The 20th century brought the dawn of a new vitality in the economy in the form of entrepreneurship. Certainly entrepreneurs have existed throughout history, but the field has flourished and become a major force in the economy over the past few decades. In 1969, there were only 274,00 new corporations started per year; in 1995, the annual number had reached 770,000. What does the future hold? Is this an upward trend or a passing fad?
If my mail is any indication, not only is the trend upward, but outward internationally. What was once an American phenomenon has become global - and that does not mean Americans going abroad with their products, but individuals around the world starting entrepreneurial ventures in their home countries. Fully a third of the participants in the Entrepreneurs community are from somewhere other than the United States.
Another obvious trend is the number of people electing to work from home, either through telecommuting or running a home business. When all organizational forms, part-time, full time, and home based are considered, the total number of startups soars to 4.5 million per year, far higher than anyone had previously suspected.
Interestingly enough, while many have attributed this to a desire of many women to be home for their children, over half of the people now working from their homes are men. Scant data has existed on this trend because it was such a small part of the work force. The Department of Labor began gathering data in 1996 on persons employed out of their home because of the growing numbers. Their preliminary statistics show this to be one of the most rapidly emerging trends in our economy.
Academics are aware of the trend because of the parallel increasing growth in the demand for entrepreneurship courses of study. Arnold Cooper of Purdue University has been studied this trend noting the evolution of entrepreneurs into "folk heroes." The question he poses is whether it is the downsizing our economy has faced that has forced many in the labor force to become entrepreneurs or whether this is a genuine change in our economy. He concludes that there are a number of factors that seem to favor continued high rates of new firm formation. Some of these factors are:
- Continuing high rates of change. Our changing world creates new opportunities for new firms.
- Continued growth of the service sector of the economy. The service sector is the highest growth area for new firm formation.
- Increasing number of "virtual corporations" in which firms out source not only support functions, but also basic activities such as producing and selling. This out sourcing creates opportunities for entrepreneurs.
- Positive climate for small businesses. A survey by the National Federation of Independent Businesses found that the American public believes that small business is primarily a positive influence on the way things are going in this country.
- Growth in international business opportunities for both Americans and international entrepreneurs. Global trade is growing at six percent a year, more than twice as fast as the world GNP is growing.
What do I foresee from my day-to-day immersion in entrepreneurial dialog? The key word of the moment is strategic alliances. For the entrepreneur that means forming relationships with other businesses that either are closely aligned with yours (for instance, a printer forming an alliance with an advertising agency) or with someone who can add value to your product. What is emerging are alliances of businesses who operate much like a corporation, but without the overhead, commute or slow moving superstructure. These alliances allow for flexibility in design, rapid readjustments, partnerships with likeminded entrepreneurs, and the ability to work when and where you want to. Futurists have envisioned a return to extended community living with shared resources, but individual living and working relationships with entrepreneurial activities being the primary base of these communities. Strategic alliances are the first step along this path.
So what does this mean for a business student? For a start, entrepreneurship is an important part of your future. Even if you plan on following a more traditional business career, alliances with entrepreneurs will part of your environment, both locally and internationally. To form alliances you need a good grasp of negotiation skills and legal relationships. Understanding motivation and the sociocultural context of our world are also valuable. While in a sense we may specialize more in our particular niche, we will need to interrelate with a broad spectrum of people and understand the formal mechanisms for making those relationships work. A few years ago Fortune Magazine estimated that the average young person entering the job market would have ten different jobs with five different organizations before retirement. Young people must now take responsibility for their own careers. Even if they expect to start with larger firms and hope to stay with them, conditions change. Those who develop entrepreneurial skills will be better prepared for a constantly changing world and they will have more interesting options in the future. The person entering the job market of the future will find the most exciting and rewarding opportunities in entrepreneurship.