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Tuesday, 25 June 2013 15:09

West Michigan entrepreneurial climate improves, GVSU report finds

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Paul Isely, GVSU Paul Isely, GVSU

West Michigan became a better place to start and run a business during the last four years, a change that reflects a greater entrepreneurial culture that's taking hold across the region.

That's according to a new report by Grand Valley State University's Seidman College of Business and the Center for Entrepreneurship & Innovation.

The "Empowering Entrepreneurship" report concludes that three of the four essential elements for entrepreneurism – culture, capital, business climate and talent – have all improved since the last time that GVSU examined the topic in 2009, when the area was mired in the depths of the recession.

The cultural change is perhaps the most significant, said Paul Isely, co-author of the report and chairman of the Economics Department at GVSU.
Whether out of economic necessity or overcoming their fear of failure, or both, more people are willing to take the leap into entrepreneurism. They have at their disposal far greater support for their enterprise through universities and community organizations, Isely said.

"There has been a mindset change across West Michigan. People are really wondering, 'How can we get into the entrepreneurial space? How can we contribute to this? How can we participate?'" he said. "We are now embracing entrepreneurship as a goal."

One indicator of the change: 63 percent of the new jobs created in Grand Rapids since the recession came from new businesses, a rate that's well above the national average, Isely said.

While the cultural mindset toward entrepreneurism has improved, there are obstacles to overcome, the GVSU report stated. The Grand Rapids area is less diverse, for instance, than the national average and suffers from the inability to keep young talent.
Those issues, however, are tempered somewhat by the creation of new companies at a faster rate than the national average, the GVSU report said.

In addition, the access to capital is increasing at a rate higher than the national average, although West Michigan firms largely lag the nation in attracting federal grants through the Small Business Innovation Research and Small Business Technology Transfer programs, GVSU found.

Despite the growth locally in the access to angel investing, venture capital and private equity, the perception persists that more capital is needed to support entrepreneurship, Isely said. Data show the biggest need in Michigan right now is for second-stage capital, which contrasts with a perception that the largest void is at the early-stage level.

"If you ask an entrepreneur, 'Is there is enough capital?' – if they ever say 'yes', I would be surprised," he said. "There's always a need for more capital."

The change two years ago in the state business tax has helped to improve West Michigan's business climate, GVSU said, although the region's cost of doing business remain high. The Grand Rapids area also has fallen behind seven cities to which it was compared in recruiting new talent to supplement the local labor force.

In the talent category, the percentage of people in West Michigan with college degrees still ranks below the national average, as does the number of people employed in creative occupations, GVSU said. The region also trails the nation in the generation of patents.

"Grand Rapids has made significant progress in attracting entrepreneurial firms to the area. The availability of capital and the business climate has improved, but it still needs to do a better job of educating its workforce and retaining young workers. Future policies to attract specialized talent from abroad and attracting more capital will help foster the growth of entrepreneurship in the region," the report concludes.

Read 4513 times Last modified on Friday, 19 July 2013 11:56

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