollars) on big corporations. Some sense of balance would be nice.
A healthy and stable economic climate will ultimately enable more productive entrepreneurial activity. Without that, the “time-out” in new business formation could unfortunately turn into an unwelcome trend.
The GEM report did have some positive findings worth sharing:
• The entrepreneurship rate in the U.S. is 50 percent higher than our peer countries (high-income nations.)
• The U.S. ranks third in early-stage activity.
• Motivation to start a business in the U.S. is still largely based on “opportunity.”
• Minorities continue to exhibit higher rates of entrepreneurship. (However, their motivation for starting businesses may be based on what they perceive as discriminatory practices – that is, being turned down for a job due to their ethnicity, as between 57 percent and 72.6 percent report.)
Renewing the perception that the American Dream of starting and growing a successful small business is an attainable reality comes highly dependent on sound policies. That is, political leaders need to enact policies that support business start-up and growth. That means staying away from policies that impose more costs and unnecessary regulatory burdens on entrepreneurs and focusing on those that encourage capital formation/access, and an even playing field in accessing markets.
Karen Kerrigan
President & CEO
No comments:
Post a Comment