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Week of March 1 - 5,
2004
Welcome to the National
Dialogue on Entrepreneurship and e-News, an electronic newsletter
sponsored by the Kauffman Foundation of Kansas City for followers of the
entrepreneurial economy. Through e-News, we bring you short summaries and analyses of
various trends driving the innovation economy. Please feel free to share
this with friends and colleagues. To subscribe, visit www.publicforuminstitute.org/nde/join/
Did you know that links to
the day's entrepreneurship stories from across the nation and around the
world are posted each weekday at www.publicforuminstitute.org/nde?
Bookmark it and stay informed about the latest entrepreneurship
news.
Regulations
on Home-Based Business
It's tough to have a
home-based business. The kids get in the way, you're on your own, and
there are chores to do as well. On top of that, the Internal Revenue
Service (IRS) makes life tough---that's one take-away from a new Small
Business Administration Office of Advocacy-funded study entitled
Home-Based Business and Economic Regulation. The study follows upon
previous research that shows that small businesses (those with under 500
employees) are disproportionately affected by regulatory burdens. But,
does this mean that the burden grows as the firm gets smaller? This new
report indicates that this may indeed be the case. Home-based businesses
are penalized by the IRS in their use of deductions, and zoning rules can
complicate matters as well. The report suggests that the IRS consider
easing its rules for home office deductions. Because so many other tax
deductions are dependent on being able to deduct one's home office, this
step would provide significant tax benefits to the 53% of small businesses
based at home.
The February 2004 report, Home-Based Business
and Economic Regulation, by Henry Beale of Microeconomic Applications,
Inc. is available at http://www.sba.gov/advo/research/rs235tot.pdf
2003's
Biggest Givers
One of the biggest
benefits that accrues from entrepreneurial development is that
entrepreneurs aggressively give back to their communities, as local
leaders, mentors and philanthropists. And they can become big-time
philanthropists. For evidence, one only needs to briefly skim the Slate
60, Slate magazine's listing of the top 60 charitable gifts made in 2003.
This year's list is just out, and it contains some interesting stuff.
Overall, big charitable contributions are up-this year's Slate 60 comes in
at $5.9 billion, a slight rise from last year's total of $4.6 billion. The
single biggest contributor was the late Joan Kroc, widow of McDonalds' Ray
Kroc, who donated more than $1.91 billion to various causes such as the
Salvation Army and National Public Radio. Michael Dell ranks No. 2; his
Dell Foundation made more than $673 million in grants last year. Other big
entrepreneurial givers include Ted Turner, Paul Allen, and Pierre Omidyar
of Ebay.
To access the 2003 version of the Slate 60, visit http://slate.msn.com/id/2094846
Europe in
the Creative Age
In his best-selling book,
Rise of the Creative Class, Richard Florida projected how a new class of
highly educated, creative, and diverse workers would transform American
society. In a new report, Europe in the Creative Age, he takes this
analysis across the Atlantic to examine how Western Europe may fare in its
ability to attract, nurture and support the creative class. The report
examines 14 European nations and compares their performance in terms of
technology development, diversity, and talent to previous data developed
for the US. The authors find that the US continues to excel in developing
technology and attracting talent, but that a cluster of northern European
countries-Belgium, Denmark, Finland, the Netherlands, and Sweden---is
becoming increasingly competitive. Sweden tops the report's
Euro-Creativity Index. Meanwhile, several of the southern European
countries, especially Portugal and Italy, have a long way to go in terms
of developing a strong creative economy.
The February 2004
report, Europe in the Creative Age, by Richard Florida and Irene Tinagli
is available at
http://www.creativeclass.org/acrobat/Europe_in_the_Creative_Age_2004.pdf
The UK's
Small Business Action Plan
The United Kingdom falls
in the middle of the pack in the Euro-Creativity Index cited above, but
that ranking is surely not from lack of effort. As we have noted in past
newsletters, the British government is pursuing a variety of steps to help
nurture the entrepreneurial spirit. The latest effort comes from the Small
Business Service (SBS) and its newly released Action Plan. As part of this
plan, SBS envisions its role in the center of a virtuous circle,
developing effective small business policies at the national level while
also ensuring that services are effectively and efficiently delivered at
the grass-roots level. SBS is organizing its future work around seven key
strategic themes which include building a more dynamic start-up
environment, expanding the availability of growth capital for small
businesses, and nurturing entrepreneurship in distressed areas and among
under-represented populations. The action plan is an ambitious exercise to
build an "enterprise culture" across the UK.
The SBS report,
A Government Action Plan for Small Business: Making the UK the Best Place
in the World to Start and Grow a Business, is available at
http://www.sbs.gov.uk/content/7-strategies/ActionPlan.pdf
Self-Employment:
A Cautionary Tale
As many Americans opt for
self-employment, we must remind ourselves that while this shift has many
upsides (e.g. greater flexibility, more dynamism), the picture is not
always 100% rosy. That's the important message contained in a new National
Bureau of Economic Research (NBER) paper by Dartmouth researcher David
Blanchflower. In Self-Employment: More May Not be Better, Blanchflower
makes an attempt to quantify the downsides of self-employment using data
from both Europe and the US. He notes that the self-employed are more
satisfied with their pay and the type of work they do. However, his
literature review also finds that the self-employed report that they work
more hours, are more stressed, more tired, and find less time to spend on
family and leisure pursuits. The research also shows that these negative
effects are most pronounced in firms that produce jobs---the self-employed
without employees tend to face fewer of these negative effects. None of
these findings should surprise entrepreneurs, but they remind us that
self-employment (like any job) has both pros and cons that must be
understood before an aspiring entrepreneur decides to "take the
leap."
The February 2004 NBER Working Paper (No. w10286) by David
Blanchflower, Self-Employment: More May Not be Better is available
at
http://papers.nber.org/papers/W10286
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