The U.S. doesn’t need a new economic engine. It already has one: entrepreneurship. It’s just that we aren’t getting the mileage out of it that we could.
Small businesses are instrumental to the U.S. economy. They employ 50 percent of all private-sector workers and create more than 60 percent of new jobs. The proof is present; entrepreneurs and small-business owners can revive the economy but they need more than just capital.
As we look to help entrepreneurs lead the recovery, we need to increase resources and implement strategic initiatives to make entrepreneurship more accessible. Here are three ways for the federal government to build an infrastructure and a national campaign to spur entrepreneurship.
First, we need to reduce the financial risk for recent college graduates to start businesses. As an educator who teaches innovation, I know that the reason most of our best and brightest don’t pursue their startup ideas isn’t that they lack the knowledge, talent or access to venture capital; rather, they forgo their dreams to pay down their student loans.
Some have suggested that people should drop out of school and start business, holding up the model of some well-known success stories. Those are outliers. Most college dropouts don’t achieve the success of Bill Gates.
Instead, we should put in place incentives for college graduates to start businesses. For every job they create beyond their own, they should earn credit to use against their student loans. This will increase the motivation to start businesses.
Second, we need to develop a pipeline of highly skilled labor, creating “talent incubators” where the government can train people in high-growth industries, such as technology.
A similar approach has been followed by Israel, where military personnel are trained for combat but also learn and develop skills in computer programming. This has been an effective pillar of the country’s innovation strategy and has helped make it one of the world’s most advanced innovation and research-and-development centers.
Finally, we need to find a large group of willing and able high-potential entrepreneurs who can mentor the next generation. Many ideas, good intentions and venture dollars have been lost because people repeat the same mistakes.
Just as in 1961, when our nation responded to a different challenge by creating the Peace Corps, we could now create a Startup Corps for America. This group would provide the vital mentoring and coaching needed to help entrepreneurs avoid common mistakes and develop business models that create new wealth. In addition, it would offer assistance such as reduced cost services and facilities; talent scouting and recruiting; proof-of-concept opportunities; distribution and capital. It could complement existing efforts by the Startup America Partnership led by the Case Foundation and the Kauffman Foundation.
Fostering and investing in small businesses and high-potential entrepreneurs would give the U.S. a much better chance of a turnaround.
(Andrew Razeghi, a professor of marketing at the Kellogg School of Management, Northwestern University, is a contributor to Business Class. The opinions expressed are his own.)
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