STANDING UP FOR THE UNDERDOGS
Helping Entrepreneurs Succeed WENDY GUILLIES From Shark Tank to Silicon Valley, Elon Musk to businesses create a strong bias toward incumbent firms. Mark Zuckerberg, and Uber to Airbnb, entrepreneurship Established firms sometimes seek out governmental has never been as highly regarded in pop culture as it is protections under the guise of public good, but those now. Entrepreneurship and firm dynamism are critical protections ultimately just crowd out new firm activity. for innovation, meaningful employment and a higher Curbing startups means fewer young, high-growth firms quality of life for all Americans. But entrepreneurship – the businesses that drive job creation and productivity gains. is not thriving -- at Firm financing least not yet. is always a point of R e s e a r c h concern for most indicates that the new businesses, number of new firms and the research each year has been shows traditional declining for decades, funding sources and the decline only may be diminishing accelerated during the for entrepreneurs. Great Recession. Even While the total with a modest recent value of commercial uptick, our economy loans has doubled is now following a in the past couple of trend where the rate decades, the share of of business creation those loans going to in the United States small businesses has is about half of decreased from about what it was in the Wendy Guillies half of all bank loans 1980s. The decline to under one-third. in startups – coupled Research indicates that the number Demographics with the concentration of new firms each year has been also are changing, of power in a small further number of large declining for decades, and the decline creating impediments to firms – creates a less only accelerated during the entrepreneurship. dynamic economy. Millennials are Despite this Great Recession. having a stunted gloomy picture, there impact on economic is reason to believe that we are about to enter a future with robust economic growth. Reaching working age during the recession growth led by entrepreneurs. If we remove the artificial and subsequent modest recovery for the U.S. economy barriers that impede entrepreneurship, we may see a certainly did not help. While it is true that millennials real world experience that matches the glamourous pop are not starting businesses at the same rate that older generations did at the same age, millennials also are culture narrative. To understand the entrepreneurial decline and not at the peak age for starting a business: late thirties general stagnant economic recovery since the Great and early forties. The general aging of the population, including the Recession, take a look at the barriers entrepreneurs face. Burdensome regulations for new and young retirement of “boomers,” can explain part of the decline RIPON FORUM April 2016
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