Start-Up Fact and Fiction
Paul Reynolds stopped by the magazine recently. Reynolds is Coleman Chairholder in Entrepreneurial Studies at Marquette University in Wisconsin, where he has been doing some provocative research on start-ups. Here are a few highlights of our conversation:
"How many more marriages would you expect to see if the government started giving away engagement rings?" That was Reynolds's response to a question about whether the federal government stimulated start-up activity by setting up programs to assist would-be entrepreneurs. He pointed out, however, that what this country could use is a comprehensive and accessible clearinghouse of information on programs that already exist.
"We consistently underestimate the amount of energy being invested in the entrepreneurial process," Reynolds told us. Readers of this column may recall that research conducted by Reynolds has established that about 4% of the adult population in the United States is actively trying to start a new venture. "Let me put this into perspective for you," says Reynolds. "What this means is that at any given moment more people are trying to start a business than are getting married or having children. In fact, evidence suggests that one out of every two adults in this country has tried to start a new business.
"Contrary to popular belief, the United States does not have a monopoly on entrepreneurial drive," explains Reynolds, who points out that there is no significant difference between the United States and Europe regarding the percentage of the population involved in trying to launch a new venture. "We have found four characteristics of an economy that are predictors of high firm-gestation rates: economic activity that's become specialized, prevalence of established small businesses within the given economic system, higher-than-average household wealth, and higher-than-average population growth."* * *