Kauffman Foundation CEO serves up 5 policies for entrepreneurial growth

Adaptation, experimentation and research.

Guillies

No, those aren’t tips to run a startup. Rather, they’re a few of the recommendations for lawmakers to consider if they’d like to spur nationwide entrepreneurial growth, according to Wendy Guillies, CEO of the Ewing Marion Kauffman Foundation.

Now nearly a year into her tenure as CEO, Guillies recently presented five policies to reverse the “startup deficit” and boost growth of entrepreneurial ventures. Guillies shared her thoughts in the April edition of The Ripon Forum, a magazine published by the Ripon Society, a Republican public policy organization.

“Research indicates that the number of new firms each year has been declining for decades, and the decline only accelerated during the Great Recession,” she writes. “Even with a modest recent uptick, our economy is now following a trend where the rate of business creation in the United States is about half of what it was in the 1980s. The decline in startups – coupled with the concentration of power in a small number of large firms – creates a less dynamic economy. … Despite this gloomy picture, there is reason to believe that we are about to enter a future with robust economic growth led by entrepreneurs.”

Here’s an overview of her five suggestions.

1) Adapt existing regulations for the new economy.
Guillies maintains that federal policy needs to clarify how the changing nature of work — such as the “gig economy and irregular work” — affects worker rights. As they’re now written, employer and contractor worker classifications are no longer sufficient to capture the nature of employment today. Without further clarification, its raises uncertainty for startups, she says.

2) Reduce the opportunity cost of entrepreneurial experimentation.
Individuals should be able to maintain unemployment insurance when they are starting a business, Guillies said. She notes France’s success with such a policy, as it helps produce more quality startups.

3) Increase the labor market supply and velocity.
The United States could  benefit from expanding immigration quotas as its labor force participation rates wain. Lawmakers should particularly focus on developing a startup visa, she said. Fifteen countries now have some form of a startup visa, Guillies said, which allows immigrant entrepreneurs to stay in those locales and create jobs. Without such a program, the U.S. is neglecting to capitalize the “global exchange of ideas,” she said.

4) Decrease incumbent bias to support entrepreneurial entry.
Current policies such as regulatory exemptions, loan guarantees and subsidies must account for a company’s age instead of just size, Guillies argues in the piece. The United States should remove unnecessary occupational licensing, which she said artificially limits employment and startups.

5) More data and research on entrepreneurship.
You can’t improve what you don’t know. So the collection and publishing of more data and research on entrepreneurship is crucial to informing policy decisions. Lawmakers need to make evidence-based policies rather than responding with emotions or politics.