Tracking Business Dynamism and Entrepreneurship in Your Community ERIK R. PAGES, PH.D. ENTREWORKS CONSULTING DDAA PROFESSIONAL DEVELOPMENT SEMINAR CHARLESTON, WV JULY 31, 2019
Tracking Business Dynamism and Entrepreneurship in Your
Community
ERIK R. PAGES, PH.D.ENTREWORKS CONSULTING
DDAA PROFESSIONAL DEVELOPMENT SEMINARCHARLESTON, WV
JULY 31, 2019
• The Basics (1): What is a Small Business? Who is an Entrepreneur?
• The Basics (2): The Role of the Eco-System
• Building the Eco-System: What are Seeking to Do?
• What Data Can We Track?
• How Can We Track It?
• Exercise: A Quick Local Ecosystem Snapshot
Today’s Presentation
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Who is the Entrepreneur?
• A person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk
• A key driver in our economy
• Entrepreneurs and their ventures account for majority of net new jobs and innovations
• A dynamic force for change
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•Self-Employed: Account for vast majority of new
businesses
•Lifestyle Business: Goal is self-employment—often
refers to family-
owned business (“Mom & Pop”)
•High Growth Entrepreneur: Seeks fast growth for
company
Entrepreneurial Businesses: Types of Firms
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Employers vs. Non-Employers
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• All firms start small, most remain small
• Most start with limited capital
• Few Firms enter the high-growth entrepreneurial phase
• 1-5% of all firms depending on definition
• As firm grows, needs and goals evolve
• Transition from desire for independence/economic well-being to building a world-class company
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Entrepreneurs vs. Small Business
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• As firms grow, needs change
• Equity vs. Debt Capital
• Intense need for Talent
• New Business Models Emerge
• Sophisticated Coaching/Mentoring
• Fast-growth firms exist in all sectors
• Small Businesses tend to concentrate in service and retail
Entrepreneurs vs. Small Business (2)
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Small Business vs. Entrepreneur Policy
• Quantity
• Firms
• Self-Employment/ SMEs
• Support
• Quality
• Individuals
• High Growth Firms
• Enable
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• Small Business Policy • Entrepreneur Policy
• Business Attraction (“The Buffalo Hunt”)
• Traditional ED Role
• Business Retention
• Business Growth
• Our Topic Today!!
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Supporting Entreprneurs: Rethinking Economic Development’s Three-Legged Stool
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Creating Jobs: What are We Trying to Do?
START: Spur New E's
INFORM: Train "Better"
E's
GROW: Build "Better"
Businesses
PROSPER: Create
Wealth & Jobs
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What’s the Goal? Innovation Ecosystems: Pick A Model. . .
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Ecosystems as Pathways
The Big Picture: Keys to Ecosystem Building
• Entrepreneur Focused: Meeting entrepreneurs where they are; responsive to their demand
• Pipeline Approach: Wide and deep mouth of the pipeline; Process for moving through the pipeline
• Not Another Program: Holistic; interconnected
• Collaboration among Resource Providers: Offers “no wrong door” and leads to “hard referrals”
• Hub: Someone making Connections; “Network Weaver”
• Regionally Asset-Based: Connected to Community and Regional Assets
(Source: Deborah Markley, RUPRI Center for Rural Entrepreneurship)July 2019 14
• Supportive Community Culture
• Easy Access to Technical Assistance & Training
• Capital
• Access to Talent
• Access to Networks
Inside the Ecosystem: What Do Entrepreneurs Need?
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• Effective entrepreneurship support helps:
• INVEST: Provide diverse sources of capital
• SPUR AMBITION: Grow More Ambitious Entrepreneurs
• LINK: Provide Networks and Linkages to Growth Opportunities
• GROOM: Develop more local talent—as entrepreneurs and as employees.
How to Get There . . . .
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The Kauffman Policy Map
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Turning to Data and Analysis . . . • It’s tough to track innovation and
entrepreneurship
• Data is old and hard to access
• Data sources for local level are limited
• Plus . . .
• Issues of Attribution
• Issues of Timing
• Issues of Impact
• Limited Prospects for Dialogue
• Will Policymakers “get” a complicated story?
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What do Current Measures Assess?
• Seek to Assess:
• Business Dynamism
• Investment Inputs
• Ideas & Innovation
• Quality Human Capital & Productivity
• Digital Connectivity
• Cost of Doing Business
• Idiosyncratic Issues
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Some Sample Sources for Data
• Business Dynamism
• www.youreconomy.org
• INC. 5000: https://www.inc.com/inc5000/index.html
• Investment Inputs
• PWC MoneyTree: https://www.pwc.com/us/en/industries/technology/moneytree.html
• ACA HALO Report: https://angelresourceinstitute.org/
• Ideas and Innovation
• U.S. Patent and Trademark Office (http://patft.uspto.gov)
• NSF Indicators: https://www.nsf.gov/statistics/2018/nsb20181/
• University Tech Transfer: www.autm.net
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More Sample Sources• Quality Human Capital/Talent
• Education Attainment: US Census Bureau
• https://www.census.gov/topics/education/educational-attainment.html
• NSF STEM Education: https://nsf.gov/nsb/sei/edTool/
• Tech Employment (CompTIA): https://www.cyberstates.org/
• Digital Connectivity
• Fixed Broadband: https://broadbandmap.fcc.gov/#/
• Mobile Broadband: https://broadbandmap.fcc.gov/#/
• Cost of Doing Business
• Tax Foundation: https://taxfoundation.org/publications/state-business-tax-climate-index/
• US Chamber-State Legal Climate: https://www.instituteforlegalreform.com/states
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DIY: Building Your Own Data Sources
• Quantitative Data alone is insufficient
• Especially at Local Level
• Build your own sources of local data?
