Friday, January 27, 2012

Small Business Start-ups Aid Economic Recovery

Written by Otis White
Business and Management faculty chair at Rio Salado College

Otis White

During National Small Business Week last May, Brian Morris, a leading small business and entrepreneurship blogger reported that there were more than 27 million small businesses in the U.S. He also reported that between 60 and 80 percent of all new jobs, depending on the industry sector, would be created by small and medium sized businesses that will hopefully startup operation after the recession is over. Well, it is after the recession and the country is looking for those new businesses.

What worries researchers and small business advocates is that the nation’s confidence in starting a business is actually slipping to lows not seen in years, according to the National Federation of Independent Businesses. Many blame the housing crash as home equity is a major source of funding for new businesses. Bank lending for new business is at an all-time low and venture capital sources are becoming more and more selective.

In Arizona, statistics show that small business drives 26.1 billion in payroll or 28.8 percent of the state’s total payroll. In the United States more than 30 percent of all payroll ($1.5 trillion) and 21 percent of all business revenue ($7.8 trillion) is driven by small and medium sized business. We cannot afford to lose the will and drive to create new business ventures and there has never been a better time to do so.

A recent Intuit report ranks the U.S. as the fourth lowest in start-up costs of the eight leading economic opportunity countries in the world, and third in ease of operation. It costs less to begin a business today than it has over the past 15 years and the ability for anyone to start a business has never been easier from a regulatory and operations point of view. In addition, the time could not be better with the expanding “buy local” movement that is spreading across the country.

It is entrepreneurship and risk taking as said by economist Joseph Schumpeter, “which creates the new and vibrant economy out of the ashes of the cold stagnant one.” Our nation has lots of ashes
All successful companies began with an idea. For those who have ideas and are interested in starting a new business the possibilities are endless and might even be able to help sweep up some of the ashes. Here’s to a growing and prosperous 2012. Let’s start something.

Supporting the Entrepreneur Process
• Frequent local businesses who are shouldering risk. Revenue which flows through local businesses expands payrolls, creates jobs and strengthens the fundamental base of consumers which is the bedrock of our economy.

• Make small business growth a legislative imperative. Support candidates who favor small business growth in all state-wide elections and make it a requirement for that support.

• Encourage high schools, community colleges and universities to take the leading role in supporting startups and growth companies from all business sectors and infuse curriculums with entrepreneurship content across all disciplines.

• Fund education supporting entrepreneurship and small business creation and the free enterprise system by making courses and resources abundantly available to all citizens whether young or old, at low or no cost.

This article appeared in the Tempe Republic, Jan. 25, 2012