How important is small business and entrepreneurship to economic development? Sure, every community loves the “big get” – the major project that brings millions of dollars in new investment and hundreds of new jobs.
But the reality is that small companies and entrepreneurs create a bulk of the job opportunities. That’s why everyone from demographer Joel Kotkin to economist Richard Florida spends a lot of time talking about entrepreneurship as an engine for job creation and the importance of drawing and keeping entrepreneurial talent.
Dr. Deborah Markley, managing director of the RUPRI Center for Rural Entrepreneurship in Chapel Hill, NC makes a persuasive case for job growth in rural areas tied to a strategy of cultivating homegrown entrepreneurial companies. Markley argues that the there is a finite amount of large job-generating relocation projects that communities can compete for, so creating strategies to build entrepreneurial companies should be a part of every community’s economic development plan, especially rural communities.
A couple of new rankings out this week highlight the importance of small business.
Scott Thomas, the demographer extradordinaire for bizjournals.com, has a new comparative ranking for the best cities for small business that crunches such stats as five-year population growth, five- and one-year private-sector employment growth and concentration of small businesses per 1,000 residents. His top five: Austin, Raleigh, Oklahoma City, Houston and Salt Lake City.
And the latest Kauffman Index of Entrepreneurial Activity, is out, a much-studied barometer of innovation. According to the index, which measures new business creation in the United States, the top five states for entrepreneurial activity in 2011 were: Arizona, Texas, California, Colorado and Alaska.
A number of communities and states are putting formal programs in place to encourage small business development and create more favorable environments for entrepreneurship.
In Kentucky, a new program provides small businesses with a solution to a challenge for all small companies – access to capital. The initiative opens access to nearly $155 million in new loans to help Kentucky small businesses with job creation.
Tennessee has placed entrepreneurship front and center in its economic development strategy. The INCITE program – for innovation coordination, commercialization, investment, technology and entrepreneurship – was launched in 2011 to support innovation across the state. The initiative includes financing support for next-stage companies, initiatives designed to help move new products and technologies from the research lab to the marketplace faster and regional economic development strategic planning to leverage the unique assets of each region.
In February, South Carolina debuted the Small Business Network, a web hub of information and resources to help small business owners and entrepreneurs grow or establish their companies. SCBizNetwork.com offers a variety of tools including new market information, business financing options, export services and workforce development and regulatory information designed to aid small business owners and entrepreneurs in the state.
What all of these programs share are linkages to a gamut of resources that small businesses and fledgling companies need – from networking and mentoring to capital access strategies to marketing and sales advice.
The reason is simple: Creating homegrown jobs and investment is more efficient than going out and recruiting new ones. Tennessee, for one, notes that 86 percent of the new jobs created in the state in 2010 came from existing business.
What role does small business play is your community’s economic development strategy? How important is entrepreneurship in driving innovation and new jobs? What do you see as the key components in creating a winning environment for entrepreneurial success? Share your thoughts with us.