The State of Entrepreneurship 2010

January 19, 2010

4:02 pm

The State of Entrepreneurship

The State of Entrepreneurship

The Kauffman Foundation State of Entrepreneurship Address was presented by Kauffman President and CEO Carl Schramm at the National Press Club in Washington, DC today. I was on hand to see it live and the event was also streamed live on the Internet. I posted some photos here.

Schramm assessed the outlook for entrepreneurship in 2010, including the challenges facing new businesses and solutions for fueling job growth as part of the economic recovery. Schramm unveiled a new survey of entrepreneurs, commissioned by the Kauffman Foundation and conducted by Douglas Schoen, LLC that shows entrepreneurs are optimistic about their companies but are struggling to expand in the current economy:

  • 36 percent of entrepreneurs reported reductions in head count in the past year; only 8 percent have added employees.
  • Nearly two-thirds have seen their sales volume and their profitability decrease.
  • 71 percent of entrepreneurs do not expect to add any new jobs in 2010.
  • 61 percent of entrepreneurs think the economy is on the wrong track.

Schramm also went on to present a number of policy recommendations that he said would help set the country on a path toward economic recovery which included the following:

  • Reform immigration policy, granting citizenship for foreign students graduating from American universities and other immigrants who want to start new companies and create jobs (i.e. Startup Visa).
  • Revise Sarbanes-Oxley regulations to allow company shareholders to choose whether their companies must fulfill some of the most onerous reporting requirements if they think the costs of compliance outweigh the benefits.
  • Provide a temporary payroll tax holiday to companies less than five years old.
  • Give academic entrepreneurs the choice of multiple avenues to commercialize their research so their innovations can reach consumers more quickly.
  • Offer fellowships for doctoral graduates in scientific fields to educate them about how to start companies.
  • Provide entrepreneurship education and training to students in high school and college.

Following the address, U.S. Secretary of Commerce Gary Locke provided remarks about the Obama administration’s plans to encourage the growth of entrepreneurship.

“IBM, Whole Foods and Disney all started during economic downturns.”

U.S. Secretary Gary Locke said about entrepreneurship in these tough economic times. He went as far as to say, that these trying financial times are the perfect time to start a business.

The program also included a panel discussion featuring Carl Schramm with:

During the panel discussion Carl Schramm touched on one of the biggest entrepreneurial misconceptions which is often taught in business school in regard to starting a business – taking VC funding. He explained that taking VC funding is often one of the first steps taught to business school students working on a business plan. He totally disagreed with this and I do to. He went on to say:

“Sending entrepreneurs to get VC funding is a terribly wrong direction to drive people to when starting a business.”

I could not agree with him more. Fellow panelist, Mary Naylor went on to emphasize that aside from getting a loan from a family member, bank or angel investor, the best approach in starting a business is finding a customer. Great advise for anyone looking to start a business. If you can first find a customer to help solve a problem you can get the business off the ground and validate your idea and generate revenue all in one swoop. It is a lot easier said then done but that does not mean it is impossible. It may be easier than finding a grant, angel, loan or venture capital.

Overall, the event was nicely done and I thank the Kaufman Foundation for putting on such an event in Washington, DC and inviting me to attend. It was well attended from a spectrum of different sectors from bootstrapping entrepreneurs like myself to high ranking government officials. My only concern from an entrepreneur’s perspective, was the macro level emphasis on creating new jobs, to save the American economy. While I am all for helping America and it’s economy that isn’t my overall goal as an entrepreneur. While I would love to see jobs created as a result of my work as an entrepreneur my first goal is building out an idea to solve a problem. Focusing on job creation as an entrepreneur totally misses the point of what drives entrepreneurs. Rather than focusing on job creation, I would love to see the focus be placed on facilitating new ideas and  innovation.

What else would I like to see?
I would like to see entrepreneurs have access to additional grant funding opportunities. I would love to see additional subsidized office spaces, Internet and other infrastructure offered to entrepreneurs to help them get off the ground. Also additional mentoring programs and an emphasis placed on helping startups and entrepreneurs rather than just aiding the large companies that have already established themselves. Those are just a few ideas. I would love to get your take on it. Feel free to share your ideas in the comments section of this article as we look to really focus on helping foster entrepreneurship to help America recover from this tough economic times.

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Frank Gruber is the cofounder, CEO and Executive Editor of Tech.Co (formerly Tech Cocktail). He is the author of the book, Startup Mixology, Tech Cocktail’s Guide to Building, Growing, and Celebrating Startup Success. He is also a startup advisor and investor to startups. Find Frank Gruber online and follow him on Twitter at @FrankGruber.

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