Entrepreneurship: New Wave of Creativity Is Taking the Business Community by Storm
Kennedy, Allan A., American Banker
There is a revolution occurring on the American economic scene today. The revolution is a rampant outburst of raw, unbridled entrepreneurship of an extent that is staggering. This revolution holds well for the future of the American economy but spells trouble for those existing large companies that fail to adapt.
While we've all been going about our business over the last decade or so, an astonishing phenomenon has been occurring in the economy. This phenomenon has been the return of entrepreneurship to the American economic scene.
American entrepreneurs have been doing their thing in incredible numbers -- to the tune of 600,000 new businesses established in 1983 alone. Surely not all these businesses succeed; even in the teeth of the recent business recession, however, fewer than 5% of the new startups failed.
What's going on here? Why are more and more people choosing to be entrepreneurs? And more important, what are the implications for big business as we know it today? Underlying Causes
The outburst of entrepreneurial activity we are now witnessing is fueled by a number of factors, one of which is causative in my mind, the others supportive. The causative factor, I believe, is that incredible, inherent American personal desire to be independent. Consider the following historical facts:
* In 1627 the city of Watertown, Massachusetts, was founded when one of the twenty or so families comprising the community of Cambridge decided that being in such close quarters was just not for them. Their solution: Move seven miles down the Charles River and start a new community. Now that's independence.
* In the late 1860s and subsequent decades, the U.S. Government decided to populate the vast Indian territories of the western frontier. What happened? Hundreds of thousands of families packed all their belongings into Conestoga wagons and headed west to grab for their own piece of turf? Now that's independence.
* In the 1970s and into the succeeding decade, a generation of Americans recognized that they now had sufficient economic independent to be able to strike out on their own. What happened? Wht in 1983 alone, 600,000 of them started their own business. Now that's independence.
It sometimes takes an outsider to recognize the inherent qualities of an nation. In many respects, despite 20 happy and productive years of residence in the United States, I am just such an outsider, having been born and brought up in Canada.
What is amazing about the American character is the deep-seated belief that America is the land of individual opportunity. Every person can become rich if they just work hard and are willing to take the risk of striking out on their own. Other parts of the world are simply not like that.
So, in summary, I don't believe the outburst of entrepreneurial activity is any surprise whatsoever: Being independent and striking out on your own is simply a part of the American character. And let's all count our blessings for that.
What are some of the supportive trends that are allowing this pattern to bloom now? There are several and they are all important:
1. America by and large is a lot richer today than it ever was before in its history. By 1981 nearly 40% of U.S. households had annual incomes of greater than $25,000; fully 6% (5.3 million households) had imcomes greater than $50,000 a year. This is two or three times as much family income in real terms as families had as recently as 1960. With that kind of money floating around a household, it's a lot easier to think in terms of tightening one's belt and taking the entrepreneurial plunge.
2. Americans in general today are much better educated than they were before. One third of the total U.S. population aged over 25 have had some college training; closer to 70% of high school graduates now routinely go on to college. One impact of this higher education level is simply broader exposure of the individual to what the world might have to offer them. …