You may have heard that entrepreneurship is in trouble, but the facts don’t support this assertion. A recent Boston Globe article noted that increasingly large numbers of people are successfully running their own businesses. Approximately 500,000 new businesses are launched each and every year.
When those numbers are viewed in a different light, it becomes clear that entrepreneurship is doing very well. Half a million new businesses mean that roughly 10% of the workforce is either starting a small business or working for one that is less than 3 ½ years old. Perhaps the best news of all, is that these new businesses are also creating a large number of new jobs.
From Where Does Seed Capital Originate?
Considering that so many new businesses are started every year one has to wonder as to where the funding originates. The simple fact is that most people don’t have the funds necessary to start their own business. Bank loans and SBA funding are not available to most people, and a mere 7% of new or prospective business owners receive venture capital funds. How does the bulk of this army of new business owners fund their businesses?
There are several ways that business owners are funding their businesses. It is quite common for new small business owners to use credit cards and take out second mortgages to fund their new business endeavors. The Boston Globe article noted that in the last few years more than 80% of Inc. Magazine’s “Fast 1000 companies” had been started with roughly $50,000 or even less.
New Companies Boost the Economy
The article also outlined the great importance for seed capital as well as additional funding form both public and private sources. Considering the number of jobs that small business owners are generating every year, this only makes sense. As the Boston Globe article recommends, new sources of funding should be made available to these new small business owners. Additionally, this article serves to underscore the tremendous importance and role that small businesses play in the overall health and well-being of the nation’s economy and the global economy.
With a truly whopping 80% of the Inc. Magazine’s Fast 1000 coming from small businesses started with less than $50,000, can we afford to continue to largely ignore the needs of small businesses?
The fact that so many small businesses are initially funded with credit cards and second mortgages is a testament to just how strong the entrepreneurial spirit is in the United States. So forget what you’ve heard, entrepreneurship is doing quite well.