I’ve got some interesting startups to interview in near future, but while I prepare for those, I thought it would be a good idea to write about the importance of startups in Hardin County. They’re an important part of our national economic infrastructure and they play an important role for our local area as well. That’s why we came up with the idea for this column in the first place.
In this political season, it’s hard to find a politician that doesn’t sing the praises of small business – even if they don’t mean it. There’s a reason for that. They’re the engine of our economy. Here’s an interesting statistic: 89% of all businesses have twenty employers or less. So, who are these businesses? They’re your neighbors. Just like everyone else, these business owners get up every day to work to provide a living for themselves and their families. Many of them struggle to keep their doors open, but through hard work, strong will, and dedication they stay alive.
89% of all businesses have twenty employers or less.
So why all the attention on startups? Two reasons. First, they’re the primary source for job creation and second, startups are declining and we need to do something about that. Consider the information below from this article, The Importance of Young Firms for Economic Growth by the Kaufman Foundation, a noted non-profit organization with a primary focus on entrepreneurship:
Young Firms Drive Job Growth and Economic Dynamism
- New businesses account for nearly all net new job creation and almost 20 percent of gross job creation, whereas small businesses do not have a significant impact on job growth when age is accounted for.
- Companies less than one year old have created an average of 1.5 million jobs per year over the past three decades.
- Many young firms exhibit an “up or out” dynamic, in which innovative and successful firms grow rapidly and become a wellspring of job and economic growth, or quickly fail and exit the market, allowing capital to be put to more productive uses.
- Young firms were hit hard during the Great Recession. Even still, from 2006 to 2009, young and small firms (fewer than five years old and twenty employees) remained a positive source of net employment growth (8.6 percent), whereas older and larger firms shed more jobs than they created.
These are encouraging statistics but the news isn’t all good. Startups are in decline nationally as evidenced by the following, also from the previously mentioned article by the Kauffman Foundation:
Declining Startup Rates Threaten Growth
- New businesses represent a declining share of the business community. According to Census data, new firms represented as much as 16 percent of all firms in the late 1970s. By 2011, that share had declined to 8 percent.
- Not only are there fewer new firms, but those startups that do exist are creating fewer jobs. The gross number of jobs created by new firms fell by more than two million between 2005 and 2010.
- Startup activity has been subdued across the country. Firm entry rates were lower between 2009 and 2011 than they were between 1978 and 1980 in every state and Metropolitan Statistical Area except one.
While I may be more passionate about our local startup scene than others, we should all realize how startups impact our daily lives. New businesses affect us in ways that may not be obvious. You know, things like jobs, culture, shopping, restaurants, tourism, and education. So, let’s celebrate this new and exciting culture of entrepreneurship in Hardin County and support them in every way we can. If nothing else, a little pat on the back goes a long way. After all, these people are literally laying everything on the line to make their dreams come true. A little encouragement from their fellow citizens can go a long way toward helping our community thrive. They’re good for all of us.