Entrepreneurship; The Key To Economic Recovery Post COVID-19
Small businesses and new entrepreneurs are the lifeblood of communities, yet they are under threat by the current COVID-19 pandemic. Supporting entrepreneurs is critical to economic recovery in cities throughout North America.
A recent report by Heartland Forward titled, Young Firms and Regional Economic Growth underscored the positive impact that entrepreneurship plays in communities, particularly when it comes to employment. In fact, young firms, which the study defined as businesses less than five years old, were shown to be faster job creators between 2010 and 2017 than the large firms cities try to entice for job creation.
While the study, focused on five U.S. cities, the numbers aren’t much different in Canada. In 2018, nearly 70 percent of Canadians were employed by small businesses (defined as businesses with fewer than 99 employees).
These businesses that are critical to economic growth are also the ones that are most at risk during the current global crisis. Covid-19 forced a huge number of small business owners to close their doors, putting their livelihoods, and those of the people they employ, at risk. Those that operated brick and mortar stores had to figure out how to move operations online. Dine-in restaurants had to decide if takeout and delivery were better options than closing completely.
Ross DeVol, President and CEO of the U.S.-based think tank focused on entrepreneurship and community economic health, and co-author of the study said, “When entrepreneurs thrive, the cities they call home also thrive. As community leaders and lawmakers chart a path to recovery, they must put a renewed focus on support for entrepreneurship. A concerted effort will give cities the economic boost they need – not just in the immediate aftermath of COVID-19, but for generations following that.”
Cities often focus on luring large businesses in order to boost employment opportunities, and economic growth. However, this study debunks the notion that long-term viable growth comes from these initiatives, and asserts that post-pandemic recovery will be led by entrepreneurs.
A few of the study’s recommendations provide a framework for not only for enabling that recovery, but also how to foster a culture of small business support within communities.
Create Positive Attitudes Towards Entrepreneurs
The study showed that entrepreneurs were not viewed as favourably as corporate managers. Changing the narrative to focus on the positive contributions of entrepreneurs helps shift more of a focus on enabling small businesses to recover.
Funding and Support Matter
Making resources, and funding, more readily available to small business owners and startups will help spur recovery. That support can come from informal and formal networks, physical spaces such as incubators and accelerators, or through government-led initiatives.
Funding also matters. Enabling dealmakers to encourage both social and financial connections, exploring alternative revenue structures, and public sector support of angel investor networks has been shown to accelerate growth of startups, and lead to their quicker contributions to local economies. Making investing opportunities more widely known to those looking to fund early-stage ventures will also make it easier to match those funders to opportunities in their communities – providing a critical link for entrepreneurs to the funding they need.
Increase the scope and number of entrepreneurship courses at universities and colleges. Providing guidance and support to young people as they learn, start, and run businesses means these graduates will be contributing significantly to the long-term economic success of their communities.
Encourage Corporate Engagement
Encouraging corporations to create and support spinoffs within communities can strengthen entrepreneurial ecosystems in ways that may not be possible within their larger corporate infrastructures.
Support Arts and Culture
Research shows that entrepreneurs are often most successful in communities where “quality of place” plays a role. The presence of a strong arts and culture network tends to improve a region’s image, attracts prosperous populations, and therefore, provides a strong framework for small business and entrepreneurs to thrive.
It is clear that entrepreneurship will play a key role in our economic recovery. Entrepreneurs are creative, resourceful, hardworking and most importantly, they find solutions to problems that exist. Entrepreneurs see opportunities and from there, create jobs.
If you’ve been thinking of starting your own business, now is a great time to become an entrepreneur. If that’s not your gig, support your local small businesses. Let’s work to encourage entrepreneurship and we will all reap the rewards.