Many small business owners are used to hearing “there’s good news and bad news,” and that’s certainly true with a recent roundup of headlines. Here’s a look at three recent nuggets, which show the ups and downs of entrepreneurship.
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Let’s begin with some good news from the Wall Street Journal/Vistage International Small Business CEO survey. In April, 728 businesses were surveyed, and 61 percent expect to hire more staff, up from 59 percent in March. The Small Business Confidence Index, which shows how small business managers feel about the economy and their company’s profit outlook, rose to 108.8, compared to 107.4 in March.
The Journal’s story highlights Dr. Richard Curtin, a researcher from the University of Michigan. Curtin, “who looked at the Vistage poll’s results, mentioned that over the past year, small business owners have mainly been dealing with new regulations, like healthcare and overtime rules, but now they seem prepared to shift their focus back to business operations and job creation.”
Read more: What Are The Business Operations of a Company?
Forecast: Not so sunny
You know you’re in for a doozy when a story mimics the beginning of A Tale of Two Cities: “It is the best of times, and it is the worst of times.”
That’s where we start with “The Mysterious Death of Entrepreneurship in America,” by The Atlantic. Derek Thompson’s story aims to define the modern entrepreneur, from the tech wunderkinds — on the rise through venture-capital funding — to small family businesses. He likens entrepreneurs to a block of ice, and it’s not doing well:
“What’s melting, exactly? Not the kids’ apps, but the mom-and-pop stores. Derek’s Coffee and Thompson’s Corner Store would be considered startups. But a new Starbucks or Whole Foods is considered part of an existing franchise. So as chains have expanded by more than 50 percent since 1983 … startups have perished.”
Among the examples: construction and manufacturing startups, which have dropped 60 percent in 40 years, Thompson says.
His overall point is that startups should be celebrated, because their presence differs from large companies’ overseas swelling.
“Startups can be special for many reasons,” he says. “They can challenge lumbering incumbents, they can create new demand for stuff, they can introduce more ideas — but from a big picture macroeconomic standpoint, they’re also special because they’re here, and when they expand they tend to expand here.”
Entrepreneurial swagger
James Surowiecki examines “epic fails of the startup world” in a recent piece for The New Yorker. He credits angel investing and crowdfunding for making it easier to get a small business off the ground. The catch, he says, is turning that small business into a sustainable success, thanks to tough competition and “scarce” profits. In examining why so many are willing to take a risk with a new business venture, he chalks it up to overconfidence:
“David S. Rose, a serial entrepreneur turned angel investor, and the author of the new book Angel Investing, told me, ‘You have to have an unreasonable level of confidence as an entrepreneur, or you’ll never get started.’ This helps entrepreneurs keep going in what’s often a bleak and frightening endeavor. ‘Starting a company is extraordinarily difficult, even agonizing,’ Rose said. ‘You need self-confidence and ego to get through it.’”
Surowiecki concludes that such confidence contributes to the economic form of Darwinism, and that it ultimately keeps innovation alive. He quotes Brian Wu, a professor of strategy at the University of Michigan, to illustrate his point.
“Overconfidence means that many more companies start up than will ever succeed,” Wu says. “That’s unfortunate for individual companies. The paradox is that it’s really beneficial for society.”
Read More: Manage the Cycle of Ups and Downs in Your Business