In 2006, about 12.6 million U.S. nascent entrepreneurs were involved in about 7.4 million nascent enterprises (SBA, 2008). Small firms according to the Small Business Administration employ about half of all private sector employees and pay nearly 45 percent of the total US private payroll. Though an estimated 637,100 new employer firms began operations in 2007, 560,300 firms closed that year. A better breakdown of the survival rate for new firms looks like this: two-thirds of new employer establishments survive at least two years, 44 percent survive four years, and 31 percent survive seven years.
Why is there such a high failure rate of small businesses, a term designated by the US government of an independent business having fewer than 500 employees? Can entrepreneurship programs affect a positive change to these grim statistics?
Certainly there are many factors that contribute to the life and death of enterprise development in the United States. Entrepreneurship education has broadened significantly during the past thirty years, and has become one of the fastest growing subjects in the undergraduate curriculum. The considerable growth in entrepreneurship education across the US and the globe has resulted in over 500 university programs, which include majors, minors, and certificate programs in the US alone.
According to the Kaufman Foundation in their recent report “Entrepreneurship in American Higher Education” a number of conclusions were drawn regarding the status of entrepreneurship education, of which the most relevant is that a single approach to entrepreneurship education is both “unrealistic and inauthentic.” Entrepreneurship education should be specific to the culture and climate of the university and its local community.
In the field of entrepreneurship it is commonly mentioned that past experience plays a significant role in the decision making-process of entrepreneurs. If one considers the importance of past experience in the success of new business ventures, it is easy to understand why financiers typically look for an experienced (and previously successful) management team. From the academic perspective, researchers have suggested that the experiential learning aspect must be included in any successful entrepreneurial program ; specifically concrete experiences are necessary to create successful entrepreneurs. Reality-based experiential pedagogy is necessary for truly training entrepreneurs.
While traditional university models have pushed for the analytic, classroom type of entrepreneurship program, proponents of entrepreneurial activity complain that this former model does little to translate into the “street smarts” necessary to actually be successful entrepreneurs. The project based or more experiential learning has become widespread in entrepreneurship education and may take the form of business plan development.
And the $100K New Venture Start-Up Competition at The University of Texas at San Antonio was born. To tackle the issues of technology entrepreneurship, especially with women and minority-owned businesses, the university created the Center for Innovation and Technology Entrepreneurship (CITE). The CITE mission is to create a focal point for university students, faculty, research and education that will open a pipeline of people developing new technology ventures. It will also serve as a mechanism for existing business ventures to supplement their capabilities by coordinating faculty teams to address specific technical and business needs associated with new ventures.
With this program what we are truly doing is unlocking the inner entrepreneur in a population of students and a community that has never had this opportunity in the past. As one of our competitors this year said, “This is the coolest thing I have done in four years of college. We are going to start this company.”