{"id":96,"date":"2018-09-24T14:38:46","date_gmt":"2018-09-24T14:38:46","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/suny-osintrobus\/chapter\/trends-in-entrepreneurship-and-small-business-ownership\/"},"modified":"2018-10-03T15:15:23","modified_gmt":"2018-10-03T15:15:23","slug":"trends-in-entrepreneurship-and-small-business-ownership","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-osintrobus\/chapter\/trends-in-entrepreneurship-and-small-business-ownership\/","title":{"raw":"Trends in Entrepreneurship and Small-Business Ownership","rendered":"Trends in Entrepreneurship and Small-Business Ownership"},"content":{"raw":"
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  1. What trends are shaping entrepreneurship and small-business ownership?<\/li>\r\n<\/ol>\r\n

    Entrepreneurship has changed since the heady days of the late 1990s, when starting a dot-com while still in college seemed a quick route to riches and stock options. Much entrepreneurial opportunity comes from major changes in demographics, society, and technology, and at present there is a confluence of all three. A major demographic group is moving into a significantly different stage in life, and minorities are increasing their business ownership in remarkable numbers. We have created a society in which we expect to have our problems taken care of, and the technological revolution stands ready with already-developed solutions. Evolving social and demographic trends, combined with the challenge of operating in a fast-paced technology-dominated business climate, are changing the face of entrepreneurship and small-business ownership.<\/p>\r\n\r\n

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    Into the Future: Start-ups Drive the Economy<\/h3>\r\n

    Did new business ventures drive the economic recovery from the 2001\u20132002 and 2007\u20132009 to recessions, and are they continuing to make significant contributions to the U.S. economy? The economists who review Department of Labor<\/span> employment surveys and SBA statistics think so. \u201cSmall business drives the American economy,\u201d says Dr. Chad Moutray, former chief economist for the SBA\u2019s Office of Advocacy. \u201cMain Street provides the jobs and spurs our economic growth. American entrepreneurs are creative and productive.\u201d Numbers alone do not tell the whole story, however. Are these newly self-employed workers profiting from their ventures, or are they just biding their time during a period of unemployment?<\/p>\r\n

    U.S. small businesses employed 57.9 million people in 2016, representing nearly 48 percent of the workforce. The number of net new jobs added to the economy was 1.4 million.[footnote]\u201cSmall Business Profile: 2016,\u201d https:\/\/www.sba.gov, accessed February 2, 2018.[\/footnote]<\/p>\r\n

    The highest rate of growth is coming from women-owned firms, which continues to rise at rates higher than the national average\u2014and with even stronger growth rates since the recession. There were an estimated 11.6 million women-owned businesses employing nearly 9 million people in 2016, generating more than $1.7 trillion in revenue.[footnote]\u201cThe State of Women-Owned Businesses: 2017,\u201d http:\/\/about.americanexpress.com, accessed February 2, 2018.[\/footnote]<\/p>\r\n

    Between 2007 and 2017, women-owned firms increased by 114 percent, compared to a 44 percent increase among all businesses. This means that growth rates for women-owned businesses are 2.5 times faster than the national average. Employment growth was also stronger than national rates. Women-owned businesses increased 27 percent over the past 20 years, while overall business employment has increased by 13 percent since 2007.[footnote]Ibid.[\/footnote]<\/p>\r\n

    These trends show that more workers are striking out on their own and earning money doing it. It has become very clear that encouraging small-business activity leads to continued strong overall economic growth.<\/p>\r\n\r\n<\/div>\r\n

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    Changing Demographics Create Entrepreneurial Diversity<\/h3>\r\n

    The mantra, \u201c60 is the new 40,\u201d describes today\u2019s Baby Boomers who indulge in much less knitting and golf in their retirement years. The AARP predicts that silver-haired entrepreneurs will continue to rise in the coming years. According to a recent study by the Kauffman Foundation<\/span>, Baby Boomers are twice as likely as Millennials to start a new business. In fact, close to 25 percent of all new entrepreneurs fall between the ages of 55 and 64.[footnote]Steve Strauss, \u201cBoomers\u2019 Role in Entrepreneurship Is, Well, Booming,\u201d USA Today, https:\/\/www.usatoday.com, August 25, 2017.[\/footnote] This has created a ripple effect in the way we work. Boomers have accelerated the growing acceptance of working from home, adding to the millions of U.S. workers already showing up to work in their slippers. In addition, the ongoing corporate brain drain could mean that small businesses will be able to tap into the expertise of seasoned free agents at less-than-corporate prices\u2014and that seniors themselves will become independent consultants to businesses of all sizes.[footnote]Scott Hanson, \u201cBaby Boomers Are Rewriting Retirement History,\u201d Kiplinger, https:\/\/www.kiplinger.com, January 3, 2018.[\/footnote]<\/p>\r\n