• Surveys
• Focus Groups
• Use this information to supplement outside/hard data
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Other Tools and Resources
• Stats America (Innovation 2.0): http://www.statsamerica.org/ii2/Default.aspx
• Kauffman Index of Entrepreneurial Activity: https://indicators.kauffman.org/
• Milken Institute Best Performing Cities: https://www.milkeninstitute.org/reports/best-performing-cities-2018-where-americas-jobs-are-created
• Community Indicators Consortium: https://communityindicators.net/
• World Bank: www.doingbusiness.org
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Some Excellent State/Local Reports and Studies
• Silicon Valley Index: https://jointventure.org/publications/silicon-valley-index
• Illinois Innovation Index: https://www.istcoalition.org/data/index/
• Michigan Entrepreneurship Scorecard: https://www.sbam.org/Portals/0/ScoreCard2019_FINALforWeb_1.pdf
• NC Rural Center: https://www.ncruralcenter.org/wp-content/uploads/2019/05/RC-1910_Small-Business-Dynamism_5-7.pdf
• Walton Foundation-”Most Dynamic Micropolitans:” https://www.waltonfamilyfoundation.org/learning/most-dynamic-micropolitans
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Business Dynamism: A Deeper Dive
POTENTIAL METRICS
• START
• Number of new business starts
• INFORM
• Number of trainees
• GROW
• Average Firm Growth
• PROSPER
• Jobs Created by New Firms
OUR LOGIC MODEL
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http://arceco.creconline.org
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Data Dashboard• Startups: Tracks new
establishments, i.e. companies that reported employment in 2016 and/or 2017, but not earlier. This label intends to capture startup companies with at least 1 year of activity.
• Stage 2 Businesses: This category uses a classification scheme first developed by the Edward Lowe Foundation. Stage 2 firms are those establishments that employ anywhere from 10 to 99 people.
• High Growth Businesses: Refers to establishments that have 3 or more employees in 2013 and their employment grew by 75% or more between 2013 and 2017.
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Our Exercise
• Select a County for Analysis (www.arc.gov/ecosystems)
• Ecosystem Snapshot: Key Questions
• How is County Performing on Key Metrics?
• How does it Compare to Others?
• Does the Resource Inventory Add any Insights?
• How Would You Interpret the Results?
• What’s Missing?
• What Else Would You Like to Know?
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Additional Reading
• David Audretsch: Everything in its Place: Entrepreneurship and the Strategic Management of Cities, Regions and States (2015)
• Steve Blank and Bob Dorf, The Start-Up Owner’s Manual, 2012.
• Brad Feld, Start-Up Communities, 2012.
• Victor Hwang and Greg Horowitt, The Rain Forest: The Secret to Building the Next Silicon Valley, 2013.
• Kauffman Foundation, Ecosystem Playbook, 2019.
• Maria Meyers/Kate Hodel, Beyond Collisions: How to Build your Entrepreneurial Infrastructure, 2018.
• Erik R. Pages et. al., Entrepreneurial Ecosystems in Appalachia, 2019. (www.arc.gov/ecosystems)
• Eric Ries, The Lean Start-Up, 2012.
• Center for Rural Entrepreneurship, Energizing Entrepreneurial Communities, 2014.
• Michael Shuman, The Small-Mart Revolution (2009).
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Thanks!!
• For More Information:
Erik R. Pages
EntreWorks Consulting
703-237-2506
• www.entreworks.net
• www.entreworks.net/blog
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Back Up Slides: As Needed
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1) Local is Good
• More Jobs
• Less Poverty
2) Smaller is Better
• Small Firms > Large Firms
And it’s about Home-Grown Innovators: Small & Local is Good!
Source: Atlanta Fed (Rupasingha, 2013)
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That’s Where the Jobs Are!
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How to Get Entrepreneurial and Inclusive!
• The Ingredients
• Self-Belief
• Access to Ideas
• Relevant Skills
• A Playing Field for Innovators
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Rethinking Economic Development: “People are the New Companies”
What Do Entrepreneurs Want? Key Location Factors
FOR CORPORATE LEADERS FOR HIGH-GROWTH ENTREPRENEURS
• Highway Accessibility
• Labor Costs
• Access to Skilled Labor
• Quality of Life
• Tax Exemptions
• Occupancy/Construction Costs
• Proximity to Major Markets
• Corporate Tax Range
• State/Local Incentives
• Available Land
• Source: Area Development, Corporate Executive Survey, 2018.
• Personal Factors & Quality of Life
• Residence Location is Key Factor
• Access to Talent
• Access to Customers & Suppliers
• Tax Burden or Biz-Friendly Regulations Rarely Cited
• Source: Endeavor Insight, “What Do the Best Entrepreneurs Want in a City?” February 2014.
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