Executive Summary 

Governor Jim Doyle has made entrepreneurship a priority in his “Grow Wisconsin” plan.  Entrepreneurship plays a key role in developing a strong economy through job creation, economic diversification, and tax base expansion. However, multiple sources have given the state of Wisconsin medium to low rankings in the entrepreneurial and business arena.  The UW-Extension in conjunction with the Wisconsin Entrepreneurs’ Network (WEN) and the Department of Commerce launched a research study to assess the status of entrepreneurship in Wisconsin with the end goal of determining why the state’s entrepreneurial spark seems to sputter.    

The study focused on the perception of the Entrepreneurial Climate across the state of Wisconsin as well as involvement of Wisconsinites in the Entrepreneurial Process and their awareness and experience with entrepreneurial assistance programs.   

Roughly half of the people in Wisconsin are or have been involved in the Entrepreneurial Process – i.e. they are thinking about starting a business or have started a business. 

                               The Wisconsin population views the Entrepreneurial                                  Climate as “neutral” – neither encouraging nor                                discouraging.

 Among people involved in the Entrepreneurial Process, there is a low level of awareness and usage of state assistance programs across a wide variety of topics.   

Given these findings, study recommendations are aimed at creating a more hospitable environment for entrepreneurship across Wisconsin; motivating the large segment of potential entrepreneurs to start businesses; and assisting entrepreneurs and small businesses that already exist.

 redefine the lines

A new vision of whom and what an entrepreneur is would include everyone from florists and furriers to inventors and biochemists. Redefine entrepreneurship in a broader and more inclusive manner.

Spotlight opportunities

Hearing about “entrepreneurial opportunities” will spark interest among potential entrepreneurs and make success seem within reach. 

Lighten the load

Removing barriers will help entrepreneurs move through the stages of entrepreneurship with less angst. Most helpful: make entrepreneurs aware of available assistance, ensure that programs are relevant and effective, provide detailed success stories, and connect entrepreneurs with assistance programs that are right for them. 

Ask questions

Continued research would reveal how Wisconsin’s Entrepreneurial Climate matches up against other states and why certain entrepreneurial projects are not successful. 

Background 

Wisconsin is continually striving to further its economic status and Governor Jim Doyle has made this a priority in his Grow Wisconsin plan.  Entrepreneurship plays a key role in developing a strong economy through job creation, economic diversification, and tax base expansion.   Growth and promotion of entrepreneurship is an opportunity area for the state of Wisconsin.  In fact, three different sources have issued Wisconsin medium to low rankings in the entrepreneurial/business arena.  For example, the Corporation for Enterprise Development gave Wisconsin a “D” grade for Entrepreneurial Energy for the second year in a row and ranked Wisconsin 47^th for new business starts.   The Tax Foundation ranked Wisconsin 41^st in terms of its Business Tax Climate.  Progressive Policy Institute rated Wisconsin 39^th in terms of “Gazelle” jobs, 48^th in terms of job churning and 29^th in terms of IPO’s.  In addition, NorthStar Economics has predicted that Wisconsin’s income per capita will be 17% below US average in 2024 based on 2000 data.  Therefore, learning more about the Entrepreneurial Climate and state of entrepreneurship in Wisconsin is of great importance to the health of the state.  The UW-Extension in conjunction with Wisconsin Entrepreneurs’ Network (WEN) and the Department of Commerce saw an opportunity for a research study that would address these issues.  

Study Overview 

The key topics covered by this study are: the perception of the Entrepreneurial Climate across the state of Wisconsin, involvement of Wisconsinites in the Entrepreneurial Process, and awareness, usage, and experience regarding entrepreneurial assistance programs.   

A statewide survey was seen as the best way to cover these topics for the Wisconsin population as a whole.  In order to retain the ability to customize the questions, control the parameters of the study, and attain a sample size large enough to yield statistically

valid results, a custom survey was selected as the methodology.   Distributing the survey via mail was optimal as the survey reached the greatest cross-section of the population and the format worked well with the longer multi-part questions.  The survey was sent out to 3,000 randomly selected households across Wisconsin and 1144 surveys were completed and returned. 

Recommendations 

The overall goal of this project is to learn more about entrepreneurship in Wisconsin in an effort to find ways to increase successful entrepreneurship and better the economic situation.  The study covered several pertinent topics including the Entrepreneurial Climate in Wisconsin, involvement in the Entrepreneurial Process, and usage of and experience with assistance services.  The data yielded useful findings that suggest how to improve/increase entrepreneurship in Wisconsin. 

The study found that people in Wisconsin generally view the Entrepreneurial Climate as “neutral” - neither encouraging nor discouraging.  The study also found that roughly half the people in Wisconsin are or have been involved in the Entrepreneurial Process, a strikingly high number. They are either thinking about starting a business, starting a business, or have previously started a business.  However, among people involved in the Entrepreneurial Process, there is a low level of awareness and use of assistance programs for entrepreneurs. 

