Why does the USA make the best entrepreneurs?
According to the 2017 Global Entrepreneurship and Development Index, the United States ranks first out of 138 countries for the best environment for cultivating entrepreneurship.
This stat is just one of many that highlights the US as the place to be if you’re an entrepreneur. But, what exactly makes it such a great place for businesses? First and foremost, a lot of it is down to culture.
The American Dream is based on the idea that in America, you can do anything you want, be anything you want, and achieve huge success if you work hard enough. And with the advancements of technology, this belief is why more people than ever before are becoming entrepreneurs. You just need a solution to a problem and some basic business knowledge and you’re good to go! You no longer need to secure huge investments for the likes of advertising, you can do it for yourself for free through platforms like YouTube, social media, and WordPress – there are tons of free resources now anyone can access, you just need an internet connection. Americans are also known to be risk-takers – they love an underdog who never gives up, think Rocky or Jerry Maguire. In many cultures around the world, failure can be seen as a major embarrassment that stops them from taking any real business risks. When you add all of this to the fact that Americans are becoming more and more collaborative instead of competitive with other businesses, it creates a society that helps more people get ahead.
The second big reason why the US is number one for cultivating entrepreneurship is down to money. Compared to Europe, America has much more big businesses – only 5% of new European companies since 1980 have made it into the list of the 1,000 biggest EU companies by market capitalisation, compared to America’s equivalent of 22%. This is down to both money, but also the cultural attitudes listed above. Europeans have much less to gain from taking business risks, thanks to things like higher tax rates and negative attitudes to bankruptcy. Europeans also have more time off and are generally more suspicious of businesses – according to a Eurobarometer poll, 42% of them think that entrepreneurs exploit other people’s work compared with 26% of Americans. Structurally, the European market is also more fragmented than the American one. There’s a number of legal codes as well as an expensive and time-consuming patent system. Additionally, the venture-capital industry is far less developed than the American one – America has at least 50 times as many ‘angel’ investors as Europe.
It isn’t completely easy for American entrepreneurs though. Currently, there’s a huge desire from many to tackle tax reform. According to the Small Business Administration, small businesses spend more than one hundred hours on tax compliance each year. This is a massive amount of time that could be much better spent helping their business grow. If the government can simplify the corporate tax code, US entrepreneurs will benefit massively.
When you combine both the cultural and economic factors together, it becomes clearer why America produces the best entrepreneurs. It’s fascinating why Americans thrive compared to the rest of the world, and what we can learn from their perspective and way of doing things. Let me know in the comments below if you agree that the US is the best place for cultivating entrepreneurship and what you think the rest of the world can learn from them!
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