Entrepreneurs succeed in keeping economies healthy for many reasons. One of their strongest qualities is that they aren’t afraid to innovate, re-invent, or flip the paradigm, while established firms are content with the status quo. Nonetheless, their success story isn’t always without its fair share of ups and downs.
Innovative Entrepreneurs Drive Economic Growth
Entrepreneurs like Netflix or Google founders will readily introduce radical products or game-changing processes to the market. Their innovations play a crucial role in stirring economic growth. In contrast, established businesses may deliberately lack interest in innovation to protect their existing successful products. Those with an entrepreneurial spirit don’t have this fear, as commercializing their fresh ideas is often in their best interests.
Pros and Cons of Entrepreneurship
Entrepreneurship brings the following benefits to the economy:
- Economic health and growth
- Challenges existing businesses to become more competitive
- Adds new short-term and long-term jobs
- Boost companies’ or economies’ productivity
- Entrepreneurs are flexible and adaptive to change (can introduce radical market and economic models)
On the other hand, some cons related to entrepreneurship include:
- The entrepreneurship drive is extremely rare
- High risk of failure, which may place a hefty financial burden on taxpayers
- May render established firms obsolete, sometimes causing massive layoffs
- Can’t thrive in a highly-regulated market
- Self-employment doesn’t always translate to significant entrepreneurship activity
Tips to Make the Economy More Entrepreneur-friendly
Entrepreneurship should get all the support it needs because it accounts for 20% of job creation. In 2020, startups in the U.S. created over 3 million new jobs. Here’s how to support entrepreneurs for job creation and economic growth:
- Socio-cultural change and education
A positive attitude toward innovation is necessary to encourage entrepreneurship. Entrepreneurs require a sustained spirit and determination to break ranks with long-standing business traditions and introduce new radical models. The required socio-cultural change should begin in school, wherein higher education levels tend to spur entrepreneurial activity. Society must also embrace the role that immigrants play in business. Statistically, immigrants are twice as likely as native-born Americans to own a startup.
- Access to business financing and subsidies
The lack of startup funds makes it difficult for young entrepreneurs to bring their ideas to fruition. Without banks deliberately lowering interest rates or easing their pre-qualification criteria for loans, many innovators wouldn’t go far with their brilliant ideas. Governments can chip in by backing startup loans with less strict requirements. Also, subsidies for new businesses can lower their market-entry cost.
- Supporting entrepreneurship
Both the private sector and public service can nurture entrepreneurs by encouraging intrapreneurship. With this system, organizations provide their self-driven employees with the resources needed to create products or processes. It creates a platform for employees to learn entrepreneurship without assuming the financial risk.
- Promotion of multilateral and bilateral trade deals
The U.S. has many trade agreements with partner countries. However, these aren’t necessarily obvious to most startup owners. Perhaps education and awareness programs about export markets available to U.S. businesses can help promote entrepreneurship. Access to international and regional markets with reduced trade barriers can help entrepreneurs grow their businesses and create more jobs.
Entrepreneurs Are the Backbone of Economic Health
The disruption entrepreneurs create in the market is good for better economic performance. With the right support and resources for entrepreneurs, you can turn your ideas into a thriving business that creates jobs and helps drive economic growth. Consult our experts at Economic Development Collaborative today for more business advice and inspiration!