In a comprehensive look at the effects of the economic recession, Scott Shane writing for the American Enterprise Institute finds that the entrepreneurship culture in America has been badly damaged.
We are constantly reminded how bad the recession has been for the large and mid sized businesses. The effects on the small business has been worse. The economic engine of the United States has been left sputtering and worse still, it is causing less and less numbers to consider entrepreneurship careers. Small business bankruptcies are at record highs and the businesses that have managed to survive have seen significant declines in revenues and incomes.
Just to quote a few statistics
- small business bankruptcies are up 79% from 2007 to Q1 2009
- self employment is now below the pre-recession levels
- there is an increase in number of self-employed who would rather take up working for someone else
- small business lending has declined significantly, for example, SBA 7(a) loans declined 40% since 2007 through the end of 2008
Worse of all, due to tight credit markets, many small business owners are now turning to credit cards and personal funds to support their businesses, which may lead to further personal bankruptcies. Most small business owners do not see the economy improving in the next year.