What Every What Every Kentucky Journalist Kentucky Journalist

Needs to Know AboutNeeds to Know AboutEntrepreneurshipEntrepreneurship

Ron Hustedde, DirectorKentucky Entrepreneurial Coaches Institute

University of Kentucky

The Economic The Economic Landscape in Landscape in

Rural Kentucky:Rural Kentucky:

Decline in “old” Decline in “old” economy economy industriesindustries

Phasing out of #1 Phasing out of #1 crop: burley crop: burley tobacco quota tobacco quota reduced approx. reduced approx. 60% between 60% between 1997 and 20001997 and 2000

Traditional Traditional Development Development Approaches:Approaches:

Industrial Industrial RecruitmentRecruitment

““Build it and they will Build it and they will come”come”

Focuses on providing the Focuses on providing the infrastructure (buildings, infrastructure (buildings, water & sewer) as well as water & sewer) as well as loan and tax incentivesloan and tax incentives

Business Retention Business Retention and Expansionand Expansion

Incentives to existing Incentives to existing businesses to stay (tax businesses to stay (tax and loan programs)and loan programs)

Small entrepreneurial Small entrepreneurial firms are the engines firms are the engines

of innovationof innovation

Account for 50% of the Account for 50% of the nation’s non-farm GDP*nation’s non-farm GDP*

Employ more than half Employ more than half of all employees in the of all employees in the private sector*private sector*

Create 75% of net new Create 75% of net new jobs in our economy*jobs in our economy*

Kentucky small Kentucky small businesses income businesses income increased from $7.4 increased from $7.4 billion in 2002 to $8 billion in 2002 to $8 billion in 2003. billion in 2003.

*Small Business Development Center, Office of Advocacy *Small Business Development Center, Office of Advocacy (February 2004)(February 2004)

Entrepreneurship in Entrepreneurship in the 21the 21stst Century: Century: By 2025, an estimated ½ of By 2025, an estimated ½ of

North American workforce North American workforce will be self employed**will be self employed**

A “paradigm shift” is on A “paradigm shift” is on the horizon:the horizon:

State of Kansas: utilizing State of Kansas: utilizing community development block community development block grant funds to establish rural grant funds to establish rural entrepreneurship entrepreneurship demonstration projects demonstration projects

State of Maine: both state-State of Maine: both state-wide and rural-specific wide and rural-specific entrepreneurship initiativesentrepreneurship initiatives

****Wall Street Journal, 09/12/2000Wall Street Journal, 09/12/2000

Riding the Entrepreneurial Riding the Entrepreneurial Wave:Wave:

Can compliment more traditional approaches (putting your eggs in more than one basket)

Entrepreneurship focuses on nurturing entrepreneurial activity at the local level

Tends to involve local civic organizations; more diverse leadership; loyalty to local community; often more highly skilled (though fewer) jobs

BUT:BUT: Current Economic Current Economic

Development Policies Development Policies focus on Industrial focus on Industrial Recruitment. The Recruitment. The support structure support structure includes:includes:

Industrial Development Industrial Development AuthoritiesAuthorities

Small Business Development Small Business Development CentersCenters

State Tax and Loan Incentive State Tax and Loan Incentive ProgramsPrograms

But – relatively little support But – relatively little support for entrepreneursfor entrepreneurs

E-Activity70%

Other30%

E-Activity1%

Other99%

What’s Wrong with this Picture?What’s Wrong with this Picture?

Percentage Difference inEconomic Growth ExplainedBy Entrepreneurial Activity

Percentage State EconomicDevelopment Resources forEntrepreneurship Development

Source: Global Entrepreneurship Monitor 2000 Source: NASDA Survey of State Expenditures 1999

Three Kinds of EntrepreneursThree Kinds of Entrepreneurs

1) Aspiring2) Lifestyle3) New Fast-Growth Companies

What Entrepreneurs Want:What Entrepreneurs Want:1) Access to Talent2) Access to Capital3) Networks4) Infrastructure

Ten Things Elected Leaders Ten Things Elected Leaders Can Do for Entrepreneurship:Can Do for Entrepreneurship:

1) Find out what they need2) Make it clear you’re entrepreneurial-friendly3) Create more entrepreneurs4) Diversify economic development investments5) Increase networking6) Strengthen support system7) Make it easier for investors to find opportunities8) Pay attention to women & minority entrepreneurs9) Form regional clusters10) Build a citizen-based entrepreneurial vision

Will Your County or Region Will Your County or Region Be A Maverick Be A Maverick

or Just One More Cow in the Herd?or Just One More Cow in the Herd?

“The scenery changesonly for the steer

that’s in the lead.”

Red Steagall“The Maverick Way”

Maybe it’s time for you to become an . . .Maybe it’s time for you to become an . . .

AdvocateAdvocateFor For

EntrepreneurshipEntrepreneurship