National Value-Added Agriculture Conference
Here Comes the Entrepreneurial Generation!
Dr. Jeff Cornwall Belmont University
The Previous Entrepreneurial Era in America
• The last great period when entrepreneurs transformed the American economy was in the late 1800’s • In fact, most of the 1997 Fortune 200 were already among the largest corporations in 1917 • 197 of the 200 largest companies in America were started by entrepreneurs • Many of these entrepreneurs were first generation Americans
The Decline of the Previous Era
• The large corporations formed in the last great entrepreneurial era in America are no longer creating new jobs in significant numbers • Total employment by the Fortune 500 companies has dropped from 20% of US workforce in 1980, to about 7% in the late 1990s • Fortune 500 actually lost over 5 million jobs during the past 20 years
Emergence of the New Entrepreneurial Economy
• New business formation was about 200,000 per year in mid 1900’s • For 2005, Kauffman Foundation estimates new business formation at 464,000 per month • Over 500 new businesses will be formed during my talk today • Survival rates are now over 50% • Make up 50% of GDP
Emergence of the New Entrepreneurial Economy
• 99% of employers are small businesses • Entrepreneurs and small business owners are responsible for 77% of new jobs created in past twenty years • Over 50% of workforce now is employed in small businesses • 45% of total payroll comes from small businesses • Small businesses are 97 percent of America's exporters and produce 26 percent of all export value
The Entrepreneurial Generation
• Those born between 1977 and 2002 • More financially savvy – 37% already thinking and planning for retirement • Independent thinkers • Politically independent, but leaning toward libertarian • Concerned about our culture, society and economy • Alienated by corporate scandals
Government
Market Forces
Early 1900s - Free Market Approach
Government
Market Forces
Late 1900s - Activist Approach
A Third Approach….
• Favored by many in the entrepreneurial generation • Recognizes that markets are morally neutral • Without a sense of responsibility, markets can alienate society • Culture can provide a moral framework
Culture
Government
Market Forces
Values-based Approach
Public Policy Issues
Tax Policy • Margin tax rates matter • A business with only 20 or fewer employees spends over $1,200 per employee in tax compliance • 1.2 million paid tax preparers in the country -six times more than the number of troops in Iraq • Almost 600 different tax forms and over 60,000 pages of tax code
Public Policy Issues
Regulations • Level of regulation predicts entrepreneurial activity • firms with <20 employees spend $7,647 per employee compared with $5,282 in firms >500 employees • Small Business Compliance Assistance Enhancement Act of 2004 (States following federal lead) • Property rights enhances entrepreneurial activity, however, Kelo Decision weakened property rights
Impact of Education
• Can Entrepreneurs Be Taught? • Success rates increase to 80-90% with education and training
Who is the Entrepreneurial Generation?
• They are leading the way in our new economy • Creative and imaginative • Work-life balance really matters to them • Likely to be serial entrepreneurs • They are becoming your customers • They are becoming your competitors