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Week of June 12 - 18, 2006

Welcome to the National Dialogue on Entrepreneurship, an initiative of the Public Forum Institute made possible by a grant from the Kauffman Foundation of Kansas City. Through NDE-news, we bring you short summaries and analyses of various trends driving the innovation economy. Subscribe now to receive your weekly copy. Archived issues are available online. Links to the day's entrepreneurship stories from across the nation and around the world are posted each weekday on the NDE main page - bookmark it and stay informed about the latest entrepreneurship news.

New Census Studies on Self-Employment

It’s been conventional wisdom that many entrepreneurs had parents who were self-employed. According to some estimates, more than half of all business owners had a self-employed family member prior to starting their business. While this data is compelling, what’s really driving intergenerational business ownership patterns? Is it nature or nurture? In other words, are some entrepreneurial traits inherited across generations or do entrepreneurs model the behavior displayed by their parents? Two new papers sponsored by the Census Bureau’s Center for Economic Studies shed some light on these issues. In this research, Robert Fairlie and Alicia Robb examine how a family business background affects small business outcomes. The research offers a number of interesting insights, but one main conclusion stands out. New business owners gain invaluable experience from working in a family member’s small business, not from simply knowing another entrepreneur. This work experience is critical in providing future entrepreneurs with the skills and knowledge needed to succeed in business ownership. The authors also note that few public sector programs help aspiring entrepreneurs obtain this kind of apprenticeship experience. Many programs do provide technical assistance and financial support, but they do not provide real life experiences that seem to be important for the acquisition of critical entrepreneurial skills. 

Access the June 2005 US Census Bureau Center for Economic Studies Discussion Paper (CES 05-07), “Families, Human Capital, and Small Business:  Evidence for the Characteristics of Business Owners Survey,” by Robert W. Fairlie and Alicia M. Robb.

Bank Financing and High-Growth Firms

Few fast growing businesses obtain financing from banks. This conventional claim receives strong support in the latest edition of PriceWaterhouseCoopers Barometer survey of “Trendsetter” companies (312 private firms who are among the fastest growing in the US. The survey finds that only 12% of fast-growing firms obtained bank financing in the first quarter of 2006. This proportion has dropped from last year, but it has remained fairly consistent (in the range of 10-13%) over the past few years. Lines of credit and self-financing are more commonly used financing tools. In addition, surveyed firms are showing a growing interest in pursuing alternative financing options such as angel investors or private placements.  Analysts expect these trends to continue as interest rates continue to climb.

View the latest Trendsetter Barometer Survey from PriceWaterhouseCoopers.

Black Enterprise's Top Businesses

The June 2006 issue of Black Enterprise contains B.E.’s 34th annual list of the largest black-owned businesses in the US. The B.E. 100 lists are a little different from other “best of” rankings. Instead of a single list, the B.E. 100’s list firms in several categories: industrial/service companies, auto dealers, advertising agencies, and financial services firms. Michigan is the biggest source of B.E. 100 winners, accounting for 24 firms in either the industrial/service or auto dealer categories. Other centers for B.E. 100 firms are Georgia (17), Texas (15), and California (13). World Wide Technology Inc. (of Maryland Heights, MO), a reseller of information technology products and services, takes the top spot on the list of B.E. 100 Industrial/Service companies with annual sales exceeding $1.8 billion. Black Enterprise’s Company of the Year takes the 2nd place ranking. Houston’s CAMAC International Corporation, with $1.5 billion in annual sales, is a major player in oil and gas exploration and drilling in West Africa and Colombia.

The 2006 Black Enterprise B.E. 100 winners lists can be found in the June 2006 issue of Black Enterprise.

Asian-Owned Firms Growing

Although it doesn’t seem to generate much attention, Asian-American entrepreneurship is alive and well. New Census Bureau data (from 1997-2002) shows that the number of Asian-American owned businesses grew by 24% while their annual revenues grew by 8 percent (to a total of $326 billion). The growth rate of Asian-owned firms is roughly double the overall US growth rate in new businesses. Within the broad category of Asian-Americans, Chinese-Americans account for the largest portion (nearly 47%) of business owners. Almost one in three Asian-American owned firms have employees. This is a much higher proportion than among other demographic groups.

View the May 2006 US Census Bureau report, Asian Owned Firms: 2002.

Negotiation Strategies for Entrepreneurs

Negotiation skills – an increasingly important part of virtually every aspect of business and life – are especially valuable to entrepreneurs engaged in growing their companies. This month, Kauffman eVenturing features new articles to help emerging business owners become better negotiators in their daily and longer term business dealings. The articles include “Negotiation for Mutual Gain” by William Ury, distinguished global expert and co-founder of Harvard Law School’s program on negotiation. Ury explains how to enable both sides in a negotiation to gain by expanding (rather than dividing) the economic pie.

Read this month’s collection on Kauffman eVenturing.

NCGE Site Highlights Research and Policy Community

The National Council for Graduate Entrepreneurship just launched its research community website and graduate observatory, providing users with a searchable database of more than 650 research entries – including NCGE’s commissioned research projects. In addition, the site is beginning to build a Who’s Who community to raise the profile of entrepreneurship research. NCGE – whose aim is to promote entrepreneurship as a career choice among students and recent graduates in the UK – recently partnered with the Kaufman Foundation to create a fellowship for Britain’s most promising young entrepreneurs to spend six months in the U.S. with some of America’s most innovative thinkers, experts and business leaders. 

Visit the Research & Policy Community – and register for the Who’s Who of entrepreneurship researchers.

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All stories © 2006 The Public Forum Institute
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