President and Principal,
As an entrepreneur, businessman and Chair of the Chamber’s Innovation and Entrepreneurship Council I was shocked to read Gallup’s article “American Entrepreneurship: Dead or Alive?”
If you read or listen to the news, consensus seems to be that we are slowly yet steadily recovering from the ‘Great Recession’. Everyone seems to have an opinion on why the recovery has been slow and many of those opinions default to that of the depth of the downturn being the cause.
But, what no one is talking about, and what Gallup has pointed out, is that:
Entrepreneurship in the U.S. is in decline for the first time since the government started measuring almost 40 years ago.
Prior to the downturn in 2008, new business startups outpaced business closures by 100,000 per year. That situation is now reversed with business closures outpacing startups by 70,000 per year (i.e. -70,000 net business created per year). And, as you can see from Gallup’s chart, though there was initial improvement in net job creation from the bottom of the recession, it is once again trending downward.
Though likely not the only reason, this seems like an important factor for what’s slowing down this recovery, as well as the disconnect between what economists say about the economy, and what the American people are feeling. We all know the relationship between entrepreneurship, job creation and economic prosperity. Entrepreneurs create new businesses, new businesses create new jobs, and new jobs create new opportunities for workers. All of this gives people options, which fuels optimism.
The Gallup article brings up another great point as it relates to innovation. Innovation for the sake of innovation is of little value, as it does not create businesses or jobs. Innovation must feed into entrepreneurship and the creation of new businesses (whether inside or outside of existing companies) in order to spur job creation, economic growth and prosperity.
It’s in all of our best interests to do what we can to help reverse this troubling trend in net new business creation. I encourage you to engage with the Chamber and the Innovation and Entrepreneurship Council and help us to address the issues that are holding people back from starting new businesses.
Just as critical, is the engagement of the business community with our political representatives on this issue. At the local, state and federal levels, we must help to ensure that our representatives are aware of this disconcerting issue and urge them to put in place policy that breaks down the barriers to business creation and invests smartly in innovation as a driver of entrepreneurship.