Posted by: dstieglitz | January 3, 2015

Entrepreneurship in 2015

“A pessimist sees difficulty in every opportunity, while an

optimist sees opportunity in every difficulty.”  Winston Churchill

     Welcome to 2015: yet another year of rampant change especially for me. After selling our house in Maryland and moving our worldly goods south after extensive downsizing, I’m legally a resident of The Villages, Florida. The change is uncomfortable – even a bit frightening. I ask myself “What if?” when I think of dozens of things that could go wrong. The feelings are like those I experienced when I left a senior position in a Fortune-100 company to plunge into entrepreneurship.

    Entrepreneurial Spirit.  It’s more risky to start a business today, but entrepreneurial spirit – a willingness to leave the comfort zone to reach for a better life – still drives America’s economic growth. Companies five years old or less produce most net job growth and much of the innovation, while established organizations tend to expand what already exists. Start-up companies survive by coming up with new ideas and creating jobs in the process. Unfortunately, the U.S. isn’t producing as many start-ups as it once did and today’s start-ups add only five jobs compared with an historical average of seven. The Labor Department reports that start-ups created 4.7 million jobs in 1999, but only 2.7 million new jobs in 2012.

    Barriers to Success.  In the course of outfitting our new house in The Villages, I hired several small businesses. When I ask the owners – some young and some retirees starting anew – how their business is going, they uniformly cite the same barriers:

  • The first is people. They can’t find the right people because schools don’t teach skills for today’s markets. Small businesses can’t afford training, so they get by with fewer people working longer hours.
  • The second is red tape: regulations and taxes. One tradesman said he spends two days a week in county offices pulling permits and just four days working. They also complain about high tax rates and the uncertainty of new laws like Obamacare.
  • The third is cash. Most businesses are funded with the assets of the founder, often a home equity loan. Unfortunately, the recent recession reduced home values to the point few have equity to adequately fund on a start-up.

These hard-working entrepreneurs make a strong case for eliminating regulations and cutting personal income taxes across the board.

    Entrepreneurs – Endangered Breed.  These barriers hit entrepreneurs harder than established companies. Blue-collar business owners are frustrated by the maze of paperwork; academics struggle to commercialize new ideas; and foreign-born entrepreneurs find it difficult to gain residency. American capitalism is moving toward the European model where large firms with resources to deal with regulations dominate, while new companies flounder or sell out to bigger companies. In Congress, Republicans have lost Ronald Reagan’s passion for immigration and Democrats try to win favor with voters by vilifying business leaders. And, despite record low interest rates, both parties seem reluctant to invest in the infrastructure that stimulates business growth. Entrepreneurs may be endangered, but don’t underestimate their ingenuity.

    Brave World of Entrepreneurs.  It’s trendy to glamorize entrepreneurs and ignore the downsides they face. The press makes people drool over the houses, yachts and lifestyles that the top 1% of entrepreneurs enjoy. President Obama was oblivious to the 50% of startups that fail within five years when he said: “If you have a business, you didn’t build it. Somebody else made it happen.” The reality of entrepreneurship is as glamorous as shoveling cow manure in a barnyard. Entrepreneurs worry continuously about meeting payroll. They have no job security and virtually no life outside work. Entrepreneurs are just plain brave, and they deserve respect for risking everything in an attempt to build something from nothing.

     Grey Power.  Historically, most new businesses were started by people in their 30s. Today, that age group is financially handcuffed with student debt and chronic underemployment. With nearly 10,000 Americans turning 65 every day, the number of seniors who are becoming entrepreneurs is growing. They have marketable skills and experience, and the wherewithal to take risks. At the same time, their demand for services is creating entrepreneurial opportunities for younger folks in areas like health care, lifestyle design, and personal assistance. The swelling number of older voters and their propensity to vote gives them power in areas like Social Security reform, health care and disability benefits. And now that influence is extending into small business areas.

     Conclusion.  The U.S. is fortunate that entrepreneurship flows in the veins of its people – both old and young. It’s absurd that the government puts red tape and taxes in the path of people whose desire is to start a business and hire workers. To bolster the middle class, policies that produce jobs and help small business should be at the top of the political agenda. The take-away message to Congress and public officials at all levels is: no matter what else you do, make things easy for entrepreneurs! That may seem obvious, but it’s not happening today.


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