Entrepreneurship As An Economic Development Strategy

Entrepreneurship as an Economic Development Strategy
Brian Dabson, Rural Policy Research Institute
University of Wisconsin Extension Center for Community & Economic Development Web Training Session March 14, 2008
Center for Community & Economic Development
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Todays Presenter Brian Dabson

President & CEO, Rural Policy Research Institute Research Professor, Harry S. Truman School of Public Affairs, University of Missouri Co-Director, RUPRI Center for Rural Entrepreneurship
Formerly, President, Corporation for Enterprise Development (CFED), Washington DC Managing Director, Center for Employment Initiatives (CEI), UK
What is an entrepreneur?
A person who organizes and manages a business undertaking, assuming the risk for the sake of the profit
RuralPolicyResearchInstitute
What is an entrepreneur?
Visionary entrepreneurs develop innovations, create jobs, and contribute to a more vibrant national and global economy
What is entrepreneurship?
Some Definitions
Entrepreneurspeople who create and grow enterprises Entrepreneurshipthe process through which entrepreneurs create and grow enterprises. Entrepreneurship development the infrastructure of public and private policies and practices that foster and support entrepreneurship.
BrianDabson:Entrepreneurship&Regional Development
Many types of entrepreneurs

Survival entrepreneurs resort to creating enterprises because there are few other options Lifestyle entrepreneurs choose self-employment to pursue personal goals Growth entrepreneurs motivated to grow their businesses to create wealth and jobs in their community Serial entrepreneurs over their lifetimes will create several businesses
BrianDabson:Entrepreneurship&Regional Development 8
By the Numbers
20 million microenterprises (0-4 employees) in the US (Aspen) Microenterprises represent >86% of total number of businesses (Aspen) 9% of Americans are entrepreneurs employing others; 60% of new business owners offer jobs to others (GEM)
RuralPolicyResearchInstitute 9
Althoughsmallandyoungfirmshaveonly amodesteconomicimpact
Davis,Haltwinger &Jarmin (2005)
pl oy
Em
No
n-
Em
pl o
Nonemployerfirms accountforonly4% of total businessrevenues Smallfirmsaccountfor 5% ofemployer businessrevenues Youngfirmsaccountfor 20% ofemployer businessrevenues
120 100 80 60 40 20 0
er ye r
Small Young Total
10
theyarelargeinnumber
pl oy
Em
N on
-E m
pl o
ye r
Of21millionfirms inUS, 76% arenonemployer firms 16millionsmallfirms (<$90K); 25%ofemployer firmsand95% ofnon employerfirmsaresmall 8millionyoungfirms (<4years);35% ofemployer firms,40% ofnonemployer firmsareyoung
100 90 80 70 60 50 40 30 20 10 0
er
Small Young Total
11
andtheyarecriticalto USbusinessdynamics
Firms
5% ofnonemployer firms(10%ofnon employerbusiness revenues)become employerfirmswithin3 years
750,000 businesses
Revenues
12
and many expect to grow

Autio, Hancock, (2005) 20+ employeeswithin5years 50+ employeeswithin5years
1in10
1in20
Startupsandnewlyformedbusinesses
More entrepreneurs means stronger economic growthnationally and

NationalEntrepreneurshipIndexandGDPGrowth
12
AverageGDPGrowth(2004to2006)
10 8
China India Russia
6 4 2 0 0 5 10
U.S.
15 20 25 30 35
TotalEntrepreneurshipActivityIndex(2003)
Source:GlobalEntrepreneurshipMonitor,2003andInternationalMonetaryFund BrianDabson:Entrepreneurship&Regional Development
14
atthecountylevel.
CountyEntrepreneurialGrowthandEmploymentGrowth
EmploymentGrowth(WageandSalary:19902004)
25 20 15 10 5 0 -5 -10 -15 -10 -5 0 5 10 15 20

