Why Fewer Americans Are Starting New Businesses
Senior Editor, CNBC
So who qualifies to be an entrepreneur these days? Is it as simple as plugging in your PC?
Lauren Berger is a 28-year-old college graduate who runs her own web site InternQueen.com. Business Week Magazine once named her number five on its annual list of Young Entrepreneurs aged 25 or under.
Set up in 2009, Berger's site helps students find and apply for internships with major firms.
"I was excited about my business but I didn't have the financial resources," says Berger, who operates out of her Los Angeles home and lists herself as CEO.
"I eventually had $5,000 saved and used that. I didn't get a lot of support," Berger explains.
She gets her revenue from advertising and companies listing internships, while college students have free access to postings. She's just taken on a full-time worker and says she makes more than six figures but supplements her income.
"I am a top college speaker, I have a book coming out, and I do endorsement deals," adds Berger. "I'm focusing on expanding my reach."
For Jeff Platt, CEO of Sky Zone Indoor Trampoline Park, his reach now includes three theme parks, nine full-time managers, and some 100 or so part time workers, as well as several franchised parks.
But getting up and running wasn't easy. The 28-year-old started his business from Los Angeles in 2004 with his father, and used funds from family and friends, after graduating from business school.
"We had to create the product organically. We had some growing pains," Platt says. "We had to learn how to operate and promote our parks through trial and error."
Platt typically takes over industrial buildings for his parks and often faces issues over zoning laws.
"It's not so much the taxes I pay, but the regulations on zoning have been a huge challenge," Platt says. "It takes a significant amount of time and money, but we get through them."
Despite the difficulties, Platt say revenues from 2011 were $15.7 million—up from $3.4 million in 2010.
"My advice to anyone starting a business is surround yourself with people smarter than you," Platt adds.
The current business atmosphere needs to improve
Whether there are fewer entrepreneurs in the U.S. than officially counted, it's clear to some experts that the current atmosphere must improve. But agreement on change seems as difficult as counting small business owners.
"Government at all levels can do more to support entrepreneurs and innovators," says Christine Janseen-Selvadurai. "They should provide incentives and tax breaks, not hurdles and unnecessary rules."
"I'm not sure the government has to or can do more than they already do," argues Jeff Stark. "What there is, is a lack of appetite from investors to continue to fund struggling companies."
As for determining who is an entrepreneur, the business world has evolved, says Caroline Daniels, a professor in entrepreneurship at Babson College.
"It's too broad a mix to say who is or isn't one," says Daniels, who runs a property company and a small children's publishing firm. "Many people are holding down their days jobs while being an entrepreneur. I think we have to redefine what we're talking about."
In the end, whether there's a new definition of entrepreneurism or not, Lina Khan says there's enough evidence of a fall-off in the small business community for a serious wake-up call.
"People used to start a business with the idea of building wealth and passing it on to their kids," Khan says. "But now what's considered a small business is someone working on a contract for a company that may have laid them off. We need to acknowledge the decline as a problem."