Features October 2018

Entrepreneurial Spirit is Thriving in Greater Gainesville


Written By: Todd Van Hoosear

Greater Gainesville residents are not slackers when it comes to the entrepreneurial spirit. Last year alone, 550 companies started operating in the area (see Figure 1). The regional economy is composed of more small (less than 50 employees) and young (less than five years old) companies than its peers, according to research from Market Street Services.

In the second quarter of 2016, firms less than five years old accounted for approximately 12.3 percent of the region’s total employment. No other peer metro displayed a percentage above 10.0 percent.

However, when you look at larger trends, it’s clear that new business creation seems to be leveling off in the area — part of a nationwide phenomenon sometimes called the “startup slump.”

One other worrying nationwide trend is a decline in new business growth rates — the rate at which new and established businesses grow their revenues.

On the one hand, business survival rates have remained reasonably steady over the past several years. The average five-year survival rate for businesses was 56.3 percent in 2016, according the Bureau of Labor Statistics.

However, the National Bureau of Economic Research reported that at the end of 2015, the revenue growth rate for startups — which traditionally far exceeded that of established companies — had begun to slow considerably, barely keeping up with the average growth rate for older companies in several cases.

Ingredients for Survival and Success

How can Greater Gainesville companies buck these trends? Thomas H. Gray outlined the three ingredients of business survival: planning, capital and effective marketing. Get these right, and you can keep your business running.

What does it take to make your business successful? The answer is innovation.

Innovation is a loaded term, but one of the best clarifications of the term came from James Todhunter many years ago in Fast Company. He defined innovation as “the process through which value is created and delivered to a community of users in the form of a new solution,” and he differentiated it from both creativity and invention.

Gainesville is not short on innovation. Mark S. Long, director of incubation services for UF Innovate, puts our area at or near the top of a long list of startup-friendly metros.

“Gainesville is the ideal entrepreneurial ecosystem. It has a rich combination of university research and resources; a high-quality workforce; tremendous facilities and programs; outstanding legal, accounting and advisory support; and strong entrepreneurial education. Greater Gainesville ‘has it all’ for all startup efforts in any field; it’s the premier location in Florida for company formation and growth.”
— Todd Van Hoosear

“Gainesville is the ideal entrepreneurial ecosystem,” Long said. “It has a rich combination of university research and resources; a high-quality workforce; tremendous facilities and programs; outstanding legal, accounting and advisory support; and strong entrepreneurial education. Greater Gainesville ‘has it all’ for all startup efforts in any field; it’s the premier location in Florida for company formation and growth.”

What Gainesville Offers and Doesn’t Offer

The data backs Long’s claims. This year, the Gainesville Area Chamber of Commerce engaged with Market Street Services to complete the 2018 Greater Gainesville Community Survey. As part of the survey, we asked those who identified as entrepreneurs or small business owners to rate various aspects of the community’s entrepreneurial climate.

Figure 2 shows the results of that line of questions. Entrepreneurs or small business owners generally shared favorable views of the region’s entrepreneurial community, mentorship and networking opportunities and facilities.

However, that same group saw the region’s access to capital as a major weakness. While this is a challenge in all but a select few regions in the United States, entrepreneurs in the Gainesville region were especially concerned about it.

Some entrepreneurs also noted that venture capital is especially difficult to come by in the Gainesville region due to a lack of direct air connectivity to key markets. According to these individuals, many VCs are unwilling to connect in Charlotte or Atlanta to reach the Gainesville region.

Figure 1: Gainesville New Business Starts (2000-2017)

FIGURE 2: Community Survey Entrepreneurial Climate Component Ratings

At least one entrepreneur shared stories of meeting key backers at an airport hotel conference room in one of our connecting cities to split the difference.

In short, Gainesville is a startup-friendly hub of innovation with some kinks to work out. Some entrepreneurs shared that they would prefer to stay in the Gainesville region to grow their business but may reach a point where they are unable to do so due to a lack of available financing.

Marsh Sutherland wrote in the September issue of Business in Greater Gainesville about a couple of Gainesville companies that made the choice to leave. We won one of those companies back, but not without work, and not without the risk of further departures.

We must find ways to minimize the risk of even more brain drain by rounding out our excellent entrepreneurial service offerings with more structured capital and business development support. This will not only help us get out of the “startup slump,” but it will help us retain and grow the businesses that otherwise might stagnate or leave for better pastures.

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