How Many Stars Are in the Night Sky?

How Many New Businesses Are There?

It Depends Who Is Doing the Counting and Defining.

This is What The Federal Government Sees

A Business Doesn’t Exist Until there Is an Employee

With the Naked Eye, You Can Only See 2,500 Stars

The SBA Defines a Small Business as Having 500 or Fewer Employees

Here is What Venture Capitalists and Many Public Policy Experts See.

…a Small Subset of the Universe.

88 Constellations. On Scale, about 37 Venture Capital Deals Per Year

This is What the State Sees.

There were 58,260 New Business Filings In 2013.

Compare State Fed

Why Does It Matter?

Why Does It Matter? Bad information leads to bad policy. We need to have consistent definitions and consistent methodology to make informed policy . It is not helpful when we have conflicting reports; one labeling Minnesota a failure in creating new businesses, and one saying we are breaking records for creating new businesses.

Conflicting Schools of Thought 1) Anyone engaging in business activities -- whether full-time or

part-time, at the industrial park or the garage, in addition to another job or not -- should be counted as a business.

2) The census bureau's non-employer statistics over other sources --

the census only counts people who reported self-employment (Schedule C) income of more than $1,000, possibly weeding out some side-workers who pay self-employment income tax but do not operate independent businesses.

Adopt the Broader Definition of Business

“The problem with ambiguous definitions of what counts as a small business is that they may make it more difficult for policymakers to really understand and address the unique problems that businesses of different sizes are confronted with.” -- Tracy Clark, associate director, W. P. Carey School's Spirit of Enterprise Center, Arizona State University

A New Formula Is Needed

Old Formula

B (Business) = Oy (Owner) + Ex (Employees)

What Do Policy Makers Really Want?

Jobs, Jobs, Jobs!

Employment = Jobs = Making a Living

E E E E E E!

A Traditional View of a Business

B = O + (E + E + E + E + E + E + E + E)

After Layoffs

Original Business - B = O + (E + E ) Shedding 6 Employees

After Layoffs

B = O

B = O B = O

B = O B = O B = O

The Former Employees “E”

Start Their Own Businesses

and Become Owners “O”

Self-Employment Trend

In March 2011, the Number of New Self Employed Who Had Been Unemployed

in the Prior Year

Was 900,000, or 5.5 Percent of All Self Employed.

-- SBA Office of Advocacy Report

What Next?

Who Helps New Businesses Now

• SBA – SCORE Volunteer Mentor Program.

• SBA – DEED – Small Business Development Centers

• Education Institutions Offering Entrepreneurship Programs Such

as Dakota County Technical College.

• Workforce Training Centers.

Venture Capital?

Most VCs like to invest in ventures after the potential has been proven and the

risk reduced. In the first quarter of 2012,

only 3 percent of VC funding went to start-ups.

Typically Averages $243 Million Invested in 37 Deals Per Year.

$24 Million State Job Creation Fund?

To qualify, a business must: • Invest at least $500,000 in real property improvements. • Create 10 new full time permanent positions within two years. • Have other location options outside of Minnesota. • Cause no undue harm to Minnesota business competitors.

A New Model to Support Emerging Businesses

A New Model to Support Emerging Businesses

• Emulate the Legal Profession’s Pro Bono Initiative • Harness Business Professionals Already Committed to Service • Acknowledge that Sole Proprietors, Freelancers, Consultants, etc.,

Are Actually Businesses. • Drop the “It’s not a real business” attitude.

Start Collecting Data When a business registers ask: • SIC Code? • Plans to Hire? • Full-Time or Part-Time Venture? • Full income or supplemental? • Interested in Mentorship? • Need Assistance of Business Professional?

What Can Chambers Do?

• Identify Members that Are Willing to Mentor. • Welcome Startups to All Events. • Offer 1 Year Membership at No Cost. • Offer Networking Training. • Help Members Develop Pricing For Startups. • Make Chambers The Place Where Entrepreneurs / New Businesses Can Turn

to for Help. • Help Lobby the Legislature to Appropriately Fund Current Programs that

Need Help In Reaching Their Client Base.

New Business Survival Rates

• Year One – 85%

• Year Two – 70%

• Year Three – 62%

• Year Four – 55%

• Year Five – 50%

• Year 10 – 30%

Taking Care of Business