Today, the Ewing Marion Kauffman Foundation released its State of Entrepreneurship 2017 report, emphasizing three new trends that the organization said will shape the future of entrepreneurship.
The first of what the report termed “mega trends” is an aging and racially-diversifying American populace.
Since U.S. entrepreneurs are about 80 percent white and 65 percent male, a vast difference from the general population in the U.S., according to the report’s figures, that means there is a “diversity gap” among new businesses.
Kauffman noted that the newest American businesses are owned by a more racially-diverse group of people than in years past — 40 percent of businesses in their first month of operation are owned by racial minorities, compared to 23 percent in 1996.
However, the report also said that change has yet to spread to larger, more mature businesses, and that minority-owned businesses tend to “start smaller and stay smaller.”
In the end, the report contended, if racial minorities’ entrepreneurship rates were the same as non-minorities’, thus closing the “diversity gap,” the U.S. would “have more than 1 million additional employer businesses and as much as an extra 9.5 million jobs in the economy, all else being equal.”
The second “mega trend” identified in the report is that entrepreneurial activity and resources appear to be getting dispersed to different places around the country beyond the expected and established entrepreneurial centers.
That doesn’t mean Silicon Valley is in any danger of losing its primacy as an entrepreneurial hotbed. But the report does have encouraging news for places like Charlotte, North Carolina; Washington, D.C.; Columbus, Ohio; and Nashville, Tennessee, which may not have the same kind of cachet as San Jose, California, but do offer an attractive entrepreneurial environment given the sizes of those cities.
The third “mega trend” is that scaling up a business is a different proposition today than it was just a short time ago, thanks to technological advances.
Specifically, because new companies can grow so quickly with less human capital, that means fewer jobs are created by newly-huge companies.
On the other hand, the report added, those technological advances also create new opportunities through lower barriers to entry and new fields that simply didn’t exist before.
Ultimately, Kauffman said that while there is plenty of good news for entrepreneurs across the country, there is room for improvement, particularly in how formal educational gaps affect entrepreneurship rates, how rural areas can build a more thriving entrepreneurial environment, and how safety nets can keep business failure from being a catastrophic event for individuals, among other issues.
David A. Arnott is the National News Desk Editor with The Business Journals.
