A Line at the Door
In the mid 1980s when I worked for Price Waterhouse, we used to help start-up companies prepare business plans and implement processes and systems to support their financing and growth. It seemed there were many start-ups all over the country and especially in the “Silicon Forest” here in Portland. We had the proverbial line at the door of companies asking for our help.
Do today’s would-be entrepreneurs lack an appetite for risk?
Recently, I was watching a business news channel and the commentator mentioned that surveys show entrepreneurial start-ups in the US were at a 30 year low.
What happened?
Some would suggest the current recession has hurt a lot. While I’m sure it has, there were deep recessions in the 70s and 80s that didn’t seem to have the same effect. Others say that excessive government regulation has hurt. Again, I agree that regulation has put a damper on business start-ups, but I don’t think regulation fully explains the extent of the downturn. Still others suggest that September 11th changed the business environment literally overnight. That could also be true.
Risk and Reward
I think there has been an underlying change in our culture. Many entrepreneurial companies in the 80s and 90s were started by people in their 20s and 30s who had a drive for new ideas and were willing to take risks. It seems the youth of today don’t have that same drive and willingness to take risk. Certainly some do, but many more are looking for that perfect job that pays well and supports a low risk lifestyle.
Is that what has happened to the entrepreneurial spirit in this country? Can it be reawakened? What do you think?
© 2012 – Rick Pay – All Rights Reserved
I think it’s misguided to assume the change in the rate of US startups is somehow mostly a generational issue. There are certainly other factors including US education, policy on foreign workers in the US, portability of housing, available investment capital or small business loans, and US patent/IP laws that have impacted the startup climate since this 80’s. As a nation we pride ourselves on innovation, yet what are we (Americans of all ages) doing to foster a business climate that incentivizes (and rewards!) the individual who takes great risks to launch something new and unproven? Overtaxing small business owners is hardly an incentive. The argument of age equaling risk adversity also applies just as easily to an individual in the latter years of their career being unwilling to forgo the safety of their job, benefits, retirement package, etc. to break out on their own and create new companies which leverage their experience/ideas.
Hi Tom and thanks for your comments:
Some of what you list are policy and regulation issues which I agree have a great impact on the business environment. However, during the Carter administration and even during the Johnson administration, regulations and business climate (i.e., interest rates over 20%) certainly depressed entrepreneurial endeavors. But today it is even lower. I agree that education plays a big part, but that is part of what makes this generation this generation. I also agree with the late career risk aversion, but many (might I say most) entrepreneurial endeavors are not started by late career people.
More comments would be most welcome as I am truly curious what people think.
Rick