Nebraska Needs More Entrepreneurs
The word “entrepreneur” is sometimes associated with great wealth and fame. Entrepreneurs have turned single restaurants into chains that become global icons, and opened record stores (remember those?) that morphed into worldwide travel and entertainment conglomerates.
But there are far more unsung heroes who can rightfully lay claim to the title of entrepreneur. These are average people who use their talents and tools to make our lives better every single day.
The person running your kid’s daycare is an entrepreneur. So are the Uber and Lyft drivers who get us and our loved ones home safely after a night on the town. The veterinarians who take care of our four-legged friends in the house and on the ranch are usually small business entrepreneurs as well.
All of these professionals have regulatory hurdles to jump over and tax bills to pay that impact the growth of their businesses. The degree to which these burdens grow in a state plays a critical role in its climate for the creation of better businesses and new jobs.
While each state has a large number of people with the capacity for becoming entrepreneurs, the rate of those who actually choose to engage in entrepreneurship, as measured by the growth of new business firms, varies significantly across states.
Data from the Small Business Administration show that when compared with the states to which we lose the most income, Nebraska is starting fewer new businesses.
This is a key factor in the state’s underwhelming job and population growth, which lags behind the national average. Gallup CEO Jim Clifton, the author of The Coming Jobs War and the keynote speaker at the Platte Institute’s 2016 Legislative Summit, considers the nation’s birth/death rate of businesses to be a national economic crisis that threatens our ability to create more middle-class jobs.
Being the CEO of a major corporation, you might expect that Clifton’s solution to the problem comes from big business itself. You’d be wrong.
“We are a country of small and medium-sized businesses — not a country of big businesses,” writes Clifton on Gallup.com.
Regulatory reform is first on Clifton’s list for freeing entrepreneurs to create new startup businesses.
"If they want to help, national, state and local governments should stop overwhelming small businesses with new rules and regulations.”
The cumulative economic effect of overly-burdensome regulation is felt by everyone, small businesses, workers, and consumers. A working paper by the Mercatus Center at George Mason University finds that federal regulation alone costs the country an annual loss in 0.8 percent Gross Domestic Product growth.
Jim Clifton notes that it is on these seemingly razor thin margins that a country either experiences small business growth or economic decline. “The difference between 3.75% growth and 2.0% growth over several years — although seemingly small — is the difference between whether America dominates or goes broke,” Clifton writes.
Trial and error in entrepreneurship is a necessary process that is overwhelmingly rewarding for society. But that process is fraught with risk for the individuals who attempt it. For more Nebraskans to be willing to assume this risk, policymakers must clear the way to increase the potential of enjoying the rewards.
While the most obvious reward is the financial benefit of profit, there are other ways that entrepreneurship can enrich Nebraska’s quality of life.
Embracing new occupations and news ways of doing business can offer greater work-life balance in Nebraska’s marketplace, and provide professionals with more accessible options for personally fulfilling careers.
That means entrepreneurship is about more than just a vague concept of growing the economy. It’s also about strengthening the ability of more families to live out their own version of the Good Life here in Nebraska.
Thankfully, there are practical solutions to right-sizing the burden regulation places on our entrepreneurs.
Next week, the Platte Institute will release the sixth and final issue of the Removing Barriers in Nebraska series: How Red Tape is Harming the Good Life.
Though it closes out our series on policy barriers to economic growth in Nebraska, it is only the first entry in what must be a much deeper conversation about rolling back bureaucracy in next year’s legislative session.