Given these findings, study recommendations are aimed at creating a more hospitable environment for entrepreneurship across Wisconsin; motivating the large segment of potential entrepreneurs to start businesses, and assisting entrepreneurs and small businesses that already exist. The following recommendations were developed from this research along with information from other sources (see Acknowledgements section). 

 Create a broader and more inclusive view of entrepreneurship. Half of the people in Wisconsin report they are or have been involved in entrepreneurship at some level, but they do not necessarily see themselves or others like them as “entrepreneurs.”   

When people see themselves and others like them as entrepreneurs they may be more likely to look for help and encouragement which will increase their chances of success. 

In the Entrepreneurial Climate section of the survey, respondents were more likely to acknowledge successful and admired entrepreneurs in the world but less likely to report that people in their close circles are starting businesses.  This finding contrasts with the finding from the Entrepreneurial Process section that over half of the state’s population is involved (or has been previously involved) in the Entrepreneurial Process.    

There may be a preconceived notion of who and what an “entrepreneur” is expected to be.  “Entrepreneurs” like Bill Gates have received so much publicity that people may see  entrepreneurs only as rich, brilliant and successful, breaking ground in a new field. They may not consider a person who works “on the side” doing something like contract web-page design an “entrepreneur.”   

This view of “entrepreneurs” and “entrepreneurship” excludes a large and productive segment of the population who might benefit from attending entrepreneurship classes or networking with other entrepreneurs for advice.  In fact, research has shown that networking is particularly important for female entrepreneurs.    

It is possible that people do not see “entrepreneurship” and being self-employed or owning a business as synonymous.  In reality, many people have a full time job with an established organization at the same time that they are trying to start or running their own business.  Entrepreneurship can occur at any point along the way and with any combination of “job and business.”  It could be a weekend business or a lifetime pursuit.   

• Create a more welcoming and realistic view of entrepreneurship by providing examples all along the “job-business” continuum.  Potential entrepreneurs will see possibilities in their own lives for entrepreneurship and be more realistic about the outcome.  If they feel that they are included in the entrepreneurial community, they may also be more likely to seek out entrepreneurial assistance or networking opportunities.
   
• Provide examples of successful entrepreneurs “close to home” both geographically and figuratively.  Testimonials note the presence of fellow entrepreneurs within the same area.  The more targeted the campaign, the better.  Consider gender or region specific campaigns.  There should be the feeling that entrepreneurs are “just like me.”
   

       Hearing about “entrepreneurial opportunities” will spark interest among potential entrepreneurs and make success seem within reach. A “can-do” attitude is    contagious.

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Along with broadening the perception of what an entrepreneur is and does, opportunities to become an entrepreneur should be highlighted.  People with a broad view of entrepreneurship will probably be more open to seeing opportunities to start their own businesses.  In addition, given that many people see entrepreneurship as risky, highlighting very good opportunities may ease their minds.   

People will be more likely to become involved in the Entrepreneurial Process if they perceive more opportunities in the entrepreneurial world.  In particular, people who will eventually be in the job market (like students) should be made aware of entrepreneurial opportunities.  Developing a pipeline of future entrepreneurs is very important for the long-term health of Wisconsin’s economy.  

• Provide evidence and examples of different entrepreneurial opportunities in communities across Wisconsin. 
   
• Educate people about different levels of opportunities.  For example, a successful opportunity does not need to be opening a new market or revolutionizing an industry; it just needs to be solid and feasible.  Even taking a an existing technology and finding a new application can be a fruitful opportunity.
   
• Work with the media to change the way they portray entrepreneurship – particularly language about success and failure that can affect the perception of risk and opportunity.

Removing barriers will help entrepreneurs move through the stages of entrepreneurship with less angst. Most helpful: make entrepreneurs aware of assistance, ensure that programs are relevant and effective, provide detailed success stories, and                                            connect entrepreneurs with programs that are                                            right for them. 

While this study did not specifically identify barriers that entrepreneurs face at each stage in the Entrepreneurial Process, it did reveal that there is a sizable segment of people who are thinking about or trying to start a business. The study also showed that entrepreneurs/potential entrepreneurs are not aware of and/or not taking advantage of assistance programs in Wisconsin.  More specifically, the data showed that how people perceive the availability of and access to funding changes their view of the Entrepreneurial Climate.  The majority (roughly 80 percent) of respondents said people in their circle would start new firms if they could get funding.   

These findings generated several insights:

• People may not be aware of assistance (both financial and otherwise) and/or…
   
• The programs offered may not be relevant and/or…
   
• They may not think that they need help.

In reality, the difficulty probably lies in all three.  In addition, some respondents felt they were given conflicting information when they contacted multiple sources for assistance.  Given the fact that, according to Reynolds & White, start-up firms that have “moved successfully through the process are more likely to have received some assistance,” efficient access to help is vital.

• Build communities which welcome entrepreneurs and foster entrepreneurship.
   
