The Importance of Startups: Job Creation and Innovation - Gauthereau Group
Startups are extremely important to the business ecosystem and can have significant impact on the way the world lives. Job creation, technological innovation and community activism are some of startups’ major contributions to society. On average, one-year-old companies create nearly three million jobs, while ten-year-old firms generate only 300,000, according to data from a 2010 Ewing Marion Kauffman Foundation study. Startups represent about 10 percent of all U.S. companies – 500,000 out of five million total — and create an average of three million jobs every year, whereas all the other existing companies combined lose a net one million jobs, revealed data compiled by the 2011 Economic Report of the President. Unfortunately, limited access to capital is crippling startups. Despite a lot of liquidity in the market, early stage companies struggle to raise enough capital at a competitive price. The second issue is a dearth of talent in IT and marketing. Because the growth of the digital economy has been faster than the capacity for schools to train new talent, there is a shortage of engineers and programmers for the many companies who must compete for their skills and support. Thirdly, access to technology has made the barrier-to-entry extremely low for many digital media businesses, which means that innovation is quickly met with copy-cat competitors.
If I had to offer one word of advice to young entrepreneurs it would be: Focus. Successfully starting and running a company means you’ve got to focus on your product and focus on delivering a perfect experience. It’s very easy to want to start diversify or try to do too much at once when your infrastructure is not ready. Undivided focus on your core offering will help you secure capital, recruit the right talent and provide the level of quality in your product or service that will help you build your brand on the right foot.
As more startups emerge, more jobs and innovation will surely follow. I’d love to hear from some of the entrepreneurs out there: What advice would you give to aspiring entrepreneurs and what are some additional reasons startups are so important to our society?