State of Entrepreneurship 2018

Now Reading

Entrepreneurs are pointing the way to economic inclusion
President and CEO Kauffman Foundation

Entrepreneurs are pointing the way to economic inclusion

Barriers are falling, but we are a long way from zero. Fortunately, entrepreneurs are leading the way to a more inclusive future economy. #ZeroBarriers

Every year, March Madness sweeps across the United States, and this week our national attention will be focused on the battle of favorites and Cinderellas culminating in the Final Four. If you follow me on Twitter, @DubGkc, then you know I’ll be glued to the TV this weekend cheering on KU.

But, there’s another phenomenon on my mind that should also be part of the national dialogue. And unlike basketball, where one champion will be crowned, there’s room for every community in the country to come out a winner. While this topic may not create the same kind of frenzy, it has far greater potential to have an ongoing impact.

Here’s the concept: Every community in America has the opportunity to grow jobs – with entrepreneurs pointing the way. It involves building local cultures – or ecosystems – of entrepreneurship. Those ecosystems are spreading across the nation and working to remove barriers that obstruct a person taking an idea to an economic reality. A recent national survey of entrepreneurs, conducted for the Kauffman Foundation, shines a bright light on the road ahead.

What entrepreneurs told us

That survey, of 2,100 entrepreneurs contacted earlier this year, tells us that they are very optimistic – not only about their businesses currently but also about their future and potential for growth. Among startups (0-5 years old), 67 percent say that they performed well in 2017, as did 77 percent of older companies. That’s crucial, because new businesses account for nearly all net job creation in the nation. And entrepreneurship rates are half of what they were a generation ago.

Looking at 2018, those startups are even more encouraging: 88 percent predict their businesses will perform well; 74 percent think it likely that they will raise employees’ salaries, and 55 percent think it likely that they will hire additional employees.

But those entrepreneurs are also telling us what is needed to help them launch and grow companies. Most tellingly, entrepreneurs overwhelmingly feel unsupported by government. Sixty percent of startups and 68 percent of older businesses say that government does not care about "business owners like me." Ninety-two percent of startups and 89 percent of older businesses say that the president and Congress should spend more time working to help business owners like them.

Those last numbers are extraordinarily high, and that should be a wake-up call for our nation. Our greatest job-producing sector overwhelmingly thinks that the federal government is not paying enough attention to their needs. And this survey was conducted after the federal tax cut was enacted.

4 things entrepreneurs need

But the challenge is not just for the federal government. It’s for government at all levels and for communities across our nation. I’ll leave you with my “Final Four:” four things that can help reverse our long-term decline of entrepreneurship:

1. More inclusive networks: What most recent entrepreneurs lack is other entrepreneurs to turn to for support and guidance. Fifty-eight percent of startup owners know four or fewer business owners, and 21 percent of first-year startup owners know one or fewer. This lack of access to networks has real-life implications when it comes to financing or navigating regulations.

2. Help with the nuts and bolts: Many entrepreneurs struggle with the technical steps of growing their businesses. Among startups, 35 percent have difficulty, for instance, setting up pay and benefits for employees. Notably, only 55 percent of startups felt they had support from their community to start their business.

The good news is that an increasing array of free tools is available to guide aspiring entrepreneurs and ecosystem builders, including Kauffman FastTrac, now available free digitally, which equips aspiring entrepreneurs with business skills and insights, tools and resources, and peer networks needed to start and grow successful businesses. And, in 171 cities (and growing), there is a chapter of 1 Million Cups, a program designed to educate, engage, and connect entrepreneurs with their communities.

3. A new economic model: What entrepreneurs want most from government, according to the survey, is not funding but an environment more conducive to business. Fifty-one percent of startups and 67 percent of older businesses want the government to promote a business-friendly environment. Surprisingly, most entrepreneurs surveyed don’t bother using government services available to them, such as working locally with the Small Business Administration or applying for government grants and funding.

One way for communities to better understand the needs of entrepreneurs is to engage ecosystem builders. These builders have created a digital playbook full of ideas, insights, and solutions. This initial playbook emerged last summer at the first-ever ESHIP Summit, held by the Kauffman Foundation in Kansas City. That event brought together more than 400 ecosystem builders from 48 states, Puerto Rico, and the District of Columbia. The playbook continues to evolve, as communities put ideas into practice and entrepreneurs provide more feedback.

4. Getting the entrepreneurs' voices in the room: With these and other free tools, barriers to entrepreneurship and entrepreneurial ecosystems are falling, but much more needs to be done. At the Kauffman Foundation, our goal for entrepreneurship is Zero Barriers to Startup, and we recently took that message to Capitol Hill.

There, we worked with our partners nationwide on a call-to-action that enabled entrepreneurs to communicate digitally with their elected officials locally, statewide, and in Washington, D.C. We also celebrated with Revolution Ventures at a Rise of the Rest event for the creation of an entrepreneurship caucus in the House of Representatives, chaired by Rep. John K. Delaney (D-MD) and Rep. Tom MacArthur (R-NJ). We hope the Senate follows suit.

Getting the voices of entrepreneurs in the room early ensures that any top-down policy is well informed by the grassroots. We’ve seen too many promising policy plays falter because the local problem-solving skills of entrepreneurs did not inform the process.

Barriers are falling, but we are a long way from zero. Fortunately, entrepreneurs are leading the way. Their voice, their views, and their passion are vital to building entrepreneurship, and the resulting job growth, to levels that our nation has known in the past – and then beyond.