Entrepreneurs not only provide us with critical innovation and keep us at the forefront of global markets, they also create ways to gain financial independence. So why has the percentage of start-ups in the U.S. dropped significantly in the last 35 years? This is particularly worrisome in light of the healthy state of the stock market and the many new ways to raise capital. Without the impetus of more business formation, how will we ever lift up the 40 million people currently living below the poverty line?
Overall, I think there are three factors contributing to the decline of entrepreneurship. For starters, the slow recovery of the economy and stagnant wage levels have caused widespread risk aversion, especially among millennials. With a trillion dollars of college debt weighing them down, they seek the security of a paycheck, even if the pay is low. While a majority (55%) hopes to start a business one day, their dreams remain on hold.
A second reason for the decline is the lack of an early introduction to the possibilities and benefits of starting a business. For the last several years, the emphasis has been mainly on postsecondary education. University and community college programs in entrepreneurship have proliferated. Top academic schools like MIT now offer courses such as "Entrepreneurial Finance" and "The Nuts and Bolts of New Ventures/Business Plans." At the University of Maryland, students can select from more than a hundred courses geared toward starting a business. And at the #1-rated Santa Barbara City College, an entire academic center is devoted to entrepreneurship and innovation. There's even an organization called the National Association for Community College Entrepreneurship (NACCE), which brings entrepreneurial programs at the community college level together to try and link traditional roles of workforce development with entrepreneurial development.
Encouraging as this is, however, it is only part of the solution. The standard high school curriculum these days has been stripped of vocational education, and very few schools offer courses on economic literacy or opportunities for business internships where hands-on experiences can be gained. To really grow and help evolve the next generation of entrepreneurs with today's market conditions, we must first inspire and engage students at a younger age.
One shining light is the Network For Teaching Entrepreneurship (NFTE). Founded in 1987, this organization has now worked with over 500,000 inner-city high school students, helping them develop an entrepreneurial outlook and "...discover that what they are learning in the classroom is relevant to the real world." The impact of NFTE has been impressive. An independent study in 2013 found that its alumni are self-employed at twice the national average. This is why I recently pledged 100,000 digital copies of my latest book, "The Evolution of an Entrepreneur," to high schools working with NFTE. My hope is that my personal experience and proven methods will inspire their students, as I believe NFTE is truly an important catalyst for change with our youth. I know firsthand what it's like to rise up from impoverished conditions. I grew up on the streets of New York during the Great Depression and it was tough. It was through hands-on experiences that I first became inspired as I learned how to spot opportunities that helped me discover a path out of poverty toward success; entrepreneurship became my ticket to get ahead in life.
The third factor for the decline of new start-ups involves the content of most business textbooks. Their approach, based on my experience, gives too much emphasis to details and procedures and not enough on how to think in the moment and how to take advantage of opportunities that occur as conditions change. Likewise, not enough attention is given to the value of motivation and the psychology of risk-taking. Overall, educators need to better prepare young people to expect the unexpected in a world where technology grows exponentially and market as well as consumer demands change frequently.
A generation ago, no one would have predicted that Eastman Kodak would file for bankruptcy. Apparently, the company could not compete in digital photography, yet this iconic business giant invented the core technology used in digital cameras. Inexplicably, its leaders never reset their business plans to incorporate this important element which was right there staring them in the face.
Additionally, I believe textbooks tend to underplay the importance of mentors and the key role of their support. From my own experience, I can say that the extra boost of timely advice can be invaluable. Sometimes just a few hundred dollars more per month can make the difference between despair and a sustainable business.
Ultimately, successful entrepreneurship requires inspiration. Even in China, the opportunity for an entrepreneur is unlimited. Witness a mediocre student who could not get a job and was broke in 1999. Jack Ma started a company called Ali Baba which this year became the biggest IPO in the world and made its founder over $1 billion. Jack Ma reminds us that there are no boundaries to imagination.
For over seven decades I thoroughly enjoyed creating, building, and operating a dozen different companies in the United States, Asia, and Europe. Now, at age 91, sharing my experiences and good fortune with the next generation of entrepreneurs is my life's purpose. With the help of several experts, I have created a website designed to provide resources to teach, advise, inform and inspire. I realize that my spoken words have a short life. The words that I have put in writing, on video, and in my books can be useful to all who seek the independence and income that comes with being a successful entrepreneur.
I am grateful for the technology that exists today that enables me to directly communicate with readers from anywhere in the world. I recently developed an "Ask Jack" section devoted to entrepreneurs seeking answers to specific questions that may not be addressed in my latest book. It's an honor and a privilege to continue serving this country by encouraging and assisting as much new business formation as possible. I welcome any comments you have that will help the budding entrepreneur. It is important that we strengthen the middle class and encourage entrepreneurs as much as possible because they truly make a difference. Let's all do what we can to turn the start-up statistics around.
Jack Nadel is the author of the award-winning book, "The Evolution of an Entrepreneur: Featuring 50 of My Best Tips for Surviving and Thriving in Business" - winner of five Global Ebook Awards including three Gold Awards for BEST in Business, Leadership and Careers/Employment - part of the inspiring e-book and streaming video learning set for entrepreneurs, available on-demand online (www.JackNadel.com). He is the founder and chairman emeritus of Jack Nadel International, a global leader in the specialty advertising and marketing industry. Jack, a hall of fame entrepreneur, has founded more than a dozen companies worldwide, and is also the author of other books, including, "There's No Business Like Your Bu$iness," "How to Succeed in Business Without Lying, Cheating or Stealing," "Cracking the Global Market," and "My Enemy, My Friend."