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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Center for Community & Economic Development

Today’s 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
Center for Community & Economic Development

What is an entrepreneur?
A person who organizes and manages a business undertaking, assuming the risk for the sake of the profit

Center for Community & Economic Development

Rural Policy Research Institute

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What is an entrepreneur? Visionary entrepreneurs develop innovations. and contribute to a more vibrant national and global economy Center for Community & Economic Development Rural Policy Research Institute 5 . create jobs.

What is entrepreneurship? Center for Community & Economic Development Rural Policy Research Institute 6 .

Center for Community & Economic Development Brian Dabson: Entrepreneurship & Regional  Development 7 .Some Definitions • Entrepreneurs…people who create and grow enterprises • Entrepreneurship…the process through which entrepreneurs create and grow enterprises. • Entrepreneurship development… the infrastructure of public and private policies and practices that foster and support entrepreneurship.

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 Center for Community & Economic Development Brian Dabson: Entrepreneurship & Regional  Development 8 .

60% of new business owners offer jobs to others (GEM) Center for Community & Economic Development Rural Policy Research Institute 9 .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.

Although small and young firms have only  a modest economic impact… Davis. Haltwinger & Jarmin (2005) pl oy Em Brian Dabson: Entrepreneurship & Regional  Development No n- Em pl o • Non‐employer firms  account for only 4% of  total business revenues • Small firms account for  5% of employer  business revenues • Young firms account for  20% of employer  business revenues 120 100 80 60 40 20 0 er ye r Small Young Total 10 .

 40% of non‐employer  firms are young 100 90 80 70 60 50 40 30 20 10 0 er Small Young Total 11 .  76% are non‐employer  firms • 16 million small firms (<$90K). 35% of employer  firms.…they are large in number… Davis. 25% of employer  firms and 95% of non‐ employer firms are small • 8 million young firms  (<4 years). Haltwinger & Jarmin (2005) pl oy Em Brian Dabson: Entrepreneurship & Regional  Development N on -E m pl o ye r • Of 21 million firms in US.

 Haltwinger & Jarmin (2005) Firms • 5% of non‐employer  firms (10% of non‐ employer business  revenues) become  employer firms within 3  years • 750.000 businesses Revenues Brian Dabson: Entrepreneurship & Regional  Development 12 .…and they are critical to  US business dynamics… Davis.

Hancock. (2005) 20+ employees within 5 years 50+ employees within 5 years 1 in 10 1 in 20 Center for Community & Economic Development Start‐ups and newly‐formed businesses Brian Dabson: Entrepreneurship & Regional  Development 13 .…and many expect to grow Autio.

 2003 and International Monetary Fund Brian Dabson: Entrepreneurship & Regional  Development 14 .More entrepreneurs means stronger economic growth…nationally and… National Entrepreneurship Index and GDP Growth 12 Average GDP Growth (2004 to 2006) 10 8 China India Russia 6 4 2 0 0 5 10 U. 15 20 25 30 35 Total Entrepreneurship Activity Index (2003) Center for Community & Economic Development Source: Global Entrepreneurship Monitor.S.

 Regional Economic Information System data Brian Dabson: Entrepreneurship & Regional  Development 15 . County Entrepreneurial Growth and Employment Growth Employment Growth (Wage and Salary: 1990‐2004) 25 20 15 10 5 0 -5 -10 -15 -10 -5 0 5 10 15 20 County Proprietor Growth (1970‐1990) Calculations based on BEA.…at the county level.

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 Center for Community & Economic Development Brian Dabson: Entrepreneurship & Regional  Development 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 Center for Community & Economic Development Brian Dabson: Entrepreneurship & Regional  Development 17 .

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 Center for Community & Economic Development Rural Policy Research Institute 18 .

flexible. culturally sensitive. integrated. collaborative Center for Community & Economic Development Rural Policy Research Institute 19 .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.

Key Components • Pipelines – Entrepreneurship education – Entrepreneurship networks • Systems – Access to training and technical assistance – Access to equity and debt capital Center for Community & Economic Development Rural Policy Research Institute 20 .

Entrepreneurship Development Entrepreneurship Education Training & TA ED Access to Debt & Equity Capital Supportive Environment Entrepreneur Networks Brian Dabson: Entrepreneurship & Regional  Development 21 .

Entrepreneurship Education • Entre-ed and youth development critical part of any rural economic development strategy – Population retention. economic growth – Elementary through high school and postsecondary Center for Community & Economic Development Rural Policy Research Institute 22 . leadership development.

BPA – Junior Achievement – NCEE/Economics America – REAL – NFTE – Kauffman Foundation/Mini-Society/4-H – Boys & Girls Clubs Center for Community & Economic Development Rural Policy Research Institute 23 . FFA.Entrepreneurship Education • Elementary through high school – Vocational tracks – DECA.

Entrepreneurship Education • Community colleges & universities – National Association of Community College Entrepreneurship – USDA Regional Rural Development Centers/RCCI – Lifelong Learning for Entrepreneurship Professionals – Kauffman Collegiate Entrepreneurship Network Center for Community & Economic Development Rural Policy Research Institute 24 .

