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Raising Standards of Living

Entrepreneurship needs to be able to take root and bloom beyond a few big cities

By Diane Smith

In 2014, Jonathan Ortmans, a Senior Fellow at the Ewing Marion Kauffman Foundation, testified before a U.S. House Committee on Small Business. The Kauffman Foundation is one of America’s most well regarded resources on entrepreneurship and economic growth, so we can presume he knows his stuff. Mr. Ortmans’ testimony, therefore, should be a wake-up call for all of us who care about our nation’s economic prosperity. He said, “New business creation is crucial to a healthy, vibrant economy … Contrary to popular rhetoric, it is not small businesses, but rather new and young businesses that drive new job creation. Nearly all net new jobs are created by new and young companies. Similarly, startups are responsible for a disproportionate share of innovative activity, which creates … rising standards of living for all.” (My emphasis added.)

When coupled with a recent story from the Washington Post, Mr. Ortmans’ findings are troubling. According to the Post, “Americans in small towns and rural communities are dramatically less likely to start new businesses than they have been in the past, an unprecedented trend that jeopardizes the economic future of vast swaths of the country.”

Undoubtedly the recession had a pretty dire effect on start-up creation in rural and small towns: “in the early 1990’s recovery, 125 counties combined to generate half the total new business establishments in the country. In this recovery, just 20 counties have generated half the growth.” So what happened to the 105 other counties? Maybe it was lending regulations that make access to capital tough for rural and small communities or the over-gentrification of a few cities that control a disproportionate share of U.S. wealth? Maybe it’s also about culture.

After raising millions for a tech business in the Flathead, I was asked repeatedly by big-city residents as well as folks from rural and small communities, “How did you build a successful tech company in an out-of-the-way location?” I’d answer, “In a coffee shop with Wi-Fi, just like you’d do anywhere else.” Notably, I didn’t get asked about being a woman or baby boomer tech CEO, both pretty rare. Nope, I was asked about location. The implication was clear; successful technology start-ups just didn’t happen outside of a few well-known places like Silicon Valley or Boston.

I’ve worked with lots of entrepreneurs building business off the beaten path. Whether they’re in hospitality, combating climate change, or building new social media platforms, they’re all hard-working, risk-taking innovators. And they all deserve a shot at being as successful as they want to be, from wherever they want to be.

Entrepreneurship needs to be able to take root and bloom beyond a few big cities. So, if you see an entrepreneur this week (and I guarantee you will), thank her. It’s rough to put your own time and money on the line without any guarantee of success but, as Mr. Ortmans said, it results in “rising standards of living for all.”

Diane Smith is founder and CEO of American Rural