Entrepreneurship

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Michigan Municipal LeagueMay 19, 2010

Dr. Barb Fails

Michigan Prosperity Initiative Partners

Economic Gardening

1987

City of Littleton, CO

Alternative to the traditional practice of recruiting firms

EG launched with simple concept that small, local firms were the source of jobs and wealth

The job of economic developers should be to create nurturing environments for these firms.

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Entrepreneur

French word; “to undertake”

Organizes, manages, and assumes the risks of a business or enterprise (Webster)

Creates or grows an enterprise (commercial or noncommercial)

Innovation; new idea, method, or product that creates and delivers customer value

Who are they? Can you identify the entrepreneurs in your community?

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An Entrepreneurial Spirit

“The entrepreneur is our visionary, the creator in each of us. We're born with that quality and it defines our lives as we respond to what we see, hear, feel, and experience.

It is developed, nurtured, and given space to flourish – or it is squelched, thwarted, and without air or stimulation it dies.

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Communities Ask

How do we create more jobs?Entrepreneurs are the primary engine of job creation – and wealth creation – within a community

Which entrepreneurs will succeed?Gazelles grow enterprises at 15%+/yr. for at least 5 yr. (3-5% of all)

Serial entrepreneurs excel at starting, growing, and selling enterprises (<1% of all)

Those who (at least initially) create most jobs are:

Start up enterprises (Kauffman Foundation)

Established firms, on average 25 years old, with sales over $1,000,000 (Zoltan Acs of George Mason University)

How can we predict winners from losers?We can’t! All start at the same place, stage one.

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In its first 5 years of existence, eBay hired 640 people – an average of 128 new people per year.

eBay – a New Economy sector

Kauffman Foundation 2010 State of Entrepreneurship Address:

1. Companies like this are vital to our economic recovery

2. Entrepreneurs are not easily discouraged; even in down economies, and perhaps because of them, they often take the E leap

3. As America ages, the pool of potential entrepreneurs only increases. The average age of company founders is 40.

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Entrepreneurial Pipeline

Nurture the entrepreneur next door

There are many entrepreneurial types, and all start at stage one

None of us can predict the next gazelle, or the “winners and losers”

The more people engaged in entrepreneurship, the greater the chance that successful enterprises will result

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Economic and Community Development

Does a healthy, vibrant community attract innovators and entrepreneurs? Emphasis on place (place

making)

Or, do innovative and entrepreneurial people create those healthy, vibrant communities? Emphasis on people

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How Entrepreneurial Are We?

Kauffman Foundation Index of Entrepreneurial Activity

2008 data (based on Current Population Survey data, collected by U.S. Bureau of the Census)Percent of population aged 20-64 who start a new business per month (at least 15 hr./week of business ownership as their main job)

Michigan rate 0.28% vs. National rate 0.32%In 2008, 28 new Michigan businesses started per 10,000

population of adults/month. Past 12 yr. average rate; Michigan 0.25% vs. National

0.29%

Regional indices:Midwest 0.23% Northeast 0.29%West 0.42% South 0.33%

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Who Is More Likely to Start a Business?

2008 data

% of adults starting a business each month

Gender Men 0.42

Women 0.24

Ethnicity White 0.31

Black 0.22

Latino 0.48

Asian 0.35

Nativity Native born 0.28

Immigrant 0.53

Age 20-34 0.26

35-44 0.35

45-54 0.35

55-64 0.36

Kauffman Foundation Entrepreneurial Index (2008)Kauffman Foundation Entrepreneurial Index (2008)

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Entrepreneurial Index Trends

Kauffman Foundation Entrepreneurial Index (2008)Kauffman Foundation Entrepreneurial Index (2008)

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Necessity Entrepreneurs – motivated by economics

Opportunity Entrepreneurs – opportunity motivated

College grads less entrepreneurial than high school drop outs (0.31% vs. 0.48%)

Immigrants increasingly more entrepreneurial, though primarily in low income potential businessesBoomers (aged 55-64) increasingly more entrepreneurial than younger populations

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Monitoring Entrepreneurial Activity

Establishments in counties or MSAsBy sector (per NAICS codes)By business stage (per number of employees)By commercial vs. noncommercialBy resident vs. nonresident (i.e. headquarters out of state)Jobs created by each

Economic trends (by sector, stage, commercial, residential, jobs)

Openings and closingsExpansions and contractionsIn-movement and out-movement

www.YourEconomy.org is a business census resource

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Establishments (2007)Establishments (2007) Jobs (2007)Jobs (2007)

Total 607,131

100%

Noncommercial 41,892 6.9%

Commercial 565,239

93.1%

Self employed 216,746

35.7%

Stage 1 (2-9 employees)

321,780

53.0%

Stage 2 (10-99 employees)

63,749 10.5%

Stages 3 & 4(over 100 employees)

4,857 0.8%

Total 5,277,000

100%

Noncommercial

722,949 13.7%

Commercial 4,554,051

86.3%

Self employed 274,404 5.2%

Stage 1 (2-9 employees)

1,303,419

24.7%

Stage 2 (10-99 employees)

1,889,282

35.8%

Stages 3 & 4(over 100 employees)

1,809,895

34.3%

Michigan Small Businesses

REF: www.YourEconomy.org (Edward Lowe Foundation) See by Michigan county.

