The COVID-19 pandemic is driving up unemployment and fracturing many existing business relationships, but the experience of previous crises suggests that when coming out of the downturn there is likely to be an upswing in rates of entrepreneurship, according to a new report from the United States Studies Centre.
“The US recession following the Global Financial Crisis saw an increase in business bankruptcy filings and closures, and the US economy lost more than eight million jobs seeing the national unemployment rate double to more than ten per cent,” explained United States Studies Centre Director of Innovation and Entrepreneurship and report co-author, Claire McFarland, “However, higher local unemployment rates were found to increase the likelihood that individuals start businesses.”
The report analyses entrepreneurship in the United States and Australia with an emphasis on contrasting attitudes and perceptions as well as the indicators of success. McFarland, noted, “There are two things that hold back Australian entrepreneurs: attitude to opportunity and fear of failure.”
“Global Entrepreneurship Monitor data shows Australians see fewer opportunities to start a business than Americans, and when they do see an opportunity are less likely to take any action.”
Our data shows that Australians are more anxious than Americans about a) losing their job or business, b) failure at work and c) losing everything and having to start from scratch. Importantly, this fear does not decrease as income level increases, unlike in America.”
The report takes an in-depth look at eight Australian companies that successfully crossed over into the US market. These companies include awe, Biteable, Blisspot, enigmaFIT, Liquid Instruments, QuintessenceLabs, Rosterfy, and Snappr.
Report co-author, Don Scott-Kemmis, pointed to the findings that form practical advice for other entrepreneurs looking to take the first step, “Be prepared and make sure you have a good network. Joining with other like-minded individuals drives funding, talent and collaboration, which play a critical role in whether a business sinks or swims.”
McFarland concluded, “In this COVID-19 era, just like prior downturns, there will be big winners as well as big losers. A focus on radical innovation, a strong product-market-fit, technology development and customer needs are the guides to success coming from previous downturns.”
- Despite the World Bank rating Australia as an easier place to start a business compared with the United States, a lower proportion of Australians indicate it is easy to start a business than Americans, according to Global Entrepreneurship Monitor (GEM) data.
- According to GEM and prior USSC findings, Australians are less likely to see business opportunities than Americans, and when a profitable opportunity is spotted are less likely to act on it. This is largely driven by fear of failure, less connected networks and lack of global perspective.
- As the Australian economy weathers the COVID-19 crisis, encouraging an entrepreneurial mindset will be key. Role model companies with a global mindset show what is possible.
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