Entrepreneurs are the backbone of the U.S. economy. Entrepreneurship is what makes everything about modern life possible. It is the reason why the U.S. has remained the world’s only superpower since the Soviet Union collapsed.
Every business is born from an entrepreneurial endeavor. The objective of this is to convert a skill, product, or idea into income. Business is the vehicle that makes it possible. Entrepreneurs take an idea and convert it to cash flow by building or buying a business. If everything goes right, the business will grow and give back to the founders, employees, investors and the government.
Business and entrepreneurs are what make everything happen in the U.S. It is the reason why there are 10 lettuce options, thousands of shows on TV and the ability to buy anything on the internet and ship to any destination.
As entrepreneurship has suffered over the last several years, so has the U.S. economy. Entrepreneurship must continue to grow in order to sustain all the U.S. has accomplished.
Small business is the most common result of entrepreneurship. Small business is technically defined by the Small Business Administration (SBA) by either revenue or employee count, and it varies by industry. Small businesses can be anything from the self-employed housekeeper to a small corporation that employs several hundred and makes millions annually.
All in all, small business accounts for approximately 50 percent of all jobs in the U.S. That is a lot of paychecks cashed every week. This means that half of the employed are working in small businesses founded by at least one entrepreneur. Families are provided for, the government gets steady cash flow from payroll deductions, and employees stimulate the economy by spending their paychecks. Some even break away and become entrepreneurs themselves.
It is a beautifully efficient circle of life. The entrepreneur builds the business with the help of employees. Employees and the founder make money, which they in turn spend, save, or invest — all of which stimulate the economy in one way or another.
The definition of entrepreneur is “one who organizes, manages, and assumes the risks or a business or enterprise” according to Merriam-Webster dictionary.
What makes a person decide to assume the risk? Necessity, ambition, dreams and confidence are the key drivers of entrepreneurship. Typically the first inspiration is necessity. Whether it is a necessity in the market or necessity to get out of a bad job, all entrepreneurs start by deciding there is a necessity to take a risk. Then it is up to the ambition, dreams and confidence to carry the entrepreneur through the challenge of building a business.
Business, specifically small business, has been the primary driver of the U.S. economy for generations. Over the last 13 years, small business has experienced changes that threaten the long-term prosperity of the U.S. economy.
The number of startups (businesses less than 1 year old) has dropped by approximately 150,000 since 2001.
Job creation in startups has dropped by over 200,000 annually since 2001
Firms with less than 250 employees are employing less than 48 percent of all private sector employees. In 1993, these businesses were employing nearly 51 percent.
It means that fewer people are deciding to take the risk and start a business. As a result there are less new jobs in new businesses. This means that people are looking to large employers for secure jobs in increasing numbers, which is reducing the pool of would-be entrepreneurs. Small business is shrinking while larger businesses are growing.
These trends correlate with the stagnation of the economy. The average income of the American worker has remained virtually unchanged since 2001, yet costs for everything have gone up substantially. If entrepreneurs were encouraged by availability of funding and reward for their efforts, this would not be the case.
The only way to ensure the long-term prosperity of the U.S. economy is to encourage entrepreneurship on all levels. Reducing self-employment taxes, simplifying tax code, and offering incentive for small businesses to hire employees would go a long way towards encourage entrepreneurship. The fate of the U.S. hinges on our ability to address these deeply rooted challenges.
Abhipraya Subedi is a professional, adjunct professor, doctoral candidate and adult mentor in the Fairfax County Public School System. You can contact him at firstname.lastname@example.org.