Changing the Face of Entrepreneurship for Over 30 Years

On January 12, 2016, the U.S. Women's Chamber of Commerce issued a detailed statistical report(http://uswcc.org/wake-up-call) highlighting the disparity between the number of women business owners in America and their business revenues. This report, derived from the recently released2012 U.S. Census Survey of Business Ownerspoints out that women business owners are failing to achieve revenues on par with male-owned firms.

Women own 9.9 million U.S. firms representing 35.76 percent of all firms and generate$1.4 trillionin revenues annually. But, women-owned firms produce only 4.23% of all U.S. revenues. 70% of women-owned firms have less than$25,000in revenues annually. Only 1.74% have revenues over one million. Only 10% have paid employees. And, between 2007 and 2012, the average receipts generated by women-owned firms dropped by nearly$10,000annually. Firms owned by women of color are even more challenged: while 28% of all women-owned firms are owned by women of color, they secure only 14% of all women-owned revenues.

"The obstacles to growth facing women business owners are dramatically impacting their business revenues and profits," states Margot Dorfman, CEO of the U.S. Women's Chamber of Commerce. "These struggles translate into massive opportunity losses for business owners, their employees, families and communities. It behooves every American to call upon political, governmental and business leaders to take action to open the doors to opportunity for women-owned firms."


Thirty-nine community-based organizations across the United States that provide assistance to disadvantaged entrepreneurs are set to receive $5 million in grants from the U.S. Small Business Administration’s (SBA) Program for Investment in Micro-Entrepreneurs (PRIME). These organizations help low-income entrepreneurs gain access to capital to establish and expand their small businesses.

“By training low-income and disadvantaged micro-entrepreneurs on how to grow their businesses, particularly through the smart use of information technology, the PRIME Program helps small businesses thrive in a 21st century economy,” said SBA Administrator Maria Contreras-Sweet. “The beauty of PRIME is that it assists small businesses and micro-entrepreneurs to become lender ready, complementing the roughly $140 million approved this year through SBA’s mission-based lending programs.”

This year’s 39 recipients come from 16 states, Puerto Rico, and the District of Columbia. The grants range from $35,000 to $200,000 and typically require at least 50 percent in matching funds or in-kind contributions. In total, 104 organizations applied for PRIME awards.

The SBA placed special emphasis in this year’s competition on applications for projects utilizing information technology and software to help small businesses start, strengthen and/or grow. Assisting small businesses with the tools needed to implement automated financial accounting, financial reporting, inventory management and web-based marketing and distribution is emerging as an industry best practice among SBA’s most successful microlenders.

This year’s awards also emphasized organizations participating in the SBA’s Community Advantage Program. This program provides mission-oriented, non-profit lenders access to SBA’s 7(a) loan guarantees to help small businesses that have outgrown microlending but are not able to access more traditional financing, including funding from SBA commercial lending partners. Twenty SBA Community Advantage lenders submitted applications, and 13 were selected for PRIME awards.

PRIME was created by Congress as part of the Program for Investment in Microentrepreneurs Act of 1999. Funds become available on September 30 and the grant is for one year.

For more information on PRIME grants and a list of this year’s grantees, visit http://www.sba.gov/content/prime-grantees.


Pennsylvania Gov. Tom Wolf signed an executive order to increase opportunities for small businesses owned by women and minorities — including veterans, disabled and those of different sexual orientation — doing business with the state.

The order, "Diversity, Inclusion and Small Business Opportunities in Pennsylvania," will "correct the course of the commonwealth with respect to state contracting opportunities for small diverse businesses," Wolf said.

Diversity is "something that is part of everything that makes up an economy, a community, a neighborhood, a family. And that's what this executive order is about. I need to make the point that Pennsylvania is open for business for everybody," Wolf said "A society that is unfair to some is unfair to all. If we want a healthy economy, if we want strong neighborhoods, if we want good families, we must have a fair society. And my hope is that this executive order is one small step in the direction of that fair society."

Curt Topper, secretary of the Department of General Services, said the best data the state has suggests that number of small businesses and diverse businesses doing business with Pennsylvania declined from about 10 percent to about 6 percent from 2010 to 2014.

The executive order:

• Creates an advisory council on diversity, inclusion and small business opportunities that would advise the governor's office and agencies under the governor's control;

• Renames the Bureau of Small Business Opportunities as the Bureau on Diversity, Inclusion and Small Business Opportunities;

• Directs the advisory council and state agencies to consider ways to increase participation of small businesses and businesses owned by minorities, women, veterans, disabled persons and lesbians, gays, bisexuals and transgendered persons; and,

• Works to increase the participation of such businesses in the state's overall economy, not just in state contracting.


A leading researcher at Rice University’s Jones Graduate School of Business has received a $1.5 million grant from the Ewing Marion Kauffman Foundation to study the effects of entrepreneurship education on entrepreneurial success.
The five-year project will work with leading startup support organizations in the United States to track the outcomes of a group of startups receiving a free, concentrated entrepreneurship curriculum.

“Many resources are thought to feed into entrepreneurial success, including technical knowledge, business acumen, professional and entrepreneurial networks and market conditions,” said Yael Hochberg, the Ralph S. O’Connor Associate Professor of Finance and Entrepreneurship at the Jones School. “However, very little evidence exists to support the notion that business acumen and education accelerate startup success. We believe our study will help develop sharp inferences that will contribute to our current understanding of factors contributing to entrepreneurial success.”

