Best Practices

Who Are Your Entrepreneurs?

Published May 09, 2019 by Maria Meyers

Pencil eraser

 

Before you read any further, draw an entrepreneur. Go ahead. Grab a pencil and piece of paper and draw what an entrepreneur looks like.

Done? Alright. Save that and we’ll talk about it in a bit. Let’s focus on that word first.

Entrepreneur.

The word is problematic—and not just because of its linguistic challenges. Sure, it’s just as difficult to pronounce as it is to spell, but even more critically, the word historically has been exclusive and limiting. But it grabs headlines and attracts resources and funding: the word, today, gets our attention.

As well it should.

Because entrepreneurs matter. According to The Review of Economics and Statistics, “new businesses account for nearly all net new job creation and almost 20 percent of gross job creation.”

So first, let’s talk about who an “entrepreneur” is. When you hear that word, when you use that word, whom do you picture? Pull out that drawing. Who did you draw? Who didn’t you draw?

Maybe you envision a 20-something go-getter, a portrait of Silicon Valley tech entrepreneur. (The average age is actually 39.) Maybe your definition is a bit more geographically diverse and reaches up the coast, across the country and into other urban centers. Maybe it dips into the Midwest. (Yes, entrepreneurship happens everywhere.) And maybe it includes ag tech and animal health innovators in rural areas. Maybe you see other disruptive industries in the definition, beyond tech and biosciences. Health food. Transportation. Finance. Maybe your definition includes anyone, of any industry, race, gender or age, who has an idea, leads a startup, and wants to fail fast, scale fast, exit fast.

But does it stop there?

Does your definition only include the innovation-led entrepreneur? Those who disrupt a market with a breakthrough technology or service. Those who scale fast, fund fast and exit fast. Does it also allow for other types of entrepreneurs: microenterprises whose business often spin out of a hobby or passion or Main Streeters who define a city’s character with their brick-and-mortar storefronts? Is your definition willing to include anyone who wants to start a business?

Maybe it should.

Entrepreneurs matter—locally.

Because here’s the deal. We know (see stat above) that entrepreneurs create all net new jobs—but what’s their impact in your community?

According to We Create Jobs, a pilot report out of Kansas City that quantifies jobs created by startups at the metro level, KC startups with fewer than 20 employees created around 80,000 jobs between 2013 and 2017 (taking into consideration the number of employees hired as well as jobs losses), which accounts nearly 60 percent of jobs added to the Kansas City area. That’s more than half of all new jobs.

We Create Jobs was also able to report on the average salaries of the jobs created by startups and dispel myths that startups pay less than average. By year three, startups pay above average wages in the Kansas City region.

And here’s something that may surprise you: those jobs are created by a variety of industries, not just the tech sector, not just the traditional “innovation-led” entrepreneur.

Kansas City Startups by Industry

Source: We Create Jobs Report for Kansas City

Who are your entrepreneurs?

So what if we expanded our definition of entrepreneur? What if we gave as much spotlight and support to the microenterprise as we do the innovation-led entrepreneurs?

Consider these numbers. We know among U.S. businesses with fewer than 100 employees, just under 290,000 are classified as innovation-led, yet nearly 24 million are classified as microenterprises (sources: U.S. Census Bureau Data, 2013; Kauffman Foundation/ACS Survey, 2014; MERIC).

Four Types of Entrepreneurs

For those running the percentages, that means innovation-led entrepreneurs account for 1 percent of those companies with fewer than 100 employees while microenterprises account for 76 percent.

(Missouri ran these numbers statewide, too.)

Yet when you map the resources in your entrepreneurial community, ask yourself where they tend to cluster. When you follow the money, who does it tend to go to?  Do you focus the majority of your efforts on that 1 percent of the entrepreneurs in your basket? What would happen if we could help those 23 million businesses create one job, two jobs?

An entrepreneur said to me the other day that it’s like 2006 again. His sense was that venture capitalists will “throw money at anything. The entrepreneurs with good ideas and good valuations, they're going to be fine.”

What if we let those entrepreneurs do what they do and we focused on helping others develop entrepreneurial mindset and skills? What if we invited more people into our economy?

What would happen if we removed the barriers to entrepreneurship?

Entrepreneurs need infrastructure.

Those are a lot of what-ifs that we can think are worth pursuing. We don’t know the answers to all those questions, but we know the answers lie in creating an infrastructure to support all entrepreneurs—the doers, dreams, makers, side-hustlers, inventors and innovators.

Why? See jobs above.

But also recognize that companies that “grow up” in a community are more likely to stay and invest in that community. Endeavor Insight conducted surveys and interviews with 150 founders of fast-growing companies in the United States. This research, reported in What Do the Best Entrepreneurs Want in a City? (2015), found two things that founders valued above anything else: a pool of talented employees and access to customers and suppliers.  The report also noted that entrepreneurs of fast-growing firms based decisions about where to live on personal connections and quality of life factors, and few cited business-friendly regulations as reasons to start a business in a specific city.

Jobs, investment, talent recruitment, civic vibrancy, economic survival and economic growth: those are reasons to keep entrepreneurs. But how do you go about actually doing it?

Build an entrepreneurial infrastructure. Identify resources. Connect entrepreneurs. Empower collaborations to move the community forward. Then measure what you’ve done, see what works, decide what’s next.

Help entrepreneurs find ideas and make them real.

Building an infrastructure helps you move from helping people one at a time to creating a system that moves the entire community forward. It levels the playing field, making resources and opportunities more visible and accessible.

As people who want to support entrepreneurs, we can make it easier for them to make connections. We can make it easier for people starting businesses to find the right resources. We can simplify the process of getting permits or licenses. We can provide a continuum of programs to help entrepreneurs vet their ideas and grow their businesses. And we can help bring new pools of capital (case in point here and here) to the community.

So what can you do to take the first step?

Look around your community. Really look. Your community has organizations that are doing something to help people start and grow businesses. It may be a chapter of SCORE. It may be a business development center. It may be a university program. It may be a regional rural development center.

Think of those programs, those assets, as a bunch of Legos® blocks, without an assembly guide. If you start by attaching one Lego block to another, connecting one program to another in a deliberate continuum of services, you start to build something.

So back to that drawing . . .

(And thanks to Norris Krueger for the exercise.)

Who did you draw? Who would the business owner on the corner shop draw? Who would your kid draw? Who do they see in that opportunity?

Do you see yourself in the hope and future of entrepreneurship?

 


Maria Meyers, founder of SourceLink
Maria Meyers is the founder of SourceLink and executive director of the University Missouri-Kansas City Innovation Center. Maria’s approach has always been to first identify gaps, then inspire networks to create new programs, improve existing offerings and recruit outside support to meet the changing needs of the ecosystem.