Entrepreneurs are key to Tennessee's economic recovery | Opinion
As Tennessee begins the process of reopening its economy, local leaders are faced with an important question: what is the best way to recover and rebuild?
The answer will shape the state's economic well-being not just in the immediate aftermath of the COVID-19 pandemic, but for years to come. The data shows that entrepreneurs and young firms, not big corporations, are our strongest job creators—and the good news is Tennessee already has a strong entrepreneurial foundation. To put the state on the path to economic recovery and a strong future, local leaders must double down on supporting and nurturing the state's startups.
Startups outdo established firms in job creation
Recent research from think tank Heartland Forward found that cities with strong entrepreneurial ecosystems see notably faster employment growth. In fact, startups created more than 2 million jobs in 2016 while firms of all other ages lost jobs on net over the same period. Put simply, entrepreneurs are critical to economic success. Luring large firms from other locations might play well in headlines, but it is not an efficient or sustainable job growth strategy.
Entrepreneurship is the true job-creation engine, and cities must focus on creating environments where new, growing firms can thrive.
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Unfortunately, entrepreneurial-driven job growth in the Heartland region was declining even before COVID-19. Heartland Forward ranked U.S. cities based on the strength of their entrepreneurial ecosystem, and only five of the top 50 are in the Heartland.
A bright spot
Tennessee, however, is a bright spot. The state is home to both the region's highest-ranking metropolitan area (Nashville) and micropolitan area (Tullahoma-Manchester), uniquely positioning Tennessee to pave the way forward for the rest of the region.
Tennessee has shown how nearby research universities and knowledge hubs are an essential part of communities' economic success. Nashville is home to Vanderbilt University, enabling it to capitalize on first-rate research and retain many of its graduates. Beyond Nashville, the state's major research university is in Knoxville, and world-class engineering facility Arnold Engineering Development Complex sits between Tullahoma and Manchester. These knowledge-intensive pockets across Tennessee will be instrumental to its recovery.
As policymakers and economic developers begin to reopen and rebuild the economy, they must devote their attention to supporting the real job creators—the entrepreneurs. Their young firms are especially vulnerable to the challenges caused by COVID-19. But we cannot afford to lose an entire cohort of young firms; their survival and success is critical to Tennessee's economic recovery.
Support for entrepreneurs must be a hallmark of Tennessee's economic recovery plan, and many individuals and organizations across the state have an important role to play.
The state's various economic development organizations should open startup incubators in communities from Memphis to Chattanooga where entrepreneurs can have the physical space to work on scaling up their businesses. Lawmakers across the state should allocate public funding to promote angel investment networks that provide early-stage capital for entrepreneurs.
Tennessee’s public and private universities must double down on entrepreneurship programs that ultimately result in commercializing innovation. With a collaborative commitment to entrepreneurs, Tennessee can rebuild its economy to be even stronger than before.
Ross DeVol is president and CEO of Heartland Forward.