Second stage entrepreneurs are ‘re-employing’ America

 

Editor’s note: Michelle Stockman works with Little Rock-based Arkansas Capital Corp. to promote entrepreneurship development around the state. Stockman earned a bachelor’s degree from Loyola University-Chicago in communications and fine arts, and earned a master’s in entrepreneurship from Western Carolina University. Her thoughts on business success appear each week on The City Wire.

It’s no secret that the most popular word in economic development recently is entrepreneurship.

While many traditional minded individuals continue to question the validity of entrepreneurship, many others are working quickly to find ways to accommodate the growth of entrepreneurs and their businesses. News stories continue to cover topics like “most” entrepreneurial town, state or region yet the same reports vaguely understand why entrepreneurs tend to flock to one area over another.

Meanwhile, studies have increasingly shown where the changes in the economy are occurring. The once believed myth about entrepreneurship being job creators is now a resounding reality. In fact, the Edward Lowe Foundation has found that 99% of all the companies within the country have 99 employees or less.

The Kauffman Foundation concurs by noting that there is a fundamental shift occurring in the economy right now as more individuals are laid off, more become contract “consultants” in order to find their own employment. Youreconomy.org notes that 28% of businesses created are self-employment businesses.

However, self-employed individuals are not job creators. Neither are the 59% of businesses who are wobbling through the start-up years. Knowing that the top 1% of big businesses are busy laying workers off, that leaves 12% of businesses to take on the re-employment of America. It is this 12% of business that is known as Second-Stage Entrepreneurs.

Second State Entrepreneurs are past the start-up phase yet not quite to maturity with their business yet. They have serious growth issues with the capacity for growth. These companies are typically found in the technology, health, alternative energy, green as well as other booming sectors right now. It is this 12% portion of the American economy that is creating the jobs.

The Kauffman Foundation also notes that most of the job creators are companies that are one to five years in age followed closely by companies that are six to 10 years in age. However, when looking at firm creation over time, the number of small businesses created per year has not risen or declined in any dramatic factor since the early 1990s. This means that entrepreneurship has been a continual force in our economy, but not much attention has been paid to entrepreneurs until the last 10 years.

Lastly, Kauffman notes that the majority of businesses are being started by older adults. In fact, adults 55 and up have taken over the 45-55 year old entrepreneurs in business start-ups for the last two years. This trend correlates to the aging population who were most likely laid off from their former careers.

In the last 10 years, entrepreneurs have grown out of the perception of being rebellious citizens to respected economic engines. Now it is our job as citizens to support our entrepreneurs by buying local, encouraging our business owners and listening to their needs.

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Stockman can be reached at [email protected]