What Every Kentucky Journalist Needs to Know About Entrepreneurship Ron Hustedde, Director Kentucky Entrepreneurial Coaches Institute University of Kentucky

The Economic Landscape in Rural Kentucky: The Economic Landscape in Rural Kentucky: Decline in “old” economy industries Decline in “old” economy industries Phasing out of #1 crop: burley tobacco quota reduced approx. 60% between 1997 and 2000 Phasing out of #1 crop: burley tobacco quota reduced approx. 60% between 1997 and 2000

Traditional Development Approaches: Traditional Development Approaches:  Industrial Recruitment “Build it and they will come” “Build it and they will come” Focuses on providing the infrastructure (buildings, water & sewer) as well as loan and tax incentives Focuses on providing the infrastructure (buildings, water & sewer) as well as loan and tax incentives  Business Retention and Expansion Incentives to existing businesses to stay (tax and loan programs) Incentives to existing businesses to stay (tax and loan programs)

Small entrepreneurial firms are the engines of innovation Account for 50% of the nation’s non-farm GDP* Account for 50% of the nation’s non-farm GDP* Employ more than half of all employees in the private sector* Employ more than half of all employees in the private sector* Create 75% of net new jobs in our economy* Create 75% of net new jobs in our economy*  Kentucky small businesses income increased from $7.4 billion in 2002 to $8 billion in *Small Business Development Center, Office of Advocacy (February 2004)

Entrepreneurship in the 21 st Century: By 2025, an estimated ½ of North American workforce will be self employed** By 2025, an estimated ½ of North American workforce will be self employed** A “paradigm shift” is on the horizon: A “paradigm shift” is on the horizon: State of Kansas: utilizing community development block grant funds to establish rural entrepreneurship demonstration projects State of Kansas: utilizing community development block grant funds to establish rural entrepreneurship demonstration projects State of Maine: both state- wide and rural-specific entrepreneurship initiatives State of Maine: both state- wide and rural-specific entrepreneurship initiatives ** Wall Street Journal, 09/12/2000

Riding the Entrepreneurial Wave:  Can compliment more traditional approaches (putting your eggs in more than one basket)  Entrepreneurship focuses on nurturing entrepreneurial activity at the local level  Tends to involve local civic organizations; more diverse leadership; loyalty to local community; often more highly skilled (though fewer) jobs

BUT: BUT: Current Economic Development Policies focus on Industrial Recruitment. The support structure includes: Current Economic Development Policies focus on Industrial Recruitment. The support structure includes: Industrial Development Authorities Industrial Development Authorities Small Business Development Centers Small Business Development Centers State Tax and Loan Incentive Programs State Tax and Loan Incentive Programs But – relatively little support for entrepreneurs But – relatively little support for entrepreneurs

What’s Wrong with this Picture? Percentage Difference in Economic Growth Explained By Entrepreneurial Activity Percentage State Economic Development Resources for Entrepreneurship Development Source: Global Entrepreneurship Monitor 2000 Source: NASDA Survey of State Expenditures 1999

Three Kinds of Entrepreneurs 1) Aspiring 2) Lifestyle 3) New Fast-Growth Companies What Entrepreneurs Want: 1) Access to Talent 2) Access to Capital 3) Networks 4) Infrastructure

Ten Things Elected Leaders Can Do for Entrepreneurship: 1) Find out what they need 2) Make it clear you’re entrepreneurial-friendly 3) Create more entrepreneurs 4) Diversify economic development investments 5) Increase networking 6) Strengthen support system 7) Make it easier for investors to find opportunities 8) Pay attention to women & minority entrepreneurs 9) Form regional clusters 10) Build a citizen-based entrepreneurial vision

Will Your County or Region Be A Maverick or Just One More Cow in the Herd? “The scenery changes only for the steer that’s in the lead.” Red Steagall “The Maverick Way”

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