We recently discussed the State of U.S. Entrepreneurship, noticing that the total number of new entrepreneurial businesses has decreased since The Great Recession…but is this really true, or are we just looking in the wrong places? According to a piece in the April 2015 issue of Inc. magazine, we’re not taking note of all the entrepreneurs out there.
The piece, titled “American Entrepreneurship Is Actually Vanishing. Here’s Why” by Leigh Buchanan has a bit of a misleading title given its conclusion, however it presents many of the same concepts offered in the Wall Street Journal article referenced in the aforementioned blog post. After a brief resurgence in the pre-recession early aughts, the percent of new firms as portion of total firms is at a 30 year low. Like the WSJ piece, Buchanan proposes that this is “a generational problem” combined with massive barriers to capital and entry.
Unlike the WSJ piece, Buchanan reaches a much different conclusion – “actually, it may not be a problem at all” – before going on to suggest that we’re perhaps just not looking in the right places. When you take into account how so many people are in the budding stages of starting a business – coming up with an idea, starting to do research, etc – it actually seems like entrepreneurship has been on the rise since 2011. Buchanan calls this concept “nascent entrepreneurship” and cites a GEM study which states that the rate of nascent entrepreneurship has nearly doubled since 2010, from 4.8 to 9.7 percent.
Those entrepreneurs not formally classified as such generally fall into two categories: entrepreneurs with full-time employment elsewhere & soloists/virtual teams of independent contractors. Some of these elect to stay small by choice while others are “reluctant entrepreneurs” making the best of being laid off, but all can take advantage of the nimbleness and lack of overhead that today’s technology can provide.
How many of these new ideas grow into full-fledged new businesses is nearly impossible to forecast, but you shouldn’t let that stop you from trying. If you have the idea and the motivation, what’s going on in the economy at large needn’t effect you – work through the challenges and make yourself the exception.