It’s the week that we celebrate small business, but something about it is bittersweet for me. Business owners are expressing more confidence in the economy. Small businesses are creating jobs. And we are even getting credit from Federal Reserve Chair Janet Yellen who said it was our small businesses that powered our recovery after the Great Recession. A recent Gallop Poll showed that the trend is positive for current small business owners.
But the news is not as rosy as it might appear. Despite this overall vast improvement in outlook from existing small-business owners, we are facing a significant dearth of new start-ups. As our friends at Gallup point out, the rate of new firm births is being outpaced by firm deaths. Specifically, according to Gallup, 400,000 new businesses are being born annually nationwide, while 470,000 per year are dying. They go on to report that until 2008, startups outpaced business failures by about 100,000 per year. But in the past six years, that number suddenly turned upside down.
This is especially troubling for me because it seems like there are more and more Centers for Entrepreneurship at universities, seminars for start-up businesses and inventor’s networks. It certainly appears like there is a lot of support. So what is happening to discourage would-be small business owners? And, what is the reason for firm deaths?
There are lots of reasons that businesses close their doors. The owners are not well equipped to manage the business. Competition gets the better of them. They don’t adapt. They are simply tired and have not planned an exit so they close the doors. The list goes on and on.
The question of declining start-ups is harder to explain. I think that many still don’t believe that there has been enough improvement in the economy and are concerned about long-term stability. Small businesses need the environment to grow and create jobs: economic stability; predictability, fairness and transparency in taxes and health care costs; common-sense regulations that don’t unfairly disadvantage small firms; and lawmakers willing to tackle the major issues facing our country, and to do so together. Right now, many potential business owners are taking a wait and see attitude before making the leap. Maybe they will be inspired by the theme of National Small Business Week which is “Dream Big. Start Small.”
If you want to find out more about the celebration go to email@example.com
You can also join the conversation at #DreamSmallBiz
To all my fellow business owners enjoy National Small Business Week, you deserve it. And, I hope many others will join us and experience what it is like to own and run a small business.