Hochberg, who is considered one of the foremost experts on accelerator programs and serves as managing director of the annual Seed Accelerator Rankings Project, is the grants principal investigator. This month she received the 2016 Ewing Marion Kauffman Prize Medal for Distinguished Research in Entrepreneurship. The medal, which includes a $50,000 prize, is awarded annually to recognize a scholar early in his or her career as an associate or full professor whose research has made a significant contribution to entrepreneurship. Prior recipients of this award are at some of the most highly regarded universities in the U.S.

The last decade has seen the proliferation of new types of programs, such as accelerators (fixed-term, cohort-based programs with an educational and mentorship component that culminate in a pitch event), and the re-emergence and growth of incubators and entrepreneurship and innovation-focused co-working facilities, Hochberg said.

Our research agenda aims to explore these new institutions and their features, and to answer a number of fundamental questions about their nature and efficacy, Hochberg said.

We expect the results of our study to be of considerable interest to many groups, including accelerators, incubators, local governments considering entrepreneurship education programs and educational institutions, she said.

Professor Hochberg’s approach goes well beyond the standard at most universities today, said Rice University Provost Marie Lynn Miranda. While many are offering activities around entrepreneurship, Yael is establishing the evidence basis for what actually works in activating the entrepreneurial capabilities of students and in so doing, building a more robust program for students.

Other key team members of the grants research team are Eric Floyd, an assistant professor of accounting at the Jones School, and Daniel Fehder, a Ph.D. student at the Massachusetts Institute of Technology’s Sloan School of Management.


Congress’ year-end “omnibus” spending bill includes provisions to improve several programs at the Small Business Administration (SBA), Democrats on the House Small Business Committee announced in December. Rep. Nydia M. Velzquez (D-NY), the top Democrat on the Committee, said the measures would help small firms access capital, grow and create new jobs.

“Small businesses are critical to the U.S. economy and the bipartisan provisions included in the year-end spending bill will help many of them expand and create new jobs,” Velzquez said. “Letting small firms refinance debt through SBA’s 504 program will give many greater flexibility and free up resources to grow stronger. Likewise, the change we made to the SBIC program will channel more investment capital to promising startups. I’m pleased these measures were included in this package and thank my colleagues for working together on this bipartisan achievement.”

The legislation permanently reauthorizes the SBA’s “504 refinancing” program. That program allows small businesses to refinance debt under the 504/CDC program to reduce monthly payments and restructure debt. The language in the omnibus is modeled on legislation authored by Rep. Judy Chu (D-CA), the Commercial Real Estate and Economic Development Act.

Said Chu, “To meet our job creation goals, we must put more capital in the hands of job creators. Reinstating the SBA’s successful 504 refinancing program will do that by helping small business owners refinance billions of dollars in old debt at no cost to the taxpayer. This is a benefit to the entire economy. Now owners can focus their resources on hiring employees and growing their businesses.”

The legislation also expands and strengthens the Small Business Investment Company (SBIC) initiative, which helps channel investment capital to small companies and fast growing startups. The legislation increases the cap that managers of SBICs can invest from $225 million to $350 million.

“Raising the leverage cap means more funding will be accessible to small firms seeking equity capital,” Velzquez said. “Dynamic companies in the SBIC program have a strong record of growing quickly and I was pleased to see this job creating measure included in the spending bill.”

The spending bill has been sent to the Senate for consideration.


The National Minority Supplier Development Council (NMSDC) has completed a National Survey that illuminates issues of Access to Capital among Minority Business Enterprises (MBEs). The Survey examines MBEs and "focuses on the internal factors, those within a minority firm's control, which may hamper their ability to obtain critical growth or acquisition capital." Education is key, the Survey finds, to improving access to capital, along with more opportunities for networking between capital providers and minority entrepreneurs.

Internal factors among MBEs that contribute to lack of access to venture and other forms of institutional capital include: the lack of growth-oriented succession planning for owners; lack of knowledge about sources of capital, combined with a lack of engagement by owners seeking funding alternatives beyond banks; and a negative perception of venture capital. MBE certification requirements may also inhibit owners from seeking institutional funding that is likely to make their businesses ineligible for certification.

Among the Survey's recommendations are online and on-site education promoted by networks such as NMSDC to teach MBEs best practices for fundraising, entrepreneurship in high-growth sectors, and better understanding of all types of financial tools, fostering an "overall level of financial sophistication to be able to interact in a substantive way with various fund managers." The Survey also concludes that relationships need to be significantly improved between networks of MBEs, such as NMSDC, and networks of investors.

Demographic shifts mean that in coming decades more than half of all Americans will belong to minority groups, greatly affecting employment and entrepreneurship which, along with small business ownership, is the greatest driver of wealth and job creation in the U.S. "Improving access to capital among underrepresented minority entrepreneurs is more than a social issue," the Survey states. "It is an economic imperative."

The National Survey on Access to Capital among Minority Business Enterprises was conducted in early 2015, using a representative sample of the population of interest - in this case, minority business enterprises certified by NMSDC. To review the Survey, please go to www.nmsdc.org/wp-content/uploads/National-Access-to-Capital-Survey15.pdf.

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