September 15, 2016
Why Young Companies Are Changing Our Country's Economy
Whether born from a brainstorm in the shower or thought up while daydreaming in a boardroom, new businesses provide significant opportunities within the economy. When the thoughts and ideas of entrepreneurs lead to the establishment of a new business, the entire community benefits.
New Businesses = Greater Competition
New businesses, or startups, don't have market share, and can't rest on the laurels of their reputation to generate revenue. They have to innovate and hit the ground running from the moment they open their doors. This adds dynamism to the economy. It injects competition into the mix that drives both new and established businesses forward.
This results in greater options, lower prices, and better services for consumers.
Young Business = Job Opportunities
Ninety-five% of all U.S. businesses have less than 50 employees. In many cases, the employees of these companies have to wear many hats to get the job done.
It's a tough reality that every small business owner and their employees face, however, there is a silver lining to this: it means that employees learn skills and gain experience they otherwise wouldn't have if they were pigeon-holed into a job specialty. This translates to job flexibility that can help protect employees as the economy evolves and the needs of the company change.
In fact, employees who learn to wear the different hats become "go-to" people that move up the ladder as the company grows. This strengthens the in-house knowledge of the company while it creates many new entry-level positions.
As a company brings new people onboard, it brings in new ideas and new strategies. This creates a healthy mix of experience and innovative spirit that is at the heart of sustaining a small business over the long-term.
The Hiring Curve Flattens Over Time
Typically, young firms see the greatest growth during their first five years of operation. From 6-10 years, most new firms level out as their position within the marketplace solidifies.
Often, hiring picks up slightly at the 11-year mark, but it's never quite as significant as it is during the company's first few years of operation. Over the past 30 years, companies that are less than 1 year old have added 1.5 million jobs annually.
Declines In Startup Rates Dampen Growth
In the late 1970s, new firms accounted for 16% of all businesses in the economy. By 2011, that number had dwindled to just 8% as the country struggled out of a recession.
The absence of new businesses has hindered employment rates and made it harder for people to make ends meet. Fortunately, it's a trend that's picking back up again as more and more individuals hang their own shingles and pursue their own business ideas.
Contact the Amarillo Economic Development Corporation to learn more about the ways we're making it possible for businesses to prosper in our community.
SUBSCRIBE TO OUR BLOG
- Economic Development
- Small Business
- Guest Blog
- Inc Magazine
- Inc. 5000
- Quality of Life
- Align Amarillo
- Amarillo Community
- Food Manufacturing
- Gen Z
- Wind Energy
- cost of living