(Newswire.net — September 15, 2018) — Entrepreneurship may be getting more popular. According to the latest report, the first quarter of 2018 has seen rates of entrepreneurship higher than any other time period since before the economic crisis of 2008. This is good news for the economy, since entrepreneurship is correlated with more new jobs, as well as more innovation, more local economic stimulation, and healthier economic conditions overall.
The real question, though, is whether this momentum can last. Is this just a blip on the entrepreneurial radar? Or is it a sign of even bigger and better things to come?
Exploring the Root Causes
There are a few potential ways to answer this question. One of the most efficient is to look at the precipitating causes of this increase, and use them to predict how the trend may continue.
These are some of the biggest root causes responsible for this surge in entrepreneurial growth:
- Available resources and opportunities. First, we have to look at the resources and opportunities available to entrepreneurs. In the first quarter of 2018, 2,661 startups raised more than $49 billion—representing a recent trend toward capital availability. We’re also seeing the rise of more organizations and communities centered around entrepreneurship, such as the Entrepreneurs’ Organization, a global network for entrepreneurs. These resources make it easier for aspiring business owners to get started, and provide them with mentorships and frameworks to make their early years successful.
- Bull markets. Since the Great Recession, the stock market has enjoyed one of the longest bull markets in history. Stocks have consistently risen, year after year—a sign of a thriving economy. Investors are feeling wealthier and consumers are feeling more confident, which encourages more people to start their own businesses, and more people to spend money. These trends facilitate even more positive economic trends, which ultimately keep the engine of the U.S. economy moving—and inspire countless new businesses to start up.
- Online accessibility. We also have to look at the ease of creating a new online business from scratch. Website builders like WordPress and Squarespace make it possible for almost anyone to start a blog, a store, or a website advertising their services for cheap—or even for free. There are also ample online resources where aspiring business owners can learn the ins and outs of entrepreneurship, and learn best practices for starting a company from the ground up.
- Independence and deviation from the norm. We should also consider the subjective appeal of entrepreneurship. Traditional career paths, which end with a juicy pension and a surefire way to retire, are becoming less common, influencing more people to forge their own destinies by starting their own businesses. Our culture’s admiration of startup and tech company entrepreneurial giants, like Steve Jobs, Jeff Bezos, Mark Zuckerberg, and other successful business billionaires may also be pushing more people toward entrepreneurship.
Where Do We Go From Here?
So where will entrepreneurship rates go from here?
- The optimistic view. Let’s try on the optimistic view. The economy has been growing consistently, year over year, and with no major threats in terms of unemployment or productivity, it’s likely that the bull market could have several strong years left. The ease of creating a business is only going to increase as more tech products become available to aspiring business owners, and our idolization of startups is unlikely to go away soon. Accordingly, we could enjoy many more years of increased entrepreneurship rates.
- The pessimistic view. Now for a dimmer outlook. No matter how good the economy looks, a crash—or at least a pullback—is inevitable. If and when that crash happens, consumer confidence will be thrown out the window, people will spend less, startups will fail more often, and investors will have less free cash to risk in ventures. No amount of resources could make up for this, so the entrepreneurial increase could be only a few years away from ending.
- The realistic view. Odds are, we’ll fall somewhere in between these two hypothetical scenarios, with elements of each branch of possibilities coming true.
Entrepreneurship rates are in a good place, and in the near future, are likely to remain high. As for the next several years, entrepreneurship and economics are such complicated ecosystems that it’s nearly impossible to say for sure where we’re headed. Much hinges on consumer optimism, which for the foreseeable future is likely to remain strong.