Entrepreneurial activity across the country is up. But, unfortunately, this area continues to lag behind other states.
That’s the conclusion from a recent report published by the Ewing Marion Kauffman Foundation, a business advocacy group based in Missouri. The report, which tracked entrepreneurial changes in all 50 states from 1996 through 2017, found that entrepreneurial activity, which included measures of the rate of start-ups, job creation and survival, increased nationally with – no surprise - California, Florida and Texas ranking among the best states for start-ups during this period.
Unfortunately, both Pennsylvania and Delaware ranked among the worst, both overall and in its rate of new entrepreneurs as a percentage of the population. On the bright side, Pennsylvania and New Jersey were among the top 20 states with the highest start-up survival rate after one year of existence. So once we’re up and running, we tend to stay around longer.
The information “doesn’t tell you what to do,” Sameeksha Desai, director of Knowledge Creation and Research in Entrepreneurship at the foundation, said in a blog post. “But it can help you think about what next steps to investigate.”
One way to look at the data is that the high percentage of government, health-care, universities and financial organizations either headquartered or very active in this region are accounting for the lower number of start-up entrepreneurs – as compared with the entire population. In other words, there are more job opportunities from larger organizations per capita in the region, which may explain why entrepreneurs in this area were more apt to start a business by “choice” instead of “necessity,” as compared with other areas in the country, according to the Kauffman report.
Or you could argue that our area is just not that great for start-ups. For years, technology leaders and venture capitalists here have debated why the region can’t keep up with the Silicon Valleys and other areas around the country where early-stage companies are receiving more funding. Many blame the area’s higher tax structure as well as the need for more infrastructure spending and greater investments by government, local universities, and larger corporations as significant reasons why the region lags behind in entrepreneurship.
But if you’re trying to start up a business, neither the Kauffman study nor these ongoing debates are going to help you, at least not right away. You need money and resources, and you need these things now. The good news is that there is help available.
For example, education and free resources are available from the Small Business Development Centers at both Wharton and Temple University’s Fox School of Business, as well as from individual consultants provided by SCORE, a national organization of mostly retired executives supported by the Small Business Administration. The Urban League of Philadelphia runs an entrepreneurship center, and there are additional resources provided by the City of Philadelphia, the city’s Chamber of Commerce and groups like the Center City Proprietor’s Association.
The city and suburbs also have many incubators and office spaces for small companies such as the Philadelphia Fashion Incubator, which nurtures entrepreneurs from local design schools and the fashion community, NextFab (which has locations in South Philadelphia and Wilmington) and Center City’s 1776, which last year merged with co-working company Benjamin’s Desk to form what they say is the “largest entrepreneurial ecosystem for start-ups in the northeast corridor.” National co-working firms such as WeWork and MakeOffices both also have multiple locations in the area.
All of these organizations not only provide shared office spaces, internet, food, and other services that help reduce overhead but also educational programs, networking activities and administrative and technical resources that many would be unable to afford on their own.
Once a business gets to a certain size, there are many banks in the region, from TD Bank to Wells Fargo, that offer loans backed by the Small Business Administration. Private advocates, such as Philly Startup Leaders, an organization made up of thousands of active entrepreneurs, provides an online list of resources and popular accelerator programs for start-ups seeking financial and leadership backing from local technology. Can these organizations make a difference to the entrepreneur who starts up a business in the Philadelphia region? Of course.
But in the end – and regardless of all the studies and debates -- it will always come down to the founder’s bank balance, hard work, good ideas, excellent timing, and a little bit of pixie dust sprinkled on top that will make the difference between a successful start-up and one that never makes it to its fifth birthday. That fact, I’ve learned, is pretty much the same wherever in the country – or the world – that you decide to launch your venture.