entrepreneurship in nebraska conditions, attitudes, and actions
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Entrepreneurship in Nebraska Conditions, Attitudes, and Actions. Eric C. Thompson Associate Professor of Economics Director, Bureau of Business Research University of Nebraska-Lincoln William B. Walstad John T. and Mable M. Hay Professor of Economics University of Nebraska-Lincoln. Promise - PowerPoint PPT PresentationTRANSCRIPT
THE GALLUP ORGANIZATION
Eric C. ThompsonAssociate Professor of Economics
Director, Bureau of Business ResearchUniversity of Nebraska-Lincoln
William B. WalstadJohn T. and Mable M. HayProfessor of Economics
University of Nebraska-Lincoln
Entrepreneurship in NebraskaConditions, Attitudes, and Actions
Copyright © 2008 Eric Thompson and William Walstad2
Promise
and
Challenge
Copyright © 2008 Eric Thompson and William Walstad3
Promise• More economic growth• Expanded employment• Greater income and wealth• More variety of products & services• Increased philanthropy
Copyright © 2008 Eric Thompson and William Walstad4
Challenge• How can we expand
entrepreneurship in Nebraska?
Copyright © 2008 Eric Thompson and William Walstad5
Three Themes• Conditions
• Attitudes
• Actions
Copyright © 2008 Eric Thompson and William Walstad6
Our Purpose• Give an overview of the book
• Highlight some major findings
• Discuss potential actions
Copyright © 2008 Eric Thompson and William Walstad7
Credits• Jim Krieger
• Krieger Family Foundation
• Gallup and its associates
• University of Nebraska-Lincoln
THE GALLUP ORGANIZATION
Entrepreneurship in Nebraska
Conditions,Attitudes,
and Actions
Copyright © 2008 Eric Thompson and William Walstad9
Business and Economic Analysis
• Long-run Trends in Business Conditions Chapter 2
• Recent Trends in Business Conditions Chapter 3
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Comparisons
• There has been tremendous growth in entrepreneurship in the United States economy in recent years
• We compare Nebraska to the nation and other states Has Nebraska fully participated?
• We also compare growth in the 6 community college regions of Nebraska
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Community College Regions
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Tracking Entrepreneurship in Nebraska
• We tracked the progress of entrepreneurship in Nebraska over both: The last two decades The last three years
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Long Run Trends• Net growth in the number of businesses in Nebraska
lags U.S. by 0.5% to 1.0% per year.
• Nebraska population is also growing more slowly.
• These findings are related. Lower rates of business formation is one factor limiting population growth in the state.
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Comparison of NE with US Business Counts
• However, there are a number of factors that affect population growth. And, lower population growth also may
limit growth in business counts.
• It is useful to look at per person growth in business – to what extent are Nebraskan’s generating businesses?
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Employer Establishment Counts Per Person 2006
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Annual Growth in Employer Establishments Counts Per Person 1994-2006
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Comparison of NE with US Business Counts
• The growth of employer establishments per person is similar in Nebraska and United States.
• The picture is different when examining all firms, including proprietor’s without employees.
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Annual Growth in Business Counts Per Person 1994-2004
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Firm Births Per Person 1994-1995 and 2004-2005
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Selected High Growth IndustriesGrowth in Establishments Per Person
Average Annual Change
2001-2005 Nebraska U.S.
Software Publishers 0.0% -3.1%Computer System Design 2.7% 1.0%Management Consulting 5.5% 4.8%Scientific R&D 7.7% 1.5%
20
Copyright © 2008 Eric Thompson and William Walstad
Patents Per Thousand Residents
Average
Annual Change 2005 1990-2005
Nebraska 0.117 1.5%
United States 0.279 1.8%
21
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Annual Growth in Real Income Per Non-Farm Proprietor 1990-2005
Nebraska Unites States0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%1.3%
0.8%
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Relative Per Capita Income 1990-2005Non-Farm Income
Relative Non-Farm Income per Capita Nebraska vs. United States
1990-2006
82.0%
84.0%
86.0%
88.0%
90.0%
92.0%
94.0%
96.0%
1990 1992 1994 1996 1998 2000 2002 2004 2006
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Comparison among 6 Community College Districts
• Compare the number of employer establishments per person in the 6 districts, and growth in employer establishments.
• Compare growth in real income per proprietor, and per capita income.
