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Startups and small businesses in the US have a history of driving innovation. But they are in trouble.
Small businesses and startups in the US are struggling. Studies by the Kauffman Foundation and Brookings Institution have found that the number of new businesses declined in the US 44 percent since 1978. More businesses are shutting down rather than starting up.
Patrick Barnhill, President of Specialist ID, said that “small businesses are more innovative because of their company structure. The small structure allows for quick decision-making without the hassle of going through layers of approval, which can slow down company processes. Small businesses also have to be more creative than their larger counterparts due to a much smaller budget. This forces out-of-the-box thinking and innovation.”
But starting a company is risky and takes some amount of funding which is often difficult to get. Americans are becoming more complacent.
Economist Tyler Cowen said that “these days Americans are less likely to switch jobs, less likely to move around the country, and, on a given day, less likely to go outside the house at all the economy is more ossified, more controlled, and growing at lower rates.”
John Dearie, executive vice president for policy at the Financial Services Forum, said that “new businesses are disproportionately responsible for the innovation that drives productivity and economic growth, and they account for virtually all net new job creation. I would say, as a policy person, this is nothing short of a national emergency.”