Do you remember the old mom-and-pop neighborhood markets?
I bicycled past three of those storefronts on my newspaper routes in Southeast Portland decades ago. Two were on residential streets, in old buildings with the store names on Coca-Cola signs. I’d park out front on hot days to pick up a Popsicle midway through my deliveries. The person selling the Popsicle most often was the store’s owner.
This example of small, locally owned businesses comes to mind with a new report that describes a worrisome lack of business startups in the post-Great Recession era. The report by the Economic Innovation Group, a Silicon Valley-backed research organization, finds business startups have increased by 2.3 percent in the past five years, less than half the rate of increase in the post-recession recoveries of the 1990s and 2000s.
The report’s larger finding is that new startups are heavily concentrated in a few very successful regions. The top-20 list of counties, with just one-sixth of the nation’s population, are producing half of the new companies, including five each in California and Texas, four in Florida, and two within New York City. Talent draws talent. And it also draws investment and bank finance money that’s essential to launching a business.
Elsewhere, the decline in business starts in much of the country could usher in a “missing generation of enterprise” in rural areas and also in some parts of large metro regions, the report concludes.
So what’s going in most of the country?
That’s not exactly clear. It’s easy to see that competing with traditional businesses– that is, nondigital — is a tough road. Prospects aren’t good for a mom-and-pop grocery or most retail outlets in a 7-Eleven and Amazon era. Investors and lenders aren’t abundant for startups in challenging rural, suburban, and urban communities, many where people are struggling with flat or declining incomes.
Yet with the report’s pessimistic tone, it’s hard to bottle up the entrepreneurial gene that drives some people to plunge into businesses of their own. The ambitious, hard-working person who would have opened a store a couple of generations ago now creates an app to sell products. The would-be restaurateur opens a brewpub or a food truck. The exercise buff who doesn’t have the resources to open a gym creates a software add-on for the FitBit.
Buck Heidrick, a certified business adviser at Washington State University Vancouver’s Small Business Development Center, says his frontline experience doesn’t reflect the data in the report. Heidrick and his colleagues statewide are swamped with helping people who have good ideas. The ease of obtaining financing ebbs and flows, but there’s plenty of assistance and even government encouragement for those who see their futures in launching a new business.
In fact, three of Heidrick’s clients came up with business ideas so good that a corporation bought the idea before they could launch their business — all reward, no pain. Now that’s an entrepreneurial success — far better than selling Popsicles to a paperboy.