Commentary

Entrepreneurial current events


current eventsA few articles have grabbed my attention recently. One relates to the fact that recessions or economic downtimes are sometimes the best time to start new businesses. Time reported this week on the Kauffman Index of Entrepreneurial Activity, an indicator of new business creation in the U.S., which found that more Americans have started businesses during the recent downturn than at any time in the past 15 years. Ok, that makes sense; lots of people laid off, etc.

But the article goes on to talk about the fact that while there was an increase in the number of new businesses started, there was a decrease in the number of new businesses started that hire employees. The conclusion was that sole proprietorships are on the rise. This trend can be attributed to the low costs of starting a business and the quick path to revenues and profitability for many of the the go-it-alone-by-choice type of entrepreneurs.

This fact is paralleled by the general trend thatHaltiwanger job creation and destruction findings even high-growth tech startups don’t create jobs like new ventures did in the past. The Economist recently posed the question if the passing of Mr Jobs is simply the most prominent example of a broader decline in American entrepreneurship. According to JPMorgan, in the late 1990s, employment at start-up companies regularly grew 1.2m per quarter. That has fallen to 700,000 since the current recovery began.

John Haltiwanger, probably the leading economist on employment dynamics by firm size, finds an alarming slow down in the rate of job creation among small startup firms, which is the major source of all net job creation. He discusses the trends in a recent interview and raises his concern about the decline in job creation in startups and small firms and the consequent loss of dynamism in the US economy.

Finally, the Washington Post had a fun article about failure, a favorite topic for any entrepreneur. Starting with Steve Jobs, who, while wildly successful, also failed often and badly. Meaning sometimes “you have to fail to succeed.”  The article goes on to conclude: “It’s not the thing attained that matters; it’s the journey that gives us life. The act of creation — the struggle — far exceeds the pleasure of the thing created.”

I couldn’t agree more! And I’d like to thank Timo Mechler for sending me so many links to interesting articles!

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