Not a bad showing considered something called "The Great Recession"was part of that decade.
The Ewing Kauffman Foundation is the nation’s leading support organization for all things entrepreneurial, including the tracking of data related to entrepreneurism and job creation. The foundation’s "Index of Entrepreneurial Activity"is a leading indicator of new business creation in the U.S. Data has been tracked for this report since 1996.
Statistics quoted in this article are from the report released in mid-March, which was compiled by Robert Fairlie, professor of economics at the University of California Santa Cruz.
The six states that sit atop the list ahead of Kentucky make the state’s placement even more impressive. Georgia, with the power of the city of Atlanta plus its coastal shipping ports, had the most activity followed by Las Vegas-fueled Nevada. Our neighbor to the south, Tennessee, ranked third, followed by Massachusetts, California and Texas rounding out the top six.
Another piece of statistical data making this news more encouraging is that Kentucky’s No. 7 position reflected a 60 percent increase in activity throughout the 10-year period. Worthy of note is that 4 percent of that growth came in 2009 and 2010 alone.
We’ll examine that number further in a moment.
So whom do we thank for such a surge in entrepreneurial activity in the Bluegrass state? Those who deserve mention would have to be the state’s visionaries in both the public and private sector who made small business support a priority. Counselors for groups such as the Small Business Develop Centers, SCORE, area development districts, and innovation and commercialization centers have worked to connect entrepreneurs to planning resources and applicable funding.
In 2007, a local think tank of civic and community leaders laid the foundation for EntrePaducah to become a reality.
Those concerned citizens took a hard look at what part of economic development lacked full-time support and proposed to local government that the organization become a full-service resource devoted entirely to small business and entrepreneurial startups.
While all of us could line up to take a bow in celebrating the positive outlook, I’ll be quick to say that all of us — the service providers as well as governments and the community — owe the greatest debt of gratitude to the entrepreneurs.
We should never allow ourselves to look at these brave, passionate, innovative men and women as just a statistic. Entrepreneurs want to control their own destiny, and all they ask in return is fairness and respect for the risks they’ve taken to help create jobs and make our community more livable.
More data within the Kauffman Index leads us to, sadly, thanking something else for at least some of the upward trend in entrepreneurism: The Great Recession.
Nationwide, 565,000 new businesses were started each month in 2010, representing the highest level over the past decade and a half. Researchers point to necessity as the reason.
"The recent upward trend in entrepreneurship rates contrasts with a recent downward trend in employer business creation,"the report says.
"These opposing trends may be due to the Great Recession and its high unemployment rates pushing many individuals into business ownership. These individuals probably were more likely to start sole proprietorships and other non-employer firms instead of starting more costly employer firms."EntrePaducah’s client statistics also reflected this trend in 2009. For most of the year our clients skewed toward mainly service-related sole proprietorships. Many clients reported having recently been laid off from long-time employers struggling to make ends meet. While we still see a small percentage of laid-off workers wanting to start businesses, the sense of urgency seems to have subsided.
Another recession-related finding reveals an unlikely demographic that led the pack in entrepreneurial activity: High school dropouts. Again, high post-recession unemployment rates appear to have been a catalyst in people seeking to create a job.
Population growth among various demographics resulted in increased numbers of startups.
"Over the past decade and a half, Latinos, Asians, immigrants and the oldest of the tracked age groups (ages 50-64) experienced rising shares of all new entrepreneurs, partly because of rising rates of entrepreneurship, but also because of increasing populations (within those sectors),"Kauffman researchers summarized.
In a seemingly contradictory trend, the construction industry had the highest rate of entrepreneurial activity of all major industry groups in 2010. One thought would be that recession-generated TARP funds resulted in increased construction opportunities.
Whether it’s forethought toward entrepreneurism or recessionary necessity, or a little of both, at least the outlook leans toward opportunity. Just three weeks ago, noted investor Warren Buffett made the most encouraging statement of the year as he announced plans to make major capital investments in U.S. projects.
"Money will always flow toward opportunity, and there is an abundance of that in America. Our best days lie ahead."
Terry Reeves is the concierge for EntrePaducah, a joint effort by Paducah and McCracken County governments, the Paducah Area Chamber of Commerce and Greater Paducah Economic Development Council to foster small-business growth. Contact him at 270-443-1746 or firstname.lastname@example.org.