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The Start-Up Collapse

05/08/2014

bussiness-failureStarting-up a new business is downright tough.

Morphing an idea or a hobby into a business is filled with distractions and opportunities to fail. Bootstrapping or fund-raising both have their challenges. Finding good people to work for little or no compensation is not easy. Keeping your own morale high in light of huge odds can be daunting.

Well, apparently it’s gotten a whole lot tougher for start-ups in recent years.

The Brookings Institution, which looked at the rates of new business creation and destruction since 1978, has concluded that the American economy is less entrepreneurial now than at any point in the last three decades.

Not only that, but during the most recent three years of the study — 2009, 2010 and 2011 — businesses were collapsing faster than they were being formed, a first. Overall, new businesses creation (measured as the share of all businesses less than one year old) declined by about half from 1978 to 2011.

entrepreneurs

I will avoid politically commentary here in spite of my desire to do so. The numbers speak for themselves.

The authors state that if the decline persists, “it implies a continuation of slow growth for the indefinite future.” This lack of economic dynamism, particularly the steep drop since 2006, may be one reason why our current recovery has felt like much less than a recovery. Lending credence to their statement all one has to do is look at the annual job growth rates which have stubbornly refused to budge above 2% for the duration of the recovery.

Between slow job growth rates and the demise of new business creation – we’re in a funk. Economically and emotionally.

I’m ready for a change. I hope you are too.

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2 Comments leave one →
  1. Juetta West permalink
    05/08/2014 4:25 pm

    Well Mr. Rusch you may be correct on “Start Ups” failing—-but if we never take a chance at a reasonable approach and try, what will happen to this great country called America!?

    • 05/08/2014 5:40 pm

      Don’t shoot the messenger, JW! I believe you know I am a believer in start-ups. That’s why I find the findings of this research discouraging and pathetic. The entrepreneurial flame may be flickering but it will never go completely out.

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