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Entrepreneurial Communities

What do they look like?

How do they get there?

How long does community change take?

…the work of entrepreneurs

Detroit: Pure Michigan

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How Entrepreneurs Are Supported by Community

Entrepreneurial Development Systems (EDS) – or Ecosystems Integrated Collaborative Systems approach

Many community models of Entrepreneurial Development Systems

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Community-Driven Actions

Collaboration, optimism, tolerance, and inclusion

Long term view

Regional base

Global, innovative thinking

Asset based, heritage, culture

Investment in people and systems

Monitor entrepreneurial activity Teamwork

Photo: Issue Media Group

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Two Part Strategy for Communities

Develop a Pipeline of Entrepreneurs (people) Develop a Pipeline of Entrepreneurs (people)

Entrepreneurship social networks

Culture of entrepreneurship

Entrepreneurial activity creates enterprises.

Education (K-12) critically important

Build Systematic Support for Entrepreneurs (systems)Build Systematic Support for Entrepreneurs (systems)

Resources for business

PolicyDevelop the local/ regional infrastructure to support the system

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Social Networks

Entrepreneurship Clubs

Incubators

SCORE chapters

Mentors

Business networking organizations

Idea pitch events

“Third place” coffee shops

Social media connections

Young professionals

Faith based groups Photo: Issue Media Group

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Network: ICE (Innovation Club for Entrepreneurs)

Monthly meetup

Speaker draw

Referrals and resources

Affirming, motivating

Social and fun

Recruits and builds the E pipeline

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Culture of Entrepreneurship

Awards, celebrations, events

Media recognition, stories

Community attitudes, values – risk, failure

Supportive environment

Role models

Dynamic communities

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Photo: Michigan Tech

Entrepreneurial Culture: Role Models

Find the

possibility thinkers

Realize that you can have a significant and positive influence on just one person

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Resources Capital – start up and expansion, bridge loans, working capital

Equity investment capital

Educated workforce

Affordable real estate

Community heritage and cultural assets

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Resources: Green and Sustainable24

Infrastructure Support

High speed internet

Transportation

Business services

SBTDC programs

Education, training

Business resource centers

Information, market data

Public libraries

Public marketplaces

Community websites

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Infrastructure Support: Farmers Market

Andrew and family travel a considerable distance from the Quincy area every Saturday to join us on our prime market day. They offer an incredible array of fresh produce, direct in most cases from their farm, but also items from the larger Amish community …….

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PolicySmall business friendly

Minimize financial risk

Leverage and allocate community assets to support and encourage enterprise development

Buy local, independent businesses

Limit regulation for small business owners

Choose investments in “economic gardening” Photo: Pure Michigan, Kalamazoo

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Policy: Support for Libraries, School Programs

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Coaches and mentorsProfessional servicesInformationEducationWorkforceCapitalSpace

CEC Entrepreneurial Development Systems

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Faith and community based groupsE support professionals

Business groups“No wrong doors”

“Third places”Social media

E Clubs

Risk tolerantDiversity valuedMessages/ mediaWelcoming to allYouth engagementAwards and recognition

ZoningReportingIncentivesRegulation

Public policyPublic institutional support

Entrepreneurial Community Strategies

Entrepreneurial target focusEmphasis on heritage, clusters, and economic

development of community assetsRegionalismNew Economy positioning (talent retention, attraction)

Rural, urban, suburban, small town “placemaking” Community inventory assessment > identification of gapsStrategic planning and community engagementChampion and resource identification Infrastructure for team support

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MML 21c3 Assets; Entrepreneurship

Growing knowledge-based jobs in ones and twos creates sustainable economies in the 21st century.

Strategies that solely focus on seeking out large manufacturers and big box retailers overlook the positive impact that entrepreneurs and small businesses have on local communities.

It is critical to identify the characteristics entrepreneurs seek out in places where they want to start up and grow their businesses in order to harness the potential for economic growth that this vital sector brings to local communities.

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Pilot Community: Ypsilanti/eastern Washtenaw County

Phase I - Asset Mapping and Gap Analysis

Phase II - Facilitated community dialogue and strategic planning for programs and services

Phase III - Consulting support to advise on the execution of the strategic plan, development of assessment criteria

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Entrepreneurship is Pure Michigan

Barbara Fails, Ph.D., Associate DirectorMichigan State University307 Manly Miles BuildingEast Lansing, MI 48823fails@msu.edu 517-432-3287

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CEC Program Benefits

Community coaching services for 3 yearsTraining in Energizing Entrepreneurship (E2)

curriculum Access to resources among program partners

and other communities Community assessments for a solid

foundation to develop your entrepreneurial initiatives

Structured process with measurable benchmarks

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Application Steps

Form a team of 6 -10 community leaders who are committed to starting a new entrepreneurship program in your community

Submit a proposal describing your team composition, community culture, statement of purpose and community endorsement

Send completed application to MSU Land Policy Institute by June 30, 2010

Selections will be made by July 30, 2010

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