Entrepreneurs: Foundational. Inspirational.

Virtually every business began as an idea. Someone somewhere had a problem with no apparent resolution, so they invented a fix for their issue that turned out to be a good idea for others. The newly minted ‘entrepreneur’ then turned that idea into a business, which attracted customers, and – BOOM! – economic growth began. Consequently, entrepreneurs, the visionaries who see not just what could happen but also look for ways to make it happen, are central to America’s economy and, by extension, its economic growth and prosperity, too.

The Entrepreneur: A Unique Economic Force

At heart, the entrepreneur is a risk taker. These enterprising individuals step away from traditional employment processes and pursue an original path toward their personal goals and aspirations. Experts at the Harvard Business School define ‘entrepreneurialism’ as “the pursuit of opportunity beyond resources controlled,” with ‘beyond sources controlled’ meaning a constraint of available resources. These forward thinkers look beyond immediate or existing materials or options to find an improvement to what’s available or to develop a totally new response to a concern. By doing so, they take on risks that don’t appear in front of traditionally employed people:

A financial risk that arises as they contribute their own funds (which they might not recoup) or seek start-up funding (which may have to be paid back), then extends as the product or service evolves and is launched.

A technological risk that requires the product or service around which the business is built to actually achieve the solution it promises. Both its design and construction must be adequate to support the weight of growing consumer demand.

An execution risk that mandates establishing a functioning corporate team that can manage the launch from design through to market.

A demand risk that the buying public is looking for and will buy this particular new product or service.

For many people, these risks are too daunting to consider, so they choose not to pursue the entrepreneurial option as their life’s work.

For others, however, being ‘one’s own boss’ is the epitome of the American Dream. These creatives absorb the four risks as ‘the cost of doing [the entrepreneurial] business’ and move forward despite the potential losses those might incur. By doing so, they step into a critical role in the success of their community and its economy.

High Value Justifies High Risk

Entrepreneurs do more than just run businesses, and their contributions to the local, regional, and national economic landscape are significant:

New businesses need new workers, so entrepreneurs also often offer new workforce opportunities.

Their insights about existing products or services frequently trigger new and improved ways of doing things, so they also add innovation to the community.

New products frequently compel the ‘retirement’ of legacy or obsolete resources. Upgrades and updates often translate into improved product quality and higher customer satisfaction.

Often, a new company develops because of and provides service for populations that might not have access to similar resources. Social stressors, economic downturns, and legacy diversity concerns often hinder economic growth in certain neighborhoods. An entrepreneur who seeks to remedy that situation can develop a whole new consumer base, free from the constraints of competition.

Not least, the competition presented by the new company to existing entities within the same market often stimulates improved business efficiencies for both, which can also reduce product or service prices, too.

All of these realities underscore the entrepreneur’s value to the community. New businesses add assets and commodities to the economy while also building its labor force and expanding its resource base.

Entrepreneurial Efforts in Changing Times

Today’s entrepreneurial adventurer accepts the abovementioned risks as everyday occurrences within their business-building strategy. What they might not be prepared for or familiar with, however, are the vast changes occurring in today’s markets and industries that are influencing entrepreneurial opportunities. The post-COVID economy is decidedly different from that of five years ago, and both the market and the workforce have changed:

Consumers have evolved. They, too, have embraced today’s advanced digital tools and now expect their product and service suppliers to provide precisely what they want exactly when and where they want it. They are also becoming more invested in long-term relationships with the makers of the products and services they love. In addition to offering a unique and new product, today’s entrepreneurs must also master the tools that connect their companies to their ever-evolving customer base.

Securing the ‘talent’ needed to launch and manage the company is becoming more challenging. ‘Talent’ refers to the population of industry specialists who add the nuance and innovation needed to set the new product apart from its competition. Because of the rapid evolution of technology, many subject matter experts are not also experts in the technologies that are disrupting their industry. Many companies – entrepreneurial or not – are having difficulties finding workers and leaders who have both industrial acumen and technological insight.

The rise of technology – analytics, data lakes, cloud computing, Artificial Intelligence (AI), etc. – has upended every industry. Many occupations are now obsolete, and new technologically-based jobs have emerged despite the lack of qualified workers to fill those positions.

Within these parameters of changing circumstances and technological evolution, it’s a wonder that anyone follows through on their entrepreneurial dreams.

And yet, follow through they do. The calendar year 2023 was a boom year for new business openings, even after taking the pandemic’s contraction into consideration. The Home Services sector grew by 32%, with the hotels and travel sector close behind at 28%. Event services and automotives each grew by ~23%, and beauty services, active life organizations, and local service company sectors all posted percentage growth in the teens.

Notably, many of the purveyors of these new companies are from underrepresented communities. In 2023, LGBTQ+ business owners opened 33% more businesses than they did in 2022, and Black and Latino company founders launched 28% more entities than they did in 2022. Data indicates that the population of minority entrepreneurs has grown by over 35% in the past decade, contributing ~$700 billion to the nation’s economy over that time period.

Entrepreneurs have played a critical role in developing today’s national and global economies. The continued popularity of the business-ownership trend is equally essential for future economic growth, too.