Experts Say Trend Points To Uptick In Startups

By Jim Offner
Waterloo-Cedar Falls Courier, Iowa.

With legions of college students about to head back to class, the annual ritual brings to mind the dreams of success those young scholars harbor: a good, well-providing career.

Unfortunately, the news wires are humming with stories of college graduates who can’t seem to kick open any career doors with their diplomas in hand.

It seems, an increasing number are trying to knock down those barriers by starting their own businesses.

Certainly, there are more resources available to them to help them reach that goal.

Indeed, that’s all Dan Beenken does as director of the University of Northern Iowa’s Small Business Development Center and manager of UNI’s Innovation Incubator.

Martin Luenendonk, founder of The Finance Club and Entrepreneurial Insights, says more Americans are starting their own businesses than before, even though the economy continues to drag. He says, for many, it’s going it alone is the way to ensure a future for the business owner’s family.

“The current times make it very easy for people to start businesses, especially tech companies,” Luenendonk said.
The trend has been building over the last couple of years, he said.

Once you figure out a plan, venture capital is easier, but it’s very important to test your hypothesis, develop a prototype or getting customers lined up,” he said. “If you can show this to investors, then it’s quite easy to get funding.”

Beenken agreed and said there isn’t a single reason behind the trend.

“To some of those kids that are graduating, their parents were in those corporate layoffs when they were at that impressionable age in high school,” Beenken said. “They see nothing is promised to you in any job.”

Students focusing on Science, Technology, Engineering and Mathematics — STEM — are in high demand.

On the other hand, Beenken said, some students in other fields who are taking the traditional diploma-then-job route are running into disappointment in the job market.

“For lots of kids, unless they’re in a valuable STEM field, the job they’re getting out of college is not paying all that great,” he said.

The lure to be one’s own boss — carve out your own niche — is powerful enough to make the risks of failure worth taking. It always has been that way.

But now, there’s something else at work that heightens the desire to open a business, Beenken said.

“We’re overproducing,” he said. “We’ve got online degrees, so there’s a supply-demand issue, so they think, ‘I can make 10-15 bucks a year, 30 grand a year, and that job will be there and so maybe this is the time I try to start out on my own,'” he said.

The idea of being a young business owner — another Mark Zuckerberg — is gaining fashion, as well, Beenken said, citing the Facebook founder.

“It’s very much become cool to become an entrepreneur,” he said.

There are also a lot of other entrepreneurs, too, Luenendonk said.

“I think Mark Zuckerberg may be the most well known, but there are many others out there,” he said. “If they succeed, they will try to nourish entrepreneurs.”

Of course, the statistics for startups remain as grim as ever — only one in four new companies reaches age 5, according to many estimates.

Beenken acknowledges as much.

Attitudes are changing in a “cultural shift” that doesn’t attach negative connotations to students who opt out of the career race to try their own things.

Starting a business used to mean “you couldn’t get or keep a job” in former times, Beenken said.

That no longer applies, he said.

“Those younger people see more positive connotations than there was,” he said.

The risks haven’t changed, but perceptions about failure have, Beenken said.

“There’s a little bit more of ‘it’s OK to fail,'” he said.

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