Entrepreneurship in Nebraska Conditions, Attitudes, and Actions

1. Entrepreneurship in NebraskaConditions, Attitudes, and Actions Eric C. ThompsonAssociate Professor of Economics Director, Bureau of Business Research University of Nebraska-Lincoln William B. WalstadJohn T. and Mable M. Hay Professor of Economics University of Nebraska-Lincoln

2. Promise • and • Challenge

3. Promise • More economic growth • Expanded employment • Greater income and wealth • More variety of products & services • Increased philanthropy

4. Challenge • How can we expand entrepreneurship • in Nebraska?

5. Three Themes • Conditions • Attitudes • Actions

6. Our Purpose • Give an overview of the book • Highlight some major findings • Discuss potential actions

7. Credits • Jim Krieger • Krieger Family Foundation • Gallup and its associates • University of Nebraska-Lincoln

8. Entrepreneurship in NebraskaConditions,Attitudes,and Actions

9. Business and Economic Analysis • Long-run Trends in Business Conditions • Chapter 2 • Recent Trends in Business Conditions • Chapter 3

10. Comparisons • There has been tremendous growth in entrepreneurship in the United States economy in recent years • We compare Nebraska to the nation and other states • Has Nebraska fully participated? • We also compare growth in the 6 community college regions of Nebraska

11. Community College Regions

12. Tracking Entrepreneurship in Nebraska • We tracked the progress of entrepreneurship in Nebraska over both: • The last two decades • The last three years

13. Long Run Trends • Net growth in the number of businesses in Nebraska lags U.S. by 0.5% to 1.0% per year. • Nebraska population is also growing more slowly. • These findings are related. Lower rates of business formation is one factor limiting population growth in the state.

14. Comparison of NE with US Business Counts • However, there are a number of factors that affect population growth. • And, lower population growth also may limit growth in business counts. • It is useful to look at per person growth in business – to what extent are Nebraskan’s generating businesses?

15. Employer Establishment Counts Per Person 2006

16. Annual Growth in Employer Establishments Counts Per Person 1994-2006

17. Comparison of NE with US Business Counts • The growth of employer establishments per person is similar in Nebraska and United States. • The picture is different when examining all firms, including proprietor’s without employees.

18. Annual Growth in Business Counts Per Person 1994-2004

19. Firm Births Per Person 1994-1995 and 2004-2005

20. Selected High Growth IndustriesGrowth in Establishments Per Person Average Annual Change 2001-2005 Nebraska U.S. Software Publishers 0.0% -3.1% Computer System Design 2.7% 1.0% Management Consulting 5.5% 4.8% Scientific R&D 7.7% 1.5%

21. Patents Per Thousand Residents Average Annual Change 2005 1990-2005 Nebraska 0.117 1.5% United States 0.279 1.8%

22. Annual Growth in Real Income Per Non-Farm Proprietor 1990-2005

23. Relative Per Capita Income 1990-2005Non-Farm Income

24. Comparison among 6 Community College Districts • Compare the number of employer establishments per person in the 6 districts, and growth in employer establishments. • Compare growth in real income per proprietor, and per capita income.

25. Employer Establishments Per Person 2006by Community College District

26. Annual Growth in Employer Establishment Counts Per Person 1990-2006by Community College District

27. Real Income Per Non-Farm Proprietor 1990-2005 by Community College District

28. State Entrepreneurship Index5 Components • Percent Growth in Employer Establishments • Percent Growth in Non-Farm Proprietorships per Person • Business Formation Rate • Real Income per Non-Farm Proprietorship • Patents per Thousand Residents

29. State Entrepreneurship IndexNebraska and Selected Nearby States 2004 2005 State Ranking Index Value Ranking Index Value Nebraska 34 0.89 35 0.85 Colorado 3 1.96 2 2.17 Iowa 49 0.45 49 0.46 South Dakota 44 0.72 42 0.63 Wyoming 7 1.77 9 1.54

30. State Entrepreneurship IndexSelected Leading States 2004 2005 State Ranking Index Value Ranking Index Value Idaho 1 2.25 1 2.44 Colorado 3 1.96 2 2.17 Massachusetts 4 1.86 5 1.84 Wyoming 7 1.77 9 1.54 California 8 1.77 6 1.74

31. Conclusion • Many indicators suggest an average level of entrepreneurship in Nebraska. • Nebraska and the United States have a similar number of businesses per person. • The growth rate among employer establishments is similar in Nebraska and the nation on a per person basis. • Nebraska has a “middle of the pack” value and ranking for the State Entrepreneurship Index

32. Conclusion • While Nebraska is an average state in terms of entrepreneurship, Nebraska is not yet a leading state. • Further several indicators suggest that entrepreneurial success in the state is concentrated in the Omaha area. • Most strikingly, while the number of employer establishments per person grew strongly in all 6 Community College Districts of Nebraska, the average income of proprietors was flat or declining in 5 of these districts. • Omaha was the only region with rapidly growing average income per proprietor.

33. Entrepreneurship in NebraskaConditions,Attitudes,and Actions

34. Survey Analysis • Interest and Reasons for Entrepreneurship • Chapter 4 • Entrepreneurial Knowledge and Education • Chapter 5 • Views of Government, Business, and • Economic Development • Chapter 6

35. Sampling • General Public • 2,460 to 4,935 Nebraskans 18 years of age or older • +/- 1.4% to 2.0% sampling error for state results • Business Owners • 555 to 1,122 Nebraska business owners with • 1 to 100 employees • +/- 4.2% to 2.9% sampling error for state results Surveys conducted: Fall 2005 and 2006

36. Interest in Entrepreneurship

37. Interest in Starting A Business 43% total General Public (n = 4,935)

38. Community College Regions

39. Interest in Starting a Business 46% 46% 42% 41% 40% 40% General Public (n=4,935) General Public (n = 4,935)

40. Interest in Starting A Business by Age 60% 58% 51% 26% Age in years General Public (n = 4,935)

41. Age When First Thought of Starting Own Business Business Owners (n=1,122)

42. First Thought of Starting Own Business at Age 29 or younger Business Owners (n=1,122)

43. Interest Findings • Over half of Nebraskans ages 18-29 are interested in starting a business. And, over half of this group say they are very likely or likely to do so. • Among the ~ 300,000 Nebraskans (age18-29) there are about 84,000 with genuine interest in starting a business. • There is a large untapped pool of potential entrepreneurs among young adults in Nebraska!

44. Business Succession

45. Years to Exit Business Business Owners (n=1,122)

46. Who to Transfer Business to Business Owners (n=1,122)

47. Succession Findings • There is a succession problem for businesses. • Most owners plan to exit the business in next 10 years. • Many owners, especially of smaller businesses, plan to liquidate their business.

48. Role of Government

49. Government Regulations Make ItToo Difficult to Start a Business

50. Government Regulations Make ItToo Difficult to Start a Business(% in agreement) General Public (n=4,935) General Public (n = 2,475)