Why We Still Need Startups and Entrepreneurs in the U.S.
Depending on the article, entrepreneurship in America is either thriving or dying. A recent report by the Brookings Institution indicates that the U.S. economy has become less entrepreneurial since the late 1970s. Businesses that are one year old or younger have dropped from 15% to 8% in 2011.
That being said, getting a business started is easier than ever due to everything from microloans to crowdfunding to angel investors. Launching isn’t the problem. It’s staying in business once started. Failures happen for a variety of reasons: lack of planning, declining cash flow, competition, etc. A recent The Atlantic article sites the rise of businesses like McDonald’s and Dunkin Donuts as killing local mom-and-pop shops. While franchises can take customers away from smaller companies, they are also an avenue for entrepreneurs to take advantage of an established business model, but still have the thrill of running their own business.
Why People Should Be Worried
If fewer smaller businesses are succeeding, then that could spell trouble for the U.S. economy. Why? Well, startups are important for a variety of reasons:
The recent recession does have something to do with the failure of many small businesses. Yet, what has people like Robert Litan, co-author of the Brookings Institution Study and non-resident senior fellow, concerned is that fewer companies are starting businesses. The reasons for this are unknown. “The fact that the trend is so long-standing, for example, suggests that it's not one presidential administration or another that's at fault, nor is it the recession”.
To stop the trend, this may mean providing entrepreneurial education in schools and more support to entrepreneurs. Experimentation may have to take place to increase the number of startups and entrepreneurs in the country.