Amid the economic gloom of the real estate collapse and the sickly dollar, it's easy to forget that the real crucible of economic growth is the small business, both here and abroad. It's also overlooked that small business creation has never been better.
It's hard to overstate the importance of entrepreneurs to the labor force and to wealth creation. According to the U.S. Small Business Administration, small firms generated up to 80 percent of net new job growth over the past decade, represent 99.7 percent of all employer firms, and employ half the private sector.
Some of these statistics can be viewed with a jaundiced eye, given that almost anything can qualify as a "business" no matter how laughable, unpromising or unprofitable. The ultimate failure rate for new businesses probably exceeds 50 percent, and many firms are born only to die.
But the reality is that small business growth is booming: 650,000 are started each year. It's never been easier to hang your own shingle. The Internet, software, and cheap computers give anyone a reasonably priced chance. 724,000 people, for example, are reported to make their living solely by selling on eBay. Whether that business consists of a million dollar ticket brokerage or a $20,000 a year virtual yard sale, it appears to be paying the rent.
Time to disclose bias: I'm a small business owner myself. I'm also a venture capitalist, a recent pursuit which has widened my eyes to the phenomenon that is small business growth. Entrepreneurs have always been highest in my pantheon. While my friends were learning guitar in high school, I was running side businesses, projects and non-profit events. This didn't play as well with the girls, but it did prepare me for life. I had grown up with the example of my grandfather, a tireless entrepreneur who convinced me -- less through words than through actions -- that working for yourself was the ultimate honor, and responsibility.
There are powerful new ingredients to this entrepreneurial mix. One is the tremendous success of female entrepreneurs. 28 percent of businesses -- 10.6 million of them -- are now owned by women. The growth rate of female-launched start-ups is double the overall rate. Among the companies my partner and I look to invest in, most of the best ideas are from women. In an age where role models like Meg Whitman and Hillary Clinton assure women of their potential, the future looks bright indeed. My 13-month-old daughter strikes me as a budding entrepreneur, but that's probably more bias talking.
My bias doesn't blind me to the reality that allocation of capital will get sloppy as barriers to entry fall. In an excess liquidity environment, too much money will slosh toward the worst ideas, as in 1999. Failure rates will rise as a result. The dangers to small business creation always lurk: tight credit, protectionism and excessive regulation.
But anyone who wishes to bet against the world economy long-term will be on the wrong side of the trade. Millions of entrepreneurs will prove them wrong over time, as they always have in the past. Though many individuals with dreams will, unfortunately, fail, their aggregate economic contributions will succeed, and the world will be better for it.