Maybe we're not "'Shark Tank' nation" after all. The popular U.S. cable business program, which features budding entrepreneurs pleading for backing from wealthy investors (the "sharks"), seems to define us. We're a nation of hungry go-getters, eager to start our own business and strike it big.
There's a huge gap between perception and reality. The Census Bureau just released its latest figures for business startups, and they paint a picture strikingly at odds with the conventional wisdom. Instead of a boom in business startups, there's been a long-term decline. In 2015, startups totaled 414,000, "well below the pre-Great Recession average of 524,000 startup firms," as Census puts it.
To be sure, the slump reflects the lingering adverse effects of the recession. Venture capital firms, which provide funds for new businesses, "are more risk averse," says economist Robert Litan. But that's not the whole story. A 2014 study by Litan and Ian Hathaway found that the startup decline dates back to at least the late 1970s, affects all major industries and has been present in 365 out of 366 metropolitan areas. What's going on?