The Herman Trend Alert
February 4, 2014
New Business Start-Ups Growing, Except in US
Now number 12 among developed nations for new business startups, the United States has fallen behind a number of other countries, including Hungary, Denmark, Finland, New Zealand, Sweden, Israel, and even financially troubled Italy. One of the most successful crowdfunding sites, OurCrowd.com, is only in the business of funding Israeli start-ups.
Though many countries of the world encourage entrepreneurship, entrepreneurs built the US. That's why we were surprised to learn in a recent Gallup report that "for the first time in 35 years, [US] business deaths now outnumber business births". The US Census Bureau reported that for the first time ever though 400,000 new businesses were founded last year, 470,000 were closed.
According to Jim Clifton, CEO of Gallup Polls, in the US "the root of the problem comes down to three issues: 1) difficulty of accessing capital (loans); 2) excessive and burdensome government regulations; and 3) an overall malaise about our economic future".
Entrepreneurship in Brazil and Mexico Fuels Start-Ups
Entrepreneurship is responsible for part of Brazil's economic development. The country's efforts to promote its culture of innovation and entrepreneurship promise to support that growth in the coming years. According Endeavor Brazil, an organization working to promote high-growth entrepreneurship in the country, young businesses play a crucial role in Brazil's economic and social future. Currently, small and medium size-enterprises (SMEs) are responsible for 96 percent of the jobs in Brazil and comprise 98 percent of all companies in the country.
In 2014, Mexico City was named one of the "world's best start-up hubs" by Virgin Entrepreneur magazine. Mexico is a very sociable country and that sociability extends into business dealings. Moreover, the Mexican people are very friendly and build relationships easily. In this country, money enables everything. Generally, salaries are low, so entrepreneurs can afford to employ good people to do whatever they need. Finally, a young vibrant economy offers many business opportunities.
Colleges and Universities Support Entrepreneurship
Universities worldwide play an important role in creating a country's entrepreneurial and innovation ecosphere. University-based incubator programs flourishing around the world at many colleges and universities. Ubiquity University, a new online university, that will serve students worldwide, will require every business student to engage in a startup.
What's Next for Business StartUps?
Expect Generation Z/The Homelanders to be even more entrepreneurial than their predecessors in Generation Y---The Millennials. Many of these new businesses will be in the service industry providing contractors to larger companies in a variety of different fields. Alternatively, they will carve out small local markets providing qualified, experienced contractors, like "Swimazing" in Austin, Texas that offers private swimming lessons for adults and children in private pools throughout the area.
Special thanks to Ted Daywalt for coverage of the US aspect of this important topic in the VetJobs Early Eagle.
Comments from our Readers
This is no surprise. However the root causes are highly subjective and not necessarily based on fact. Three more causes might be generational cohort size differences, the fact that the US economy is improving (empirical evidence that unemployment is a factor in business creation), and the poor performance of other economies causing more business creation.
Scott Russell
New York, New York
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