    The growing numbers of Baby Boomer entrepreneurs has prompted some forward-thinking companies to recognize business opportunities in technology. At one time there was a concern that the aging of the population would create a drag on the economy. Conventional wisdom says that the early parenthood years are the big spending years. As we age, we spend less and, because Boomers are such a big demographic group, this was going to create a long-term economic decline. Not true, it now appears. The Boomer generation has built sizable wealth, and they are not afraid to spend it to make their lives more comfortable.<\/p>\r\n

    Minorities are also adding to the entrepreneurial mix. As we saw in (Figure)<\/a><\/strong>, minority groups and women are increasing business ownership at a much faster rate than the national average, reflecting their confidence in the U.S. economy. These overwhelming increases in minority business ownership paralleled the demand for U.S. Small Business Administration loan products. Loans to minority business owners in fiscal year 2017 set a record\u2014more than $9.5 billion, or 31 percent, of SBA\u2019s total loan portfolio.[footnote]\u201cSBA Lending Activity in FY 2017 Shows Consistent Growth.\u201d[\/footnote]<\/p>\r\n

    The latest Kauffman Foundation<\/span> Index of Startup Activity found that immigrants and Latinos have swelled the growing numbers of self-employed Americans in recent years, increasing the diversity of the country\u2019s entrepreneurial class. Overall, minority-owned businesses increased 38 percent. The SBA notes that the number of Hispanic-owned businesses has increased more than 46 percent between 2007 and 2012.[footnote]Enter your footnote content hereSBA Office of Advocacy, \u201cAnnual Report of the Office of Economic Research: 2016,\u201d https:\/\/www.sba.gov, accessed February 2, 2018.[\/footnote]<\/p>\r\n\r\n

    \r\n\r\n[caption id=\"\" align=\"aligncenter\" width=\"640\"]\"An Exhibit 5.6\u00a0<\/strong>The popularity of home businesses such as Rodan+Fields, eBay, and other e-commerce sites has given rise to a new kind of entrepreneur: the \u201cmompreneur.\u201d Typically ex-corporate professionals, these web-driven women launch home businesses specializing in the sale of antiques, jewelry, thrift-store fashions, and other items. Aided by digital photography, wireless technology, and friendly postal workers, these savvy moms are one of the fastest-growing segments of entrepreneurs building successful businesses on the web. Why are many professional women leaving the workplace to start entrepreneurial ventures online? (Credit: Amanda nobles\/ Flickr\/ Attribution 2.0 Generic (CC BY 2.0))[\/caption]\r\n\r\n<\/div>\r\n<\/div>\r\n
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    How Far Will You Go to Get Rich?<\/h3>\r\n

    With enough intelligence and determination, people can get rich almost anywhere in the United States. Whether you own chains of dry cleaners in Queens, car dealerships in Chicago, or oil wells in West Texas, fortunes have been made in every state in the Union. There are some places, however, where the chances of creating wealth are much greater than others. That is the reason why people who hope to strike it rich move to places such as Manhattan or Palo Alto. It\u2019s not because the cost of living is low or the quality of life as a struggling entrepreneur is fun. Whether starting a software or soft-drink company, entrepreneurs tend to follow the money<\/p>\r\n

    But not all companies follow the herd. Guild Education, founded in 2015 by Rachel Carlson and Brittany Stich at Stanford University, left San Francisco due to the high cost of living that could slow down the company\u2019s growth. \u201cWe have a lot of women who are executives and department heads here, starting with myself and my cofounder,\u201d CEO Rachel Carlson said. \u201cSo when we left, we deliberately chose a place where you can have a family.\u201d[footnote]Lora Kolodny, \u201cThis Start-up Fled the High Cost of Silicon Valley to Help Non-Tech Workers Get an Education,\u201d CNBC, https:\/\/www.cnbc.com, September 6, 2017.[\/footnote] Guild Education\u2019s mission is to help large employers offer college education and tuition reimbursement as a benefit to the 64 million working-age adults who lack a college degree.<\/p>\r\n

