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Entrepreneurs Need Encouragement If They Are Going to Revive the Economy

By: Steve Johnson

5/6/2009 - 41 Comments

With unemployment rates climbing and projections of reaching 8.9% by the end of the month, where are the entrepreneurs?

The leader in creating new jobs is always the small business sector.  80% of new jobs are created by the small business sector.  The best way to stop the declining job loss is the encourage entrepreneurs to go after new markets. 

We need all the entrepreneur energy that we can muster to reverse the recession.

The question is how do you encourage entrepreneurs?  How do you encourage people with money and energy to go after new markets?  There are a lot of entrepreneurs right now that are waiting for more favorable conditions.

Many of the best entrepreneurs are in a position where they don’t have to invest their time and money into a new business. They can choose to wait for conditions to become less risky. 

Other entrepreneurs, like colleges graduates who don’t have time or money on their side, are already motivated to start a business by the fact that they cannot find a job.  These guys have little to lose.  College grads are an important part of the entire group of entrepreneurs, but they also have a lower rate of success. 

As you can imagine, an established small business owner with key relationships with banks for credit and relationships with other business owners for leverage, have a much lower rate of failure and a much better chance of creating hundrends or thousands of jobs.

Key to Economic Revival

The key to economic revival is not to continue to encourage consumer and government spending, which has created the phony economy that is now collapsing, but to encourage entrepreneurs to build a new economy based with new products that can be sold around the world.

How to Encourage Entrepreneurs

The entrepreneurs that are capable of creating hundreds of new jobs are looking for low risk opportunities.  Entrepreneurship is about taking risks and when risks are high, they will not pursue new markets.

The way to encourage entrepreneurs is to reduce their perceived risks.  The primary causes for increased risk include, potential higher taxes, higher employment insurance and regulations, higher commodity costs, higher inflation, increase in government intervention in the economy - especially in target markets like health care.

All of these risks are increasing with the policies of the current government leaders.  The current policies are stacked against entrepreneurs.

Perhaps the most damaging monetary policy right now is the extremely low interest rates, which are below the rate of inflation.  This policy of low interest rates removes the value of saving or accumulating money.  This policy of holding interest rates below inflation rates, means the more money you have the more money you are losing each day to inflation.  This policy discourages entrepreneurs, which is the exact opposite of what we need.

The Obama team needs to soon realize that their policies are discouraging entrepreneurs, which is pushing the economic recovery farther and farther into the future.

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