CountyProprietorGrowth(19701990)
CalculationsbasedonBEA,RegionalEconomicInformationSystemdata BrianDabson:Entrepreneurship&Regional Development 15
Policy Goals
More entrepreneurs
Increase the numbers
Stronger entrepreneurs
Increase the survival rate
More high growth entrepreneurs

Increase the number that create jobs and wealth
16
Program Goals
More entrepreneurs in the pipeline More entrepreneurs staying in their community Better informed entrepreneurs Better skilled entrepreneurs More job creating entrepreneurs Greater business productivity
Key Concepts
Pipeline:
Infrastructure of lifelong learning never too early or too late to be an entrepreneur Creating a large, diverse pool of people with many motivations out of which flow a steady stream of high achievers
18
Key Concepts
Seamless systems:
Focus on graduating significant numbers of start-ups into companies that offer quality jobs Coordinates multiplicity of programs tailors them to meet diverse needs of entrepreneurs Comprehensive, flexible, culturally sensitive, integrated, collaborative
19
Key Components
Pipelines
Entrepreneurship education Entrepreneurship networks
Systems
Access to training and technical assistance Access to equity and debt capital
20
EntrepreneurshipDevelopment
Entrepreneurship Education
Training & TA
ED
Access to Debt & Equity Capital
Supportive Environment
Entrepreneur Networks
21
Entre-ed and youth development critical part of any rural economic development strategy
Population retention, leadership development, economic growth Elementary through high school and postsecondary
22
Elementary through high school
Vocational tracks DECA, FFA, BPA Junior Achievement NCEE/Economics America REAL NFTE Kauffman Foundation/Mini-Society/4-H Boys & Girls Clubs
23
Community colleges & universities
National Association of Community College Entrepreneurship USDA Regional Rural Development Centers/RCCI Lifelong Learning for Entrepreneurship Professionals Kauffman Collegiate Entrepreneurship Network
24
Access to Capital
Debt Capital
Commercial banking system CDFIs
Equity Capital
National SBICs, NMVCCs, NMTC, Angel Capital Electronics Network State KY Rural Innovation Act, IA Capital Investment Tax Credit Private Kentucky Highlands, RAIN (MN)
25
Training & Technical Assistance

Wide range of services:
Small Business Development Centers SCORE Business incubators Regional development organizations RC&D Councils Extension services Microenterprise development organizations
26
Entrepreneurship Networks
Essential as links to sources of capital, new employees, strategic alliance partners, service providers, information & intelligence on markets and technology Initiatives incubators, business-tobusiness websites, buyers groups
Economic Development
Attraction
Persuading companies to come to your community
Retention
Looking after what you already have
Entrepreneurship
Growing your own jobs and wealth
28
Rebuilding the Economic Development Pyramid

Recruitment
Entrepreneurship
Retention
Retention
Recruitment
Entrepreneurship
MEDCNovember14,2007
29
Strategic Thinking
Attraction Competition
Narrow-mindedness
Retention
Resistance to change
Collaboration Stewardship Creativity & Innovation
Entrepreneurship
Unprincipled individualism

May16,2005
30
The new economic development?

Economic Development Administration
To lead the federal economic development agenda by promoting innovation and competitiveness, preparing Americas regions for growth and success in the worldwide economy. Support long-term coordinated and collaborative regional economic development approaches Support innovation and competitiveness Encourage entrepreneurship
31
The new economic development?