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Employer Establishments Per Person 2006by Community College District
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Annual Growth in Employer Establishment Counts Per Person 1990-2006
by Community College District
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Real Income Per Non-Farm Proprietor 1990-2005 by Community College District
1990
1992
1994
1996
1998
2000
2002
2004
$5,000$7,000$9,000
$11,000$13,000$15,000$17,000$19,000$21,000
Income per Non-Farm Proprietor Community College Regions 1990-2005
Western
Mid-Plains
Central
Northeast
Metropolitan
Southeast
Inco
me
per N
on-F
arm
Pro
prie
tor
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State Entrepreneurship Index5 Components
• Percent Growth in Employer Establishments• Percent Growth in Non-Farm Proprietorships per
Person• Business Formation Rate• Real Income per Non-Farm Proprietorship• Patents per Thousand Residents
28
Copyright © 2008 Eric Thompson and William Walstad
State Entrepreneurship IndexNebraska and Selected Nearby States
2004 2005State Ranking Index Value Ranking Index
ValueNebraska 34 0.89 35 0.85
Colorado 3 1.96 2 2.17Iowa 49 0.45 49 0.46South Dakota 44 0.72 42 0.63Wyoming 7 1.77 9 1.54
29
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State Entrepreneurship IndexSelected Leading States
2004 2005State Ranking Index Value Ranking Index
Value
Idaho 1 2.25 1 2.44Colorado 3 1.96 2 2.17Massachusetts 4 1.86 5 1.84Wyoming 7 1.77 9 1.54California 8 1.77 6 1.74
30
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Conclusion
• Many indicators suggest an average level of entrepreneurship in Nebraska. Nebraska and the United States have a similar number of
businesses per person. The growth rate among employer establishments is similar
in Nebraska and the nation on a per person basis. Nebraska has a “middle of the pack” value and ranking for
the State Entrepreneurship Index
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Conclusion
• While Nebraska is an average state in terms of entrepreneurship, Nebraska is not yet a leading state.
• Further several indicators suggest that entrepreneurial success in the state is concentrated in the Omaha area.
Most strikingly, while the number of employer establishments per person grew strongly in all 6 Community College Districts of Nebraska, the average income of proprietors was flat or declining in 5 of these districts.
Omaha was the only region with rapidly growing average income per proprietor.
THE GALLUP ORGANIZATION
Entrepreneurship in Nebraska
Conditions,Attitudes,
and Actions
Copyright © 2008 Eric Thompson and William Walstad34
Survey Analysis
• Interest and Reasons for Entrepreneurship Chapter 4
• Entrepreneurial Knowledge and Education Chapter 5
• Views of Government, Business, and Economic Development Chapter 6
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Sampling• General Public
2,460 to 4,935 Nebraskans 18 years of age or older
+/- 1.4% to 2.0% sampling error for state results
• Business Owners
555 to 1,122 Nebraska business owners with 1 to 100 employees
+/- 4.2% to 2.9% sampling error for state results
Surveys conducted: Fall 2005 and 2006
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Interest in Entrepreneurship
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Interest in Starting A Business
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
32%
11%
Yes Already own business
Percent yes or already own one
General Public (n = 4,935)
43% total
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Community College Regions
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Interest in Starting a Business
Metro Southeast Central Northeast Mid-Plains Western0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
37%30% 31% 28% 26%
30%
9%
10% 11%12% 15%
16%
Yes Already own a business
Community College Districts
General Public (n = 4,935)
46%
40% 42% 40% 41%46%
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Interest in Starting A Business by Age
18-29 30-39 40-49 50+0%
10%
20%
30%
40%
50%
60%
70%
55%45%
37%
15%
5%13%
14%
11%
Yes Already own business
Age in yearsGeneral Public (n = 4,935)
60% 58%
51%
26%
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Age When First Thought of Starting Own Business
<30 30-39 40-49 50+0%
10%20%30%40%50%60%70%80%
64%
20%
9% 5%
Age
Business Owners (n=1,122)
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First Thought of Starting Own Business at Age 29 or younger
1-10 11-19 20-49 50-1000%
10%
20%
30%
40%
50%
60%
70%
80%
65%57% 60%
65%
Firm size by number of employees
Business Owners (n=1,122)
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Interest Findings
• Over half of Nebraskans ages 18-29 are interested in starting a business. And, over half of this group say they are very likely or likely to do so.
• Among the ~ 300,000 Nebraskans (age18-29) there are about 84,000 with genuine interest in starting a business.
• There is a large untapped pool of potential entrepreneurs
among young adults in Nebraska!
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Business Succession
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Years to Exit Business
0-5 6-10 More than 10 years
0%
5%
10%
15%
20%
25%
30%
35%
40%
29%
23%
38%
Business Owners (n=1,122)
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Who to Transfer Business to
Family Employee(s) Third party Liquidate0%
5%
10%
15%
20%
25%
30%
35%
40%36%
10%
19%
25%
Business Owners (n=1,122)
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Succession Findings • There is a succession problem for businesses.
• Most owners plan to exit the business in next 10 years.
• Many owners, especially of smaller businesses, plan to liquidate their business.
