A recent ominous article in the Los Angeles Times began with the headline, “A drop-off in startups: Where are all the entrepreneurs?”
Writer Walter Hamilton cited a number of alarming statistics that seem to signal the death of entrepreneurship:
- According to the Census Bureau, the number of start-ups fell almost 28% from 1977 to 2011
- By other measures — as a share of all businesses or relative to the size of the working-age population — it has fallen in half
- People ages 20-34 created 22.7% of all new companies in 2013, down from 34.8% in 1996
Hamilton discussed several factors that seem to be crippling new business startups, “including increased risk aversion among workers, shifts in government regulation and a consolidation in corporate America that has left many industries dominated by a handful of behemoths.
“Falling entrepreneurship is bad for the economy,” Hamilton concluded. “It means fewer jobs being created and a reduction in innovation that is essential to economic growth and rising living standards.”
The numbers might not lie, but they aren’t showing the whole picture. If anything, entrepreneurship is a sleeping giant that is getting ready to roar again, for several reasons.
- The “handful of behemoths” mentioned is not hiring in droves. Far from it. Big companies continue cutting employees and tightening their belts. There may be a lot of fear and “risk aversion” among people, but there’s also a lot of disgust and a deep-seated longing to be free from a system that has kept so many dependent on someone else for their livelihood.
- The biggest of the big institutions will continue to splinter and fragment, necessitating partnerships with smaller entrepreneurial or “intrapreneurial” ventures
- Hundreds of thousands of college students hit the job market every year with sketchy prospects at best (and a heavy burden of student loans). Many are forced to move back home with their parents. Fortunately, lots of them are creating opportunities with little more than a laptop and Wifi. There will be a wave of young people, on the heels of the Millennials, who will bypass college altogether in favor of carving an entrepreneurial path.
- The population as a whole is aging, with roughly 10,000 Baby Boomers reaching retirement age (65) every day for the next 15 years. They are the ones being edged out of the workplace fastest. They are also the ones with decades of experience, capable of keeping their skills sharp as consultants and free-lancers—providing their services more nimbly and cost effectively than many full-time employees.
So is entrepreneurship dead or dying? Hardly.
Can I prove it? No. However, my gut tells me entrepreneurship is poised to have a Renaissance.
Just as people overcame Fear (with a capital F) after the Great Depression, the same is happening in the wake of the Great Recession. Entrepreneurs I talk to sense this, in the countless people they encounter who are unhappy with the way things have been. There’s a growing eagerness to use the abundance of affordable tools to do something different with their lives. To return to a way of life their ancestors carved out when they first came to this country and “made it,” through sheer hard work and ingenuity.
While I’ll accept the “facts” that indicate entrepreneurship has been dropping, I won’t accept that entrepreneurship is at death’s door. I think anyone who sees it that way is missing an unprecedented opportunity.
Startups always have been and also will be a backbone of the American economy—even a moral imperative stemming from the pioneering spirit of our forefathers.
Get ready to watch the trend lines take a dramatic turn upward in the coming decade.
Photo credit: Heisenberg Media
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