What has five letters and is the solution to growing our economy, reducing inequality, and fighting poverty?
"ESHIP," as we say at the Ewing Marion Kauffman Foundation, or entrepreneurship, is the key to tackling each of those challenges.
"Entrepreneurship creates jobs, it fosters growth, and it levels the playing field," says Victor Hwang, vice president of Entrepreneurship at the Foundation. "We can take control of our economic destiny by supporting our entrepreneurs."
Every month, three out of 1,000 Americans decide to start a new business. Hwang says in order to increase entrepreneurship, aspiring entrepreneurs need to take the next step and seek help in starting a business.
"We found the success of entrepreneurs depends a lot on what the 997 do to support the work of the three," Hwang said. "If you can’t be one of the three, then be an awesome member of the 997."
At TEDx Augusta, an independently organized TED Talk in Augusta, Georgia, Hwang offered four insights into what we know about entrepreneurship and shared ideas for how to support the makers, doers, and dreamers.
Hwang referenced a study published by the Review of Economics and Statistics that found new jobs come from new businesses instead of older businesses. A study conducted by the Foundation found that new businesses contribute to all net new job creation and 20 percent of gross job creation.
"They found that virtually all net new jobs are created by businesses younger than five years," Hwang said.
Supporting new businesses is the key to stimulating our economy. When we support entrepreneurs, we help build our economy and provide opportunities for others.
In order to expand productivity and innovation, Hwang suggests that entrepreneurs and those who support them should look for new places for their ideas to take root.
He said that 50 percent of net new firms used to be spread out across 29 major cities. Now, 50 percent of new firms come from only five metro areas: New York, Miami, Los Angeles, Houston, and Dallas.
"Most cities are starving for new businesses," he said.
By supporting new businesses in our own backyards, we can help grow our economy by spreading productivity throughout the United States.
While entrepreneurial growth can create new jobs and innovations, it can also tackle old problems which have divided our communities for years. Hwang said entrepreneurship is imperative, because our long-term economic well-being depends on being able to start and grow businesses. Research has shown that there’s a correlation between new business starts and decreases in poverty, he said.
Despite the benefits entrepreneurship can bring, Hwang said the rate of Americans starting new businesses has been falling over the last 40 years. He attributed the decline to America losing its entrepreneurial spirit. According to census data, the share of new firms fell by 50 percent.
"Individual actions matter," Hwang said. "If you’ve been thinking about starting a new business, take the next step."
As for the 997 that can support new businesses, Hwang challenged them to help local entrepreneurs by testing out new products, expanding their network, and sharing their work with other consumers in their community.
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