The SUCCESS TRAPS: Why I Need Your Small Business To Succeed Today!

How important is your small business or startup? I know it’s important to you, but did you think it was important to the rest of us as well? It actually matters whether or not you succeed! Yup, what you’re doing in your little biz may just be the key to recovering our economy – not what the big guys are doing! Read the article below which was sent to me today from my good friends at SCORE.   — Tim

“Job Growth in U.S. Driven Entirely by Startups, According to  Kauffman Foundation Study.” Ewing Marion Kauffman Foundation  Press Release 7/07/10. http://bit.ly/byg7Kh

U.S. Job Growth Driven Entirely by Start-ups, Report Finds          (7/9/10)

Although conventional wisdom suggests that the annual net job  gain at existing companies is positive, the fact is that net job  growth in the U.S. economy occurs only through start-up firms,  a new report from the Ewing Marion Kauffman Foundation finds.  (http://www.kauffman.org/ )

Based on the U.S. Census Bureau’s business dynamics statistics,  the report, The Importance of Startups in Job Creation and Job  Destruction, found that both on average and for all but seven  years between 1977 and 2005, existing firms were net job
destroyers, losing a combined one million jobs per year. In contrast, during their first year new firms added an average of three mil-  lion jobs. The report also found that while job growth patterns  at both start-ups and existing firms were pro-cyclical, there  was much more variance in job growth patterns at existing firms.

Indeed, during recessionary years job creation at start-ups  remained relatively stable, while net job losses at existing  firms were highly sensitive to the business cycle.

And it’s not just net job creation that start-ups dominate. Although older firms lose more jobs than they create, the gross  flows decline as firms age. On average, one-year-old firms create  nearly one million jobs, while ten-year-old firms generate only  300,000. In other words, the notion that firms bulk up as they  age is not supported by data.

Because start-ups that develop organically are the principal  driver of job growth in the economy, job-creation policies aimed  at luring larger, established employers inevitably will fail,  said the report’s author, Tim Kane. Such city and state policies  are doomed not only because they are zero-sum but because they  are based on unrealistic employment growth models, added Kane.

“These findings imply that America should be thinking differently  about the standard employment policy paradigm,” said Robert E.  Litan, Kauffman Foundation vice president of research and policy.

“Policy makers tend to focus on changes in the national or state  unemployment rate, or on layoffs by existing companies. But the  data from this report suggest that growth would be best boosted  by supporting start-up firms.”

And just for the heck of it, in the middle of this hot, hot summer (is it as hot where you are?), a little bit of fun with a Summer “Dragon” from my back yard … edited, of course, with PICNIK, our favorite online photo editing site (and now part of the Google family).

Summer's Dragon -- Tim McMahon IMAGEworks

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