Odds officially against startups

Here’s a sobering statistic from Gallup: Since 2008, more businesses have been dying annually in the

Here’s a sobering statistic from Gallup: Since 2008, more businesses have been dying annually in the U.S. than have been forming.

In real numbers, it’s about 400,000 formations a year to 470,000 closings/failures, says Gallup, basing its figures on 2011 Census Bureau data, the latest available.

The company, which offers business consulting in addition to its better-known public polling, says the number of new “employer businesses” — those with at least one worker — had been on a slow decline for about 30 years. Still, they outpaced businesses that closed or failed.

That changed in 2008, though, when the number of startups dropped below the number of closings.

Others have seen the inversion, too, but no one is sure yet why it’s occurring. A drop in personal savings rates? A new aversion to risk? A lasting hangover from the Great Recession?

I shared the numbers with Beth Coco, who said she found them troubling — until she contrasted them with the budding entrepreneurs she sees at the University at Albany.

Coco is an entrepreneur herself. She founded MicroKnowledge, a computer and software training firm in Latham, while in her 20s. She grew it for two decades, coaxed it through a couple of bad mergers, then sold it 10 years ago to two employees.

Today, Coco is entrepreneur-in-residence at UAlbany, a job she took in 2013 to encourage entrepreneurship across the campus. She works with faculty and students on specific business ideas and helps professors interested in making curriculum more experiential and hands-on.

The goal, she says, is to “stimulate a culture of creativity.”

Early on, she brought together students interested in establishing an entrepreneurs’ organization — not a campus-funded club — where they were encouraged to write a mission statement and plan activities. The work was akin to setting up a business.

This academic year, she helped launch a living-learning community focused on creativity and entrepreneurship — a group of dorm rooms where like-minded freshmen live and study.

“A lot of these students want to be part of a team … they want to make a difference,” she says of the UAlbany students she encounters.

Some will start businesses when they graduate or will already have founded one while still in school.

“I’m an optimist,” she says. “I’m very encouraged.”

As should the folks at Gallup be. CEO Jim Clifton fretted about the business birth-death rate in a piece published last month, seeing the numbers as a threat to America’s free-enterprise system.

He thought policymakers were wrongly focused on innovation as the engine for job growth, writing that “an innovation is worthless until an entrepreneur creates a business model for it.”

“[W]e need to start focusing on the almighty entrepreneurs and business builders,” he added. “And that means we have to find them.”

College campuses seem a good place to start.

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]

Categories: Uncategorized

Leave a Reply