Earlier this year, The Kauffman Foundation released their 2017 State of Entrepreneurship report that revealed the three megatrends shaping the future for entrepreneurs. If you haven’t read the report yet, let’s get you up to speed on what those three trends are and how they are defined.
- New Demographics: Currently, the U.S. population is aging and becoming more racially diverse. However, despite evidence of these growing statistics, the changes have not been reflected as of yet in the nation’s entrepreneurial population. U.S. entrepreneurs now are 80.2% white and 64.5% male, which is not representative of our population.
- New Map: Silicon Valley and Boston aren’t the only start-up cities in town. Now more than ever before, entrepreneurial hubs are being created throughout the country with even more venture capital being distributed.
- New Nature: Thanks to technology, starting up and scaling a business is a totally different process than the one previous generations experienced with more industries and opportunities open and available to entrepreneurs of all ages.
Now that we know what these trends are, what does this mean for the entrepreneurial landscape? What can we expect to (potentially) see in the future? According to the report, here’s what the long term impacts could mean for small businesses and their owners.
Gaps in Demographic Representation Cost Jobs
While demographic changes for entrepreneurs are always exciting and welcome to see, they also cost the country more than you might realize. Most of this has to do with the fact that there are gaps in the market from the underrepresentation of certain demographic groups. As noted in the report, the quickest way to close the gap would be to have minorities start and own businesses at the same rate as non-minorities. This would give the economy an additional 9.5 million jobs and 1 million more employer businesses in the United States.
What about our aging entrepreneurs? Their population also affects the entrepreneur pipeline and the overall enthusiasm for becoming an entrepreneur in the United States. Luckily, a 2016 study from Wells Fargo on millennial small business owners doesn’t want you to worry that being your own boss is a fad. Millennials who run their own businesses are fully committed to being their own boss, with 80 percent planning to grow their businesses for years to come and 59 percent on track to pass their companies down to their children in the future.
Rural Business is in Decline Versus Urban Areas
It appears that even mom and pop shops are saying “see ya” to rural areas in favor of opening up their doors in urban ones. What happened — or is happening — to the rural business landscape? While forty years ago it was much more commonplace for a startup to be in a rural area, the population has since become more urban. And you don’t have to be on the East or West Coast for it either. Startups are now finding a boom in cities like St. Louis and Memphis where more sectors are promoting entrepreneurship and providing startup financing to hungry small business owners. However, keep in mind that this boom is not evenly spread throughout the country either. Rural areas and small towns still have a chance — but they’ll have to work hard for it.
We’re (Literally) in a New World
Here’s a shortlist of industries that earn millions today that did not exist within our cultural landscape 10 years ago: rideshares like Uber and Lyft, travel rentals like Airbnb, news media companies like BuzzFeed, and subscription box services like Loot Crate, Dollar Shave Club, and Stitch Fix. Each industry is innovative and solves a problem for consumers with technology at the root of their success.
Technology has forever altered how startups are established as well as how companies scale in revenue and jobs. The study notes that when Kodak reached its first $1 billion in sales, 75,000 were employed at the time. This contrasts sharply with Facebook, which employed 6,300 once it reached the same scale. Entrepreneurs are also turning to opportunities with lower barriers to entry, such as establishing businesses via platforms like Etsy or becoming bloggers, which allow them to work anywhere and generate a steady stream of revenue.
Yes, the landscape is changing, but some aspects of entrepreneurship will never change. Companies that create jobs, wealth and innovation will always be in demand, along with a passion for doing work that genuinely excites and interests both consumers around you and yourself.