One characteristic of American recessions is an increase in innovation. People who are laid off start new businesses that challenge the market positions of their former employers with innovative offerings. Some of these new entrepreneurs will grow their businesses and go on to create new jobs for others.
We all know people who’ve been in this situation, and most of us know some who’ve grown their businesses and hired others. I’ve regretted at times not joining with a friend who had a great idea and has grown a successful firm.
But what happens when this engine of growth stops? We would be in uncharted territory wouldn’t we? According to a report by Challenger, Gray and Christmas, an outplacement firm, that’s exactly where we are. Entrepreneurship in America has stalled. This situation is a systemic risk that if ignored by policy makers could chart a new and less prosperous course for American innovation. Perhaps now is the time to start removing barriers to would-be entrepreneurs. Also, investors in start-ups might want to consider that right now, there are fewer opportunities for investment — ideally, competition for putting money in the right places could increase and that may encourage more entrepreneurs.