Entrepreneurs are Optimistic, But Policy Changes Can Help

Locavesting Staff | March 1, 2018


The state of entrepreneurship is… optimistic. That’s according to the Ewing Marion Kauffman Foundation, which presented its 9th annual State of Entrepreneurship address on Wednesday.

Although entrepreneurship as a percent of the population is just half of what it was a generation ago, the trend has been ticking up in recent years. And entrepreneurs, it seems, are feeling bullish.

Two-thirds of startups surveyed recently by the Kansas City-based nonprofit said they performed well last year, and 89% expect to increase profits in 2018. Kauffman’s nationwide survey included 2,165 small business owners, slightly more than half of which were startup less than five years old.

Women for 2017 were generally less optimistic than their male peers about the future. And women-owned startups rated their 2017 performance lower than men, although the difference disappeared for businesses that were over 5 years of age.

Despite the generally rosy outlook, many challenges remain in removing barriers that hold back entrepreneurship, especially for rural and minority entrepreneurs, Kauffman officials said. Entrepreneurship is not diversifying as fast as the U.S. population; nor is it spilling over from urban hotbeds into more rural areas. And technological advances mean that fewer jobs are being created as companies grow.

When new businesses account for nearly all net new job creation, that’s a concern.

In addition to those broad trends, Kauffman’s survey suggests that entrepreneurs are struggling with the day-today aspects and red tape involved in running a business—things like insuring their businesses, applying for loans, setting up benefits for employees, obtaining business licenses and paying taxes.

They also feel that the government looks after large companies more than small ones. When asked whether they felt government incentives favor startups or established businesses, they overwhelming chose the latter.

That’s hardly surprising. Anyone who has paid attention to earmarks and provisions in federal tax bills or who has watched state and local governments raiding taxpayer funds to woo Amazon might reasonably conclude the same.

Interestingly, most of the respondents did not turn to the government for assistance, either with grants or funding or SBA loans.

A Shift to Policy

Officials at the Kauffman Foundation, one of the nation’s leading advocates for entrepreneurship, emphasized their goal of breaking down barriers for entrepreneurs no matter their zip code, race, age or gender. They ticked off the resources they offer for entrepreneurs, including 1 Million Cups a pitch program that  will be expanding to 100 new communities. Last fall, Kauffman began offering a free online version of its FastTrac course for entrepreneurs. And of course, it provides sought after grants.

More broadly, said Kauffman Foundation CEO Wendy Guillies, it’s about “advancing a new economic model, one that infuses entrepreneurship and the economy more broadly” and builds entrepreneurial ecosystems across the country. Kauffman officials didn’t mention any specific policies, but they used the State of Entrepreneurship address in Washington DC to signal to lawmakers that more needs to be done. Kauffman officials and entrepreneurs were headed to Capital Hill after the address to discuss ways the government can support the country’s entrepreneurs.

“Our efforts alone can’t reverse the long term decline in entrepreneurship or transform how states and cities do economic development,” said Victor Hwang, vice president of entrepreneurship for Kauffman.

We’ve got some ideas as well, from easing the way for local investment funds, improving crowdfunding laws and providing tax incentives for local investors to stronger antitrust enforcement. For more ideas, see the articles below.

State of Entrepreneurship 2018
Janice Omadeke of The Mentor Method

In the meantime, there are steps we can all take, said Janice Omadeke, founder and chief executive officer of Washington, DC-based The Mentor Method. One of a diverse group of entrepreneurs featured at the address, Omadeke urged people in the entrepreneurial ecosystem to support budding entrepreneurs, especially minorities who face extra obstacles.

“If you identify with the founder, their mission, their business model, get in their corner, advocate for them, share your network of experts and advisers and potential customers,” Omadeke said.

“I think sometimes it’s very easy to say, ‘OK, well, you’re too early, so let me wait, see your traction, and then I’ll come back next year when you’ve actually made something.’” Instead of waiting, she added, “coach and develop us to get us ready. I think that is mission-critical and something that all of us are capable of doing, starting today.”

For more steps communities and policymakers can take, check out these articles:

How the New ‘Opportunity Zone’ Incentives Can Work in Your Community

NYC Will Invest in Local Women Entrepreneurs on Kiva

Can Tax Incentives Jumpstart the JOBS Act?

Is Antitrust Policy Killing Small Business?

Chicago Looks to Social Enterprise to Address Urban Challenges

Should States Create Their Own ‘Regulatory Sandboxes’?

Small Businesses Are Key to Job Growth in Inner Cities

Spurring Rural Entrepreneurship: 8 Innovative Business Models That Don’t Break The Bank


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