RAIN (MN) Center for Community & Economic Development Rural Policy Research Institute 25 . NMVCCs. IA Capital Investment Tax Credit – Private – Kentucky Highlands.Access to Capital • Debt Capital – Commercial banking system – CDFIs • Equity Capital – National – SBICs. Angel Capital Electronics Network – State – KY Rural Innovation Act. NMTC.

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 Center for Community & Economic Development Rural Policy Research Institute 26 .

Entrepreneurship Networks • Essential as links to sources of capital. business-tobusiness websites. buyers’ groups Center for Community & Economic Development Rural Policy Research Institute 27 . information & intelligence on markets and technology • Initiatives – incubators. new employees. service providers. strategic alliance partners.

Economic Development • Attraction – Persuading companies to come to your community • Retention – Looking after what you already have • Entrepreneurship – Growing your own jobs and wealth Center for Community & Economic Development Rural Policy Research Institute 28 .

Rebuilding the Economic Development Pyramid Recruitment Entrepreneurship Retention Retention Recruitment Entrepreneurship Center for Community & Economic Development MEDC November 14. 2007 29 .

 2005 Rural Policy Research Institute 30 .Strategic Thinking Attraction Competition Narrow-mindedness Retention Resistance to change Collaboration Stewardship Creativity & Innovation Entrepreneurship Unprincipled individualism Center for Community & Economic Development May 16.

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

resources to develop and implement comprehensive strategies for regional competitiveness. entrepreneurship.The new economic development? • US Department of Agriculture • Rural Development – Rural Collaborative Investment Program (Farm Bill) – Provide rural regions with incentives. institutional capacity. quality jobs – Foster collaborations to provide professional technical expertise. nonprofit and philanthropic investments Center for Community & Economic Development Brian Dabson: Entrepreneurship & Regional  Development 32 . economies of scale – Leverage private. prosperity – Foster multi-sector community and economic development collaborations based on asset-based competitive advantages of rural regions – innovation. innovation.

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. prosperity (SACI Committee) • Creativity is what distinguishes successful regions in new economy (Richard Florida) Center for Community & Economic Development Brian Dabson: Entrepreneurship & Regional  Development 33 . growth.

productivity based on continuous innovation – Entrepreneurs through innovation turn assets into productivity growth Center for Community & Economic Development Brian Dabson: Entrepreneurship & Regional  Development 34 . natural resources. ≠ exploitation of location. added value.Regional Competitiveness • Council on Competitiveness – Δ Sustained productivity growth Δ regional prosperity – = Converting assets into intellectual capital. low cost labor – Depends on productivity of all industries and assets.

Entrepreneurial Response • Create climate and culture in which entrepreneurs and entrepreneurship can flourish • 3 organizing principles: – Community-driven – Regionally-orientated – Entrepreneur-focused Center for Community & Economic Development Rural Policy Research Institute 35 .

resources to identify/build upon assets. learn. make choices. innovate • All sectors of community should be invited/expected to contribute Center for Community & Economic Development Rural Policy Research Institute 36 .#1 Community-driven • Communities provide immediate environment – heavily influences entrepreneurial success • Communities need tools.

#2 Regionally-oriented • Political jurisdictions have no economic rationale. prevent regional solutions • Entrepreneurs need access to regional economic drivers Center for Community & Economic Development Rural Policy Research Institute 37 . few have resources to match opportunity/need. regional cooperative an imperative • Arbitrary distinctions between urban & rural interests mask issues of common concern.

#3 Entrepreneur-focused • Entrepreneurship development efforts ineffective when programmatic and uncoordinated • Most programs fail to differentiate between entrepreneurs with different education. motivation (L&L) • Requires systems thinking Center for Community & Economic Development Rural Policy Research Institute 38 . skills.

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 Center for Community & Economic Development Rural Policy Research Institute 39 .

NE • Advantage Valley EDS.Six Finalists • Hometown Competitiveness. WV/OH/KY • North Carolina’s Rural Outreach Collaborative • Oweesta Collaborative. SD/WY • Connecting Oregon’s Rural Entrepreneurs (CORE) • Northern New Mexico EDS Center for Community & Economic Development Rural Policy Research Institute 40 .

customer focus. regionalism. inclusiveness. effectiveness – accepted and embraced • Collaboration shows the way for rural America Center for Community & Economic Development Rural Policy Research Institute 41 . creativity.Three EDS Lessons • Commitment. and resourcefulness across rural America • Key principles – systems.

student interns • Local/regional networker & broker Center for Community & Economic Development Rural Policy Research Institute 42 . usually Extension or SBDCs. market research. majority included Extension as partner • Potential as enterprise facilitator • On-ground link to university resources – markets.Extension & Entrepreneurship • 20% of submissions led by universities. technical assistance.

For more information visit: Rural Policy Research Institute (RUPRI) www.org Center for Community & Economic Development Rural Policy Research Institute 43 .ruraleship.org RUPRI Center for Rural Entrepreneurship www.rupri.

C. 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. 10:00 .Next session May 9.Is It Going Mainstream? UW-Superior/Extension Associate Professor Jerry Hembd explores the emerging topic of “sustainable development. Center for Community & Economic Development 44 .T.11:00 A.M. 2008.

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