Did you know that there has been a sharp decline in entrepreneurial-ism in the last decade? A recent study by Brookings Institution shows that America, which has long been an entrepreneurial nation, is losing its entrepreneurs.
Why should this matter to you and me? Anyone who has worked in or for a large corporation knows how long it takes to make decisions, to take advantage of market trends, adapt and implement. I’ve often compared them to elephants trying to turn on a dime. They simply do not have the flexibility of small businesses.
Small Businesses Are
The Petri Dish of Innovation
Entrepreneurs, on the other hand, are
- Fast-acting,
- adaptable,
- cutting edge, and
- innovative
They
- Create manufacturing opportunities,
- foster industry, and
- employ much of the middle class
Look at the major innovators: Bell, Tesla, Edison, Gates and Jobs. They all started small in their garages or small shops. Innovation rarely comes from large corporations. It comes in the petri dish of entrepreneurship.
Entrepreneurship Fosters Freedom
In his book, FreedomShift : 3 Choices to Reclaim America’s Destiny, Oliver DeMille talks about the three things that could keep the United States free. The first is entrepreneurship. Many of the Founding Fathers (Jefferson, Franklin, Adams, Hancock, etc.) were entrepreneurs.
Entrepreneurs were the innovative, forward thinking individuals who had the courage to create an entirely new paradigm of government. The U.S. Constitution made our country the free nation that it is; and it was through the inspiration of brave entrepreneurs that we enjoy our freedoms today.
Why Is Entrepreneurship Declining?
Yet, entrepreneurship is declining, but why? According to the Brookings Institution report,
Our findings stop short of demonstrating why these trends are occurring and perhaps more importantly, what can be done about it. Doing so requires a more complete knowledge about what drives dynamism, and especially entrepreneurship, than currently exists. But it is clear that these trends fit into a larger narrative of business consolidation occurring in the U.S. economy—whatever the reason, older and larger businesses are doing better relative to younger and smaller ones. Firms and individuals appear to be more risk averse too—businesses are hanging on to cash, fewer people are launching firms, and workers are less likely to switch jobs or move.”
The economic downturn certainly has not contributed to people being willing to take risks. Also, it’s interesting to note that the middle class is also dying (See NY Times article on this subject).
The middle class-entrepreneurship question is sort of a “chicken and the egg” situation. Is the death of entrepreneurship killing off the middle class? Or is it the death of the middle class that’s eroding entrepreneurship? It definitely takes money to start, market and grow a business. If you’re at poverty level, you’re going to have a tougher time being an entrepreneur. And many entrepreneurs who have been hit hard by the economy, have been forced to close their doors.
Entrepreneurs discover soon enough that not only do they have operating expenses, but also they are slammed with self-employment taxes, federal taxes and insurance expenses that the average 9-to-5’er will never see.
The economic climate is not friendly to entrepreneurs, and it’s not friendly to the middle class. You kill one and you kill the other.
Commenting on the Brookings Institute Report, Jean Card wrote in US News and World Report,
American entrepreneurship is at its lowest point in 30 years, and the decline since 2009 has been precipitous… I don’t think you need to be an economist to find the study’s chart overlaying the trend lines of business start-ups and business closures (with the “good” news going down and the “bad” news going up, to the point where they actually, gasp, pass each other in opposite directions) to be grab-your-chest scary. I think you only need to be an American who appreciates the fact that this nation has been, historically, economically strong because of vibrant entrepreneurship.”
My friend Daniel DeCoopman and I were discussing this phenomenon the other day. He said something I think is important.
Entrepreneurs are the lookouts, the purveyors of the future. They stand at a place unobstructed by barriers” (or at least they used to). “They can see the horizon and bring forward technology. Without this market segment, we greatly impede our ability to perform and compete in the global economy. Entrepreneurship is the creative part of our culture, yet it’s no longer being valued.”
And we will pay the price…
About Marnie Pehrson Kuhns
Marnie Pehrson Kuhns is a Certified SimplyAlign Practitioner™ who uses music and creativity to mentor you past barriers, fears and doubts to discover, create, align with, and deliver your soul’s song (the mission, message or purpose you are on this earth to live). Marnie is a best-selling author with 31 fiction and nonfiction titles. If you'd like Marnie and her husband Dave to work with you personally on Your Great Reinvention, get a FREE 20-minute strategy session with Marnie here.
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