Published: Tuesday, 09 August 2016 17:44
Written by Press Room
Trending right now is a debate about what makes entrepreneurs.
It seems that the understanding that entrepreneurship is the basis of building a strong economy is finally being accepted as true, and there is a political interest in finding out where to get more of them. Montana becomes a point of focus because it seems the state has, for decades, led the nation in entrepreneurship rates.
While it may take study by some to understand why, the reason Montana has had so many entrepreneurs has never been much of a mystery to me. First it’s been a necessity. Want a good job in Montana, create one. Second, a back ground and culture of self-reliance and independence is the basis of nurturing the kind of character it takes. And thirdly, the work ethic. Nothing spells success for a self-employed person or business owner more than hard work and Montanans have a strong work ethic.
But what is entrepreneurism? That has to be agreed upon in such a discussion. Some folks out there are rather snooty about entrepreneurism. They only allow into the group, highly-educated techy sorts pursuing some leading-edge vision. They turn their noses up at the idea that someone of lower academic status, pursuing a venture less techy, and at a more modest level, qualifies as being entrepreneurial. Some time ago, one of these types, who held a job to encourage entrepreneurship in the state, explained the difference to me, with his nose quite literally up in the air. It went higher into the air when I named off some of the most successful businesses in the state that didn’t fit into his definition, and when I mentioned Bill Gates, he said, “That was a very rare exception.”
But Bill Gate’s – a man without a college education — is not such a rare exception. Not if you identify entrepreneurism as people who have been successful at launching and building a business that serves consumer needs and creates jobs for other people – those are, after all, the aspects of entrepreneurism that are the huge benefit to society. That the entrepreneur may get rich (or famous) is not what makes them such heroes; it’s the value that their activities generate for the rest of the community. It’s an achievement, it seems, at which they do extremely well – and it does not necessarily require PhD.
Studies have for decades shown that the people who are successful entrepreneurs were, quite often, not great students. Quite often they were the problem kid in class. Restless, acting out and non-conforming. Sometimes even a delinquent who got back on the right track.
That’s something to think about, in understanding that in general we have an education system which values conformity over creativity or individuality. Being quiet and behaving in the classroom are quite often the greatest measure of a good student.
And, we have colleges, where students or teachers with dissenting points of view, are shouted down. Not an atmosphere that generates innovation and creativity. And, we have a political system in which leaders are actually trying to criminalize nonconformists. If we are interested in cultivating entrepreneurism, it seems the first steps are very clear.
And, it cannot be overstated how often new ventures are launched by sheer necessity.
Someone needs something that no one else is providing, or they have a problem for which they discover a unique solution. Woods-Powr Grip comes to mind as an example in the latter instance, and Montana Silversmiths, in the first.
Woods-Powr Grip, in Laurel, has its roots in a founder who developed a suction cup that would hold items in place. The founder of Montana Silversmiths, located in Columbus, was making and selling trophies and awards out of his basement and could find no supplier of the silver pieces he needed. The only supplier was in Mexico and they were not of high quality, so he started making them himself.
Of course, in all instances, nothing comes of a great idea without an individual behind it that has the confidence and courage to take a chance.
And, a willingness to work hard. That is probably the greatest asset of the entrepreneur, exceeded only by the fact that they love what they are doing.
And therein may be the greatest, rarity – the willingness to work hard. That is a key to success is not unique to entrepreneurism. Whether its scientists, athletes, artists or entrepreneurs, what group hasn’t, time and again, had individual performers who have proven that anything is possible if you just work at it hard enough?
And while it is true that entrepreneurs are usually good problem solvers, necessity spurs entrepreneurship in an even broader way. New business startups increase when economies are bad – when economic survival requires a new approach. One could view that as a natural market phenomena.
When established businesses suddenly fail, when economies shrink and jobs are lost and replacement jobs are scarce, many people with talent, experience, knowledge and a work ethic become self-employed. That is often the first step in launching a new business enterprise – in sort of a natural re-generation of business –that is, if it is not thwarted by years of unemployment and welfare benefits which act as disincentives.
Evidence that entrepreneurship is actually a more natural human response to necessity than the experts might realize, can be found in most third world countries if one looks closely enough. But, because of the way the experts evaluate things, it is often overlooked for what it is.
Most of these countries are in a third-world status because they have governments or dictators who through their laws and edicts make any kind of business activity extremely difficult. But it is not in the nature of human beings to give up in the face of such adversity – huge segments of those populations are engaged in rampant entrepreneurism – only it’s not “legal”. Those who study such things often dismiss such production, and fail to see it as the economic factor it is, calling it a “black market,” or a “shadow economy,” or an “informal market.” It is discounted even when such activity comprises more than three-fourths of a country’s economic base – even when it is obvious that it is “illegal” market activity that is sustaining the entire country – when it is obvious that without it most of the population would starve and perish.
It is in some of these countries that one comes closer to seeing far truer free enterprise – underground as it is – than one can find in the US. With no welfare benefits, no unemployment, no subsidies, no entitlements of any kind - -entrepreneurs emerge from every direction devising not only clever ways to produce, but even more clever ways to do so without being caught and punished by government for doing so. As long as they don’t get too big or too successful, the governments are often too poor to enforce their insane edicts, so economies thrive. But because they can never be “too” successful without drawing unwanted attention there remains an arbitrary and crippling restraint on the country’s standard of living.
The US, by the way has its own underground economy – something which receives scant public recognition – but which the IRS has on occasion suggested could be as much as a quarter of total production. And, the reasons for its existence is not unlike the reasons for it in third world countries.
Over regulation, excessive permitting and licensing, and “oversight” smothers entrepreneurism. Often instigated, specifically to protect established businesses, these restraints make it difficult if not impossible for entrepreneurs to get a foothold. While the economic development leaders are concerned about how fledgling enterprises can get large investments of venture capital to move to the next level of growth, they usually ignore the more common problem – arbitrary burdens imposed at the very first rung of most business starts – things like ordinances requiring the latest and most expensive of equipment or facilities, licensing and permitting fees. Even a city business license can be out of reach for some – it is certainly an expenditure that does nothing to advance entrepreneurism in a community, even if it does fill city coffers.
The founder of one of Billings’ largest employers, today, tells how over thirty years ago his biggest problem in a typical day of business was finding enough money to buy a box of printing paper. His wife did the computer work in an “office” with a dirt floor.
A typical first foothold one hears about is for a business to start in a basement or a garage – or out of the back of a car. Some people got their business startup capital by using their personal credit card. Such common stories about how entrepreneurs got their start, is a revelation about how tenuous startups can be; and it’s an insight into how easily they can be squelched.
The most help that government can give to encourage entrepreneurism is to grant the latitude they need – as much economic freedom, as possible — because there is no way to predict from which direction success will come, and that is essentially what these folks are trying to do. Visionaries have been deplorably inaccurate in predicting markets — anticipating which ones are winners and which are losers — Wall Street is full of financial advisors who only wish they could do that.