Back to Goal 19From Measures and Milestones 2002
p. 56-57, published 2002
On many fronts, the Commonwealth has responded to the urgent call of diverse groups that cited the state’s weak entrepreneurial capacity as an obstacle to economic growth and expanding prosperity. In recent years, they offered abundant evidence of the importance of entrepreneurship to economic growth, particularly in the era of information technology. In order to help foster more entrepreneurship, we need to identify and remove the barriers that would-be entrepreneurs face. Citizens do not rank an entrepreneurial economy highly in terms of its overall importance, nor do they perceive much progress on this goal. It ranks fourth from the bottom in terms of importance and seventh from the bottom in terms of progress.
Table 1: Where Citizens Think We Stand
In three surveys conducted by the University of Kentucky Survey Research Center in the fall of 1996, 1998, and 2000, the Kentucky Long-Term Policy Research Center asked Kentuckians if they had ever started a business. A comparison of results for the three years shows that the percentage of Kentuckians who had started a business increased over this period, suggesting that the strength of the economy may have provided the impetus for more would-be entrepreneurs to launch businesses.
Figure 1: Kentucky Adults Who Have Started a Business, 1996, 1998, 2000
In the same surveys, individuals who reported never having started a business were asked if they have ever seriously considered doing so. A greater proportion of respondents had considered starting a business than had actually started one in all three surveys. The trend in this entrepreneurial indicator, however, also rose over the time period analyzed. Again, this rising entrepreneurial impulse in Kentucky is likely linked to the then-overall health of the economy, the availability of loans to qualified borrowers, and the expanding use of information technology and the Internet.
Figure 2: Kentucky Adults Who Have Seriously Considered Starting a Business, 1996, 1998, 2000
The status of entrepreneurial energy in the Commonwealth can be gauged in part by the number of new firms or establishments owned by a parent company in the state. By 2002, the Kentucky Science and Technology Council would like to see Kentucky creating 25 percent more new firms every year than it did in 1996 when the U.S. Small Business Administration estimated that 9,133 new employer firms were created here. Thus far, Kentucky has not attained this ambitious goal, nor does it seem on pace to do so in the coming years. Indeed, the number of new firms added each year declined during the last two years shown here.
Figure 3: Number of New Firms in Kentucky, 1990-2000
Small businesses (fewer than 20 employees) constitute about 85 percent of all business establishments in Kentucky. To succeed, they need support and encouragement from government at every level, as well as from community-level institutions. In 1997, small business owners suggested considerable room for improvement in support for entrepreneurs. The Small Business Survival Index, which is produced by an advocacy group for small businesses, ranks states on a range of criteria the group perceives as contributing to the cost of doing business. In 2001, Kentucky ranked 32nd in the nation, a sharp fall from its 1998 ranking at 19th by this group.
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