US Department of Agriculture
Rural Development Rural Collaborative Investment Program (Farm Bill)
Provide rural regions with incentives, resources to develop and implement comprehensive strategies for regional competitiveness, innovation, prosperity Foster multi-sector community and economic development collaborations based on asset-based competitive advantages of rural regions innovation, entrepreneurship, quality jobs Foster collaborations to provide professional technical expertise, institutional capacity, economies of scale Leverage private, nonprofit and philanthropic investments
32
Regional Competitiveness
Economic regions are basic unit of global competitiveness (Michael Porter) Innovation and entrepreneurship in a regional context are the engines of job creation, growth, prosperity (SACI Committee) Creativity is what distinguishes successful regions in new economy (Richard Florida)
Regional Competitiveness
Council on Competitiveness
Sustained productivity growth regional prosperity = Converting assets into intellectual capital, added value; exploitation of location, natural resources, low cost labor Depends on productivity of all industries and assets; productivity based on continuous innovation Entrepreneurs through innovation turn assets into productivity growth
34
Entrepreneurial Response
Create climate and culture in which entrepreneurs and entrepreneurship can flourish 3 organizing principles:
Community-driven Regionally-orientated Entrepreneur-focused
#1 Community-driven
Communities provide immediate environment heavily influences entrepreneurial success Communities need tools, resources to identify/build upon assets, make choices, learn, innovate All sectors of community should be invited/expected to contribute
36
#2 Regionally-oriented
Political jurisdictions have no economic rationale; few have resources to match opportunity/need; regional cooperative an imperative Arbitrary distinctions between urban & rural interests mask issues of common concern, prevent regional solutions Entrepreneurs need access to regional economic drivers
#3 Entrepreneur-focused
Entrepreneurship development efforts ineffective when programmatic and uncoordinated Most programs fail to differentiate between entrepreneurs with different education, skills, motivation (L&L) Requires systems thinking
38
The Kellogg/CFED project

Entrepreneurship Development Systems for Rural America 4 goals:
Reinforce/enhance existing promising ED systems Gather and share effective practices Stimulate national and state interest in rural entrepreneurship Encourage/reward thinking & action around systems development & collaboration
Six Finalists
Hometown Competitiveness, NE Advantage Valley EDS, WV/OH/KY North Carolinas Rural Outreach Collaborative Oweesta Collaborative, SD/WY Connecting Oregons Rural Entrepreneurs (CORE) Northern New Mexico EDS
Three EDS Lessons

Commitment, creativity, and resourcefulness across rural America Key principles systems, customer focus, regionalism, inclusiveness, effectiveness accepted and embraced Collaboration shows the way for rural America
41
Extension & Entrepreneurship

20% of submissions led by universities, usually Extension or SBDCs; majority included Extension as partner Potential as enterprise facilitator On-ground link to university resources markets, market research, technical assistance, student interns Local/regional networker & broker
42
For more information visit: Rural Policy Research Institute (RUPRI) www.rupri.org RUPRI Center for Rural Entrepreneurship www.ruraleship.org
Next session
May 9, 2008, 10:00 - 11:00 A.M., C.T.
Sustainable Development - Is It Going Mainstream? UW-Superior/Extension Associate Professor Jerry Hembd explores the emerging topic of sustainable development. What challenges and lessons does it offer to those of us working to enhance our communities? What does it suggest in terms of new ways of doing business? Join in as Jerry shares his research on the sustainable development movement and how we might employ key elements in our community development efforts.
44
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Entrepreneurship as an Economic Development Strategy

Brian Dabson, Rural Policy Research Institute

Todays Presenter Brian Dabson

Center for Community & Economic Development

Center for Community & Economic Development

Center for Community & Economic Development

Many types of entrepreneurs

Small Young Total

Small Young Total

5% ofnonemployer firms(10%ofnon employerbusiness revenues)become employerfirmswithin3 years

and many expect to grow

Center for Community & Economic Development

More entrepreneurs means stronger economic growthnationally and

China India Russia

25 20 15 10 5 0 -5 -10 -15 -10 -5 0 5 10 15 20

More high growth entrepreneurs

Center for Community & Economic Development

Center for Community & Economic Development

Center for Community & Economic Development

Access to Debt & Equity Capital

Center for Community & Economic Development

Training & Technical Assistance

Center for Community & Economic Development

Center for Community & Economic Development

Rebuilding the Economic Development Pyramid

Center for Community & Economic Development

Collaboration Stewardship Creativity & Innovation

Center for Community & Economic Development

The new economic development?

Center for Community & Economic Development

The new economic development?

The Kellogg/CFED project

Three EDS Lessons

Extension & Entrepreneurship

This archive will remain for two weeks on the web

Center for Community & Economic Development

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