Entrepreneurship and the Economy: What’s holding New Yorkers back from starting a business?
Ever thought of starting a business in New York but abandoned the idea? In a lackluster economy, small businesses are often an engine of growth, creating many of the jobs and commercial activity that keep the nation’s communities afloat. According to the U.S. Small Business Administration (www.sba.gov), small firms represent 99.7 percent of all employer firms; employ half of all private-sector employees; pay 44.3 percent of total U.S. private-sector payroll; have generated 60 percent to 80 percent of net new jobs annually over the last decade; and supplied more than 23 percent of the total value of federal prime contracts in fiscal year 2003.
Earlier this year, New York City’s Center for an Urban Future (www.nycfuture.org) hosted a forum to determine why New Yorkers shied away from starting a business. The forum, held in March under the title Tapping the Entrepreneurial Vitality of New York City Neighborhoods, challenged the notion that “access to capital” is the primary deterrent. Moderated by CUF’s research director, Jonathan Bowles, it also identified fear of failure and inadequate business assistance as major obstacles for New York’s would-be entrepreneurs.
New York City Comptroller William Thompson zeroed in on access to capital. “Lack of capital—whether it is the lack of capital to start or to grow—is what holds people back the most, and that’s probably what you hear about the most,” he said.
Brian Singer, program manager for Business and Community Economic Development at the Church Avenue Merchants Block Association Inc. in Brooklyn, N.Y., argued that people were afraid to fail. “People that I meet who are ready to start businesses...think they’re ready but they don’t take that step to actually start their businesses. Part of that is a fear of failure. If they were to have solid business plans, or at least solid ideas on how they were going to implement their plans, then they could feel confident enough to go forward,” he said.
Other speakers noted that some people take steps toward entrepreneurship but are disappointed when they seek help. Such was the case for New York entrepreneur Etu Evans. “I agree that there are many institutions that are in place to help,” said Evans, founder and president of Etu Evans LLC, a foot-wear design company in Harlem. “Unfortunately, none have helped me. In my honest opinion, I think that [the people who work for these institutions] are people who have jobs but don’t understand the constituents that they’re serving. [In one instance,] I submitted my business plan and was told that it would take two months just for them to review the plan.” Evans was an honoree among TNJ’s 2003 40 Under-Forty Dynamic Black Achievers.
Nigel Pearce, managing director of Finance NYC and former director of business services at the Queens County Overall Economic Development Corp., sees the need for more investment incentives. You need that early-stage money in order to get to that point where a venture capitalist or private equity investor will look at you,” he said. “The barriers today are that those [venture] funds find it infeasible to operate in those zones. So we’ve got to find a way to incentivize those people so they can operate in those zones.”
Pearce said he succeeded in getting some of his small business clients to move into designated “economic empowerment zones,” thus enabling their investors to receive a 25 percent credit on their state taxes. “That was an incentive for many of the people to put money into certain deals,” he said.
Isa Abdur-Rahman, Esq., can be reached at 212-920-5221 or Isa@Rahman-Esq.com.