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Role of Government
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Government Regulations Make ItToo Difficult to Start a Business
Series10%
10%
20%
30%
40%
50%
60%
70%
56%
67%
General Public (n=2,475) Business Owners (n=567)
Percent in agreement
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Government Regulations Make ItToo Difficult to Start a Business
(% in agreement)
Metro Southeast Central Northeast Mid-Plains Western0%10%20%30%40%50%60%70%80%
52% 55% 59% 61% 62%67%
Community College Districts
General Public (n = 2,475)
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Government Taxes Make ItToo Difficult to Start a Business
Series10%
10%
20%
30%
40%
50%
60%
70%
51%56%
General Public (n=2,475) Business Owners (n=567)
Percent in agreement
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Government Should Provide MoreTax Incentives for New Businesses
Percent saying yes0%
10%20%30%40%50%60%70%80%90%
100%
75%81%
General Public (n=4,935) Business Owners (n=1,122)
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Government Findings • Government regulations are perceived as making
it too difficult to start new businesses
• Taxation is also viewed as an impediment to starting new businesses.
• Of possible actions, people would like to see more tax incentives given for starting businesses.
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Business Climate
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Positive Climate for Business
Percent positive response0%
10%
20%
30%
40%
50%
60%
70%
46%50%
General Public (n=2,475) Business Owners (n=567)
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Positive Climate for Business(% positive response)
Metro Southeast Central Northeast Mid-Plains Western0%
10%
20%
30%
40%
50%
60%52%
44%40% 41%
44%
35%
Community College Districts
General Public (n = 2,475)
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Effectiveness of Economic Development
Percent effective or very effective0%
10%
20%
30%
40%
50%
60%
70%
42%34%
General Public (n=4, 935) Business Owners (n=1,122)
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Effectiveness of Economic Development(% saying effective)
Metro Southeast Central Northeast Mid-Plains Western0%5%
10%15%20%25%30%35%40%45%50% 46%
34%
44%38% 38%
32%
Community College Districts
General Public (n = 2,475)
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Major Problems for Starting a Business
Cost of Health Care Poor Economic Condi-tions
Finding Workers0%
10%20%30%40%50%60%70%80%90%
100%
79%
46%37%
80%
49% 49%
General Public (n=2,475) Business Owners (n=567)
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Who Should Improve Accessto Financing for Starting Businesses
Banks Investors Business organiza-
tions
Government0%
10%20%30%40%50%60%70%80%90%
100% 91%82%
72%
46%
Business Owners (n=1,122)
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Climate Findings • The business climate is fairly positive, but it
varies by region across the state.
• Economic development is not generally viewed as being effective and it also varies by region.
• There are concerns about health care and financing as barriers to starting new businesses.
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Careers, Education, Knowledge
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Number of Other Businesses Started
Just this one 1 2 3 or more0%
5%
10%
15%
20%
25%30%
35% 33%29%
22%
16%
Chart Title
Number of other businesses started
Business Owners (n=555)
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Child Become an Entrepreneur
Percent saying yes0%
10%20%30%40%50%60%70%80%90%
100% 91%81%
General Public (n=1,018) Business Owners (n=555)
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Importance of Schools To Teach Entrepreneurship
Percent Saying Important or Very Important0%
10%20%30%40%50%60%70%80%90%
100%
80%86%
General Public (n=4,935) Business Owners (n=567)
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Importance of Colleges To Teach Entrepreneurship
Percent Saying Important or Very Important0%
10%20%30%40%50%60%70%80%90%
100%85% 88%
General Public (n=2,475) Business Owners (n=567)
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Knowledge of Starting and Managing a Business
Percent saying good or excellent0%
10%
20%
30%
40%
50%
39% 36%
General Public (n=4,935)Business Owners--at first (n=1,122)
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Careers, Education, Knowledge • Entrepreneurship is a satisfying career choice as
indicated by its serial nature (starting more than one business) and wanting a child to be one.
• There is great support for the teaching entrepreneurship in schools and colleges.
• Knowledge of entrepreneurship is limited and needs to be improved.
THE GALLUP ORGANIZATION
Entrepreneurship in Nebraska
Conditions,Attitudes,
and Actions
Copyright © 2008 Eric Thompson and William Walstad70
Actions to Advance Entrepreneurship
in Nebraska
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Advance Technology and Capital Formation
A.Technology transferTransfer inventions to local firms
B.Angel investorsIdentify, fund, and advise high-growth firms
C.Entrepreneurship endowmentPrivate investment in funds loaning money to
and advising start-up firms
D.Technical supportProfessional services for start-up firms
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Increase the supply of potential entrepreneurs
A. Entrepreneurship education
1: Provide entrepreneurship curricula
2: Identify students with entrepreneurial potential
B. Encouraging business succession
1: Increase interest in family business
2: Recruit new entrepreneurs
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Improve the Business Climate
A. TaxesReduce state tax rates
B. RegulationMore flexible regulation
C. Health Care 1: Insurance pools for small firms 2: Reduce malpractice costs
D. Qual i ty of L i feImprove amenities and recreation
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Call to Action to Advance
Entrepreneurshipin Nebraska
Jim Krieger
Copyright © 2008 Eric Thompson and William Walstad75
Questions
and
Comments