Can Entrepreneurs Beat Bad Economy?
There is a toolbox available to help business owners and managers fight through the recession, and it’s filled with the sort of ideas and action plans that have traditionally been identified with one of the most important components of the U.S. economy: Entrepreneurs.
Entrepreneurs are individuals who start new businesses from scratch or breathe new life into established commercial enterprises, helping them expand. A recent report by New York-based accounting and consulting firm Ernst & Young LLP offered a clear reminder about the power of entrepreneurs, who have traditionally driven much of the growth in the U.S. economy and the creation of whole new industries. Anyone from the owner of a small restaurant (see related photo and caption, home page) to Microsoft Corp. founder Bill Gates is an entrepreneur of sorts, with manufacturers, service providers, shopkeepers and street peddlers in the same class.
The report from Ernst & Young, titled “Entrepreneurship and Innovation: The Keys to Global Economic Recovery” comes a time when “business leaders are struggling to balance short-term survival with long-term demand for growth,” according to representatives of the firm. The basic message of the report is that “innovation and an entrepreneurial mindset is essential.”
The report drew on academic research and the views of various business leaders, contending that entrepreneurial activities such as developing new products and services, revamping organizational processes, or adopting fresh approaches to partnerships can put business enterprises in a position to make gains even in the current economic recession.
“Entrepreneurship and innovation inherently thrive in downturns,” said James S. Turley, chief executive officer of Ernst & Young. “In fact, some of the world’s largest companies were born during a recession.”
Turley also warned that “entrepreneurial thinking isn’t optional” in today’s recession.
“It’s more than a buzz word,” he said. “It’s a business strategy."
Turley combined his words of caution with a bright outlook on the future—although he indicated that his optimism is dependent on whether entrepreneurs in the U.S. continue to bring innovations forward amid the current economic downturn.
“Those with an innovative mindset can unlock the hidden opportunities in this recession,” Turley said. “New companies will spring up that will revolutionize whole industries, while mature companies will build innovative cultures that can strengthen their competitive edge for generations. We must do everything we can to stimulate creative thinking across our organizations, teams and processes. Our economic recovery depends on it.”
Some key findings of the report include:
• Recessions tend to favor the naturally innovative temperament of an innovative mind. Historically, entrepreneurs have thrived in recessions, and helped to bring about a return to economic health.
• 67% of respondents to a recent Ernst & Young survey said they are focused on pursuing new market opportunities brought on by the recession.
• Entrepreneurship is not about size—it’s a state of mind. Large and small companies can and do build and sustain cultures that embrace the power of innovation.
• Government policies can play a big role in encouraging entrepreneurial growth. Free flows of capital, labor, and ideas benefit innovators, as does an educated populace.
The full report can be viewed and downloaded via the Internet at http://www.ey.com/innovation.
