Forbes: How Congress Can Help Reluctant Millennial Entrepreneurs And Small Businesses
Entrepreneurship is on the decline. This may come as a surprise with the popularity of shows such as “Shark Tank.” But between 2010 and 2014, only about 165,000 new businesses were started, compared with almost half a million new businesses between 1992 and 1996. Perhaps more surprisingly, millennials are starting even fewer businesses than previous generations.
Why are innovators – particularly Millennials – reluctant to start their own company? The recent recession coupled with barriers such as regulations, taxes, and lack of access to capital needed to start and grow a company, is adding to their reservations.
As chairman of the House Small Business Committee, I’ve seen first-hand how entrepreneurs and small businesses create a majority of our nation’s jobs. In fact, 99.9% of all businesses in the United States are considered a small business, and two out of every three new jobs are created by a small business. With these kinds of facts, you probably know someone who owns, works for, or works with a small business.
That’s why we need to make sure that people with great ideas feel like they can take that idea and successfully turn it into a product, service, or job.
In response, the House Small Business Committee recently held a hearing to ask industry experts what we can do to reverse the decline. We brought in Gregory Crawford, Ph.D., the president of Miami University in Oxford, Ohio, and Karen Kerrigan, president and CEO of the Small Business & Entrepreneurship Council, to get their input on the current state of entrepreneurship.
Dr. Crawford is focused on using universities as testing grounds for the next generation of innovators. He believes in not only traditional education, but also real-world experience and entrepreneurial lessons, to prepare more students to create new businesses, and thus create new jobs through their entrepreneurial accomplishments.
According to Dr. Crawford, Miami University has transformed their traditional internships into “interactive apprenticeships” where students can jump into the middle of a “messy, complex, sometimes risky, tension filled” real-world experience of entrepreneurship. Kerrigan noted that half of Millennials would be interested in starting a new business. However, she stressed the fact that millennials are more risk averse than other generations, leading to a 24 year low in businesses created by young Americans. She also said we need to create a more “business-friendly” environment, particularly by reducing duplicative or outdated regulations that prevent companies from growing.
I couldn’t agree more.
Across the country, federal government regulations affect small businesses in all industries, making it harder and more costly for small companies to start, grow and expand their businesses. Entrepreneurs are struggling with high compliance costs and expensive mandates. We need to lighten the massive regulatory burden, and make it easier for small businesses to thrive.
The Small Business Administration’s (SBA) Office of Advocacy is currently holding round tables around the country to hear directly from small businesses about which regulations are hurting them the most. By updating, cleaning up, or getting rid of bad regulations entirely, entrepreneurs will be better able to do what they do best – create jobs.
While there are many reasons potential entrepreneurs are apprehensive, perhaps the biggest barrier to taking the leap is the broken tax code. According to a June CNBC survey, taxes were the number one issue for at least a quarter of small businesses surveyed.
First, the current system is confusing for many small business owners. Many came from different careers, but with one great idea decided to start their own business. They do not have accounting backgrounds to help them navigate our complicated tax system. Nor are many of them able to hire tax attorneys to help them figure out how to save money.
Second, when small businesses have to pay higher taxes, it prevents them from investing money back into their company. Money they could use on new equipment to make their latest cupcake, invest in a marketing campaign about their new phone app, or even hire more employees to manage a new store.
Third, the smaller the business, the higher their tax burden per employee. Businesses with more than 50 employees have a tax burden of less than $200 per employee, while businesses with five or fewer employees face burdens as high as $4,500 per employee. This is not fair. We need to ensure that our tax system doesn’t favor the size of a business or their ability to turn a profit the quickest.
With slow economic growth and declining entrepreneurship, especially among millennials, it is more important than ever to provide legislative solutions to help, not hurt new and small businesses. From reducing regulations, increasing access to capital, and reforming the outdated tax system, I am committed to helping create an environment that encourages younger generations to get excited about starting a business. Millennials have the talent, creativity, and work ethic to create the next generation of businesses and jobs, and I look forward to working with my colleagues on Capitol Hill to make that a reality.The original article can be read HERE.