    Since moving to Denver, Guild Education has raised another $21 million in venture capital, bringing the total funding to $31.5 million with a company valuation of $125 million.[footnote]Tamara Chuang, \u201c4 Silicon Valley Venture Firms Invest $21 Million in Denver\u2019s Guild Education,\u201d The Denver Post, https:\/\/www.denverpost.com, September 6, 2017.[\/footnote] The company headquarters in Denver is next door to a Montessori school and employs 58 employees. \u201cWe were joking that we\u2019re the polar opposite of Apple,\u201d said Carlson. \u201cRemember when the new \u2018mothership\u2019 came out? Every single parent noticed that it had a huge gym but not a day care.\u201d<\/p>\r\n

    According to PwC\u2019s quarterly venture capital study, \u201cMoneyTree Report,\u201d the top regions in the United States for venture-backed deals in the third quarter of 2017 were San Francisco ($4.1 billion), New York Metro ($4.2 billion), Silicon Valley (Bay Area $2.2 billion), and New England ($1.8 billion).[footnote]PwC\/CB Insights, \u201cMoneyTree Report Q3 2017,\u201d https:\/\/www.pwc.com, accessed February 2, 2018.[\/footnote]<\/p>\r\n

    In 2017, equity financing in U.S. start-ups rose for the third straight quarter, reaching $19 billion, according to the PwC\/CB Insights \u201cMoneyTree Report Q3 2017.\u201d \u201cFinancing was boosted by a large number of mega-rounds,\u201d says Tom Ciccolella, Partner, U.S. Ventures Leader at PwC.[footnote]Ibid.[\/footnote] Twenty-six mega-rounds of $100 million in companies such as WeWork, 23andMe, Fanatics, and NAUTO contributed to the strong activity levels in the first three quarters of 2017. The top five U.S. industry sectors with the most deals and funding were Internet, Healthcare, Mobile and Telecommunications, Software (Non-Internet\/Mobile), and Consumer Products.<\/p>\r\n\r\n

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    concept check<\/h3>\r\n
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    1. What significant trends are occurring in the small-business arena?<\/li>\r\n \t
    2. How is entrepreneurial diversity impacting small business and the economy?<\/li>\r\n \t
    3. How do ethics impact decision-making with small-business owners?<\/li>\r\n<\/ol>\r\n<\/div>\r\nSummary of Learning Outcomes<\/span>\r\n\r\n<\/div>\r\n<\/div>\r\n
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      1. What trends are shaping entrepreneurship and small-business ownership?<\/li>\r\n<\/ol>\r\n

        Changes in demographics, society, and technology are shaping the future of entrepreneurship and small business in America. More than ever, opportunities exist for entrepreneurs of all ages and backgrounds. The numbers of women and minority business owners continues to rise, and older entrepreneurs are changing the small-business landscape. Catering to the needs of an older population and a surge in web-based companies fuel continues technology growth. Entrepreneurs typically follow the money and set up shop in places where there is venture capital money easily available.<\/p>\r\n\r\n<\/div>\r\n

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        Preparing for Tomorrow\u2019s Workplace Skills<\/h3>\r\n
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        1. After working in software development with a major food company for 12 years, you are becoming impatient with corporate \u201cred tape\u201d (regulations and routines). You have an idea for a new snack product for nutrition-conscious consumers and are thinking of starting your own company. What entrepreneurial characteristics do you need to succeed? What other factors should you consider before quitting your job? Working with a partner, choose one to be the entrepreneurial employee and one to play the role of his or her current boss. Develop notes for a script. The employee will focus on why this is a good idea\u2014reasons he or she will succeed\u2014and the employer will play devil\u2019s advocate to convince him or her that staying on at the large company is a better idea. Then switch roles and repeat the discussion. (Information, Interpersonal)<\/li>\r\n \t
        2. What does it really take to become an entrepreneur? Find out by interviewing a local entrepreneur or researching an entrepreneur you\u2019ve read about in this chapter or in the business press. Get answers to the following questions, as well as any others you\u2019d like to ask:\r\n