Most people don’t think of book writers as entrepreneurs—but, if you don’t have a day job, that’s exactly what we are. We take risks and create new things. We have scant economic security. Mind you, I was an entrepreneur in the generally understood sense before I became a writer—and have learned most of what little I know through the school of hard knocks. That is a polite way of saying I have failed a great deal—but normally finally succeeded (at least for a while).
Success in the creative arts tends to be fleeting. Even if you are one of the few authors who achieves commercial success, you may well find that stands in the way of the stuff you really want to write. It’s a classic creative conundrum (over which you will cogitate considerably).
I know I will never succeed in being as good a writer as I would like—so, in a sense, writing involves being in a state of permanent failure—but the effort is so satisfying, so stimulating, so compelling, and so joyous, that I would prefer to fail in writing than succeed in another line of work. And some might quarrel with my definition of writing failure since I tend to raise the bar again and again—and want to conquer new fields.
The challenge is the driving force.
Having achieved some success in novel writing, I wanted to try non-fiction. Screenplays followed. Next—I want to try short story writing. And finally, I think it will be fun to write my memoirs. Is that all? N0—I’d like to give my award-winning playwright son, Christian O’Reilly, a run for his money—and write at least one play for the theater. I doubt very much it will reach the standard of his work (he is impressively talented) but it will be an adventure.
Does my reach exceed my grasp? Probably so—but it is just wonderful to try.
All of this is leading up to saying that I’m a tremendous admirer of entrepreneurship in its myriad of forms—and regard it as crucial to the health of any thriving economy. As a consequence, I have been reading the Kauffman Foundation’s latest report on entrepreneurship with concern—even though its findings validate my own. I hold to the view that the current American Business Model is broken—and that the real economy suffers from serious structural flaws. If I am right, then the Kauffman findings could be expected.
The following are a few extracts from the Kaufman report.
Stalled economic mobility and rising income inequality also threaten the economy’s long-term health. There is growing evidence that socioeconomic status is stickier than it once was; individuals are less likely to climb to higher income brackets or fall into lower ones. And less mobility has contributed to growing inequality: more than 100 percent of the wealth increase in the United States between 1983 and 2009 went to the top 20 percent of households, with the other 80 percent actually seeing a net decrease in wealth. Median household income—the core economic indicator for broad-based economic growth—has stalled since 1999.
Historically, entrepreneurship and innovation
have been the principal sources of economic growth,
technological progress, productivity, and rising standards of living. Entrepreneurship plays an important role, for example, in net new job creation. Recent research indicates that “high-growth (incumbent) businesses contribute about
50 percent of job creation and startups account for about 20 percent of job creation. Most of those high-growth companies, however, also are entrepreneurial firms under six years old.
The bottom line is that is that that we’re being less entrepreneurial now that we used to be. Why is that? Various reasons have been advanced. Let me list my some of my thoughts.
- Despite the fact that we’re statistically in a recovery and growing, the earning power of most of us is in decline. That makes it more difficult to raise initial capital from family and friends (the traditional source of seed capital)..
- Bank lending to Small Business still hasn’t recovered to even pre-2008 levels. Without the involvement of the Small Business Administration, bank lending to Small Business would be close to non existent. Big Banks are innately biased towards Big Business because the administrative cost are lower and it is safer. Despite the financialization of the economy, Small Business is singularly ill served when it comes to raising funds. This tends to mean that Small Businesses are under-capitalized—which substantially increases the chances of failure.
- The entire economy is tilted in favor of the rich, the superrich and the corporations they own. They borrow money cheaper, pay tax at lower rates, operate under regulations that favor them, enjoy economies of scale, and have both the power and will to crush the upstart. In addition they are now able to squeeze substantial tax, grant and infrastructure benefits from federal, state and local governments. Why not indeed! They largely own the government.
- Although legislation has been passed to make the raising of capital easier, the SEC is in the process of imposing so many regulations, that the legal costs of raising such money look like being excessive. Here, I am referring to the JOBS act.
- The risks of leaving a secure job (decidedly less secure than it was) are frighteningly high, the odds are against you, and arguably the rewards not commensurate.
Can something be done to boost entrepreneurship? Of course. I could write pages on the subject (and probably will). However, with Congress so polarized at present, we seem to be stuck in a political rut. That said, much more could be done at state and local level. A vital Small Business sector is essential for a prosperous economy—and for employment. That obvious fact is not adequately understood by politicians in general.
Fortunately, entrepreneurs are risk-takers and innately march to the beat of a different drum. But our numbers are dwindling. Is that good for this already excessively corporatized nation?
I rather think not.
Mind you, I am biased.