• Help entrepreneurs find the resources they need at each stage of the Entrepreneurial Process.  
  • Increase marketing
  • Focus on providing effective and relevant programs
  • Show how important these programs are to the success of new businesses
  • Help connect entrepreneurs with assistance that is right for them at any given time
  •  Avoid providing conflicting information by developing a comprehensive, collaborative and consistent network of services
     
• In terms of financial assistance:
  • Change the perception that funds are not available by providing successful case studies
  • Help entrepreneurs understand and move through the steps necessary to get funding (such as business plan development)
     

Continued research could reveal how Wisconsin’s Entrepreneurial Climate matches up against other states and why certain entrepreneurial projects do not succeed.
 

This study generated several new questions about entrepreneurship which the data could not answer.  Future research on these topics would help policy makers and the public further understand the state of entrepreneurship in Wisconsin. Researchers should: 

• Create a longitudinal project for the topics covered in this study.  One of the limitations of this study is that it is not longitudinal and does not provide the immediate opportunity to compare results over time.  However, given the interesting results generated from the study, it may warrant repetition in three-to-five years to examine any changes in the elements measured. 
   
• Study why people become discouraged on the path to starting a business or discontinue a business which has previously been open. For example, when is too much “churn” fatal?  It is necessary to have some churn (i.e. discontinued businesses) to ensure successful idea generation and entrepreneurship.  Finding out why businesses fail is necessary to understand more about creating “optimal” churn.  Determining why potentially successful businesses do not get off the ground could also help reduce barriers for future entrepreneurs.
   
• Consider benchmarking research to determine how Wisconsin stacks up against other states in terms of Entrepreneurial Climate and participation in the Entrepreneurial Process.  Consider states with high ratings/rankings in terms of entrepreneurship and/or similar demographic profiles.

Key Findings 

Entrepreneurial Climate

• To foster high levels of successful entrepreneurship Wisconsin should have the most encouraging Entrepreneurial Climate possible.  This would be a score of 4.0 on the Entrepreneurial Climate scale developed by Reynolds & White.  The average score across all respondents in Wisconsin in this study is 2.47, meaning that they view the Entrepreneurial Climate as “neutral” (neither encouraging nor discouraging).  This score has changed little over the past 12 years as Reynolds & White found the average score to be 2.48 in 1993.  This indicates that there is an opportunity to create a more positive and encouraging Entrepreneurial Climate across Wisconsin. (Note: the Entrepreneurial Climate scale is made up of attitudinal statements that respondents indicate their level of agreement/disagreement with.)
   
• Respondents reacted fairly positively to statements regarding community support for start-up and small businesses. 
   
• Respondents responded neutrally to Entrepreneurial Climate statements regarding the encouragement young men and women receive to be independent and start new firms.
   
• Many Wisconsinites see and admire entrepreneurs from afar but are much less likely to have an entrepreneur in their circle of family/friends.
   
• Funding continues to be a hot topic for Wisconsinites.  On the Entrepreneurial Climate scale, statements regarding funding and financing received less than positive ratings and brought down the Entrepreneurial Climate average overall.

Involvement in the Entrepreneurial Process

• Roughly half of the Wisconsin population is or has been involved in the Entrepreneurial Process in some way.  This is a large group even given this study’s broad definition of involvement in the Entrepreneurial Process.    
  • Roughly 19% of respondents indicated that they are self-employed, owners/managers of current business or selling goods/services to others.
  • Seventeen percent (17%) are thinking about starting a business while 12% are currently in the process of starting one.   Interestingly, of those who indicated that they are trying to start one, half (50%) have taken two or more steps towards this goal. 
  • On the other hand, 14% of respondents indicated that they had discontinued the process of starting a business and 12% had shut down a business that previously been open (not including businesses which have been sold). 
  • (Note: these “stages” are not mutually exclusive so an individual respondent could potentially be included in multiple stages at any given point in time.)
     
• Respondents who indicated that they are not involved in the Entrepreneurial Process in any way (50% of the population), listed various reasons for this including: no funds, too risky, happy with current job, and retired.
   
• Respondents who are involved in the Entrepreneurial Process have a statistically lower average Entrepreneurial Climate score than those who are not involved, meaning that they have a less positive perception.   
   
• Demographically, current business owners are more likely to be married and in the 45-54 age group.  Close to two thirds (62%) are male while just over one third (37%) are female.
   
• Those who are not involved in the Entrepreneurial Process are more likely to be female, not married, employed full-time, retired, high school graduates, and/or have no internet access.

Awareness & Usage of Entrepreneurial Assistance Services

• According to this study, the majority of people involved in the Entrepreneurial Process are not contacting assistance sources in Wisconsin for help with marketing, financing, business planning, or regulatory issues.
  • Seventeen percent (17%) of respondents contacted sources for regulatory information which was the largest percentage for any of the four topics.
• Referrals from other agencies was one of the top ways that respondents found out about assistance services, although, on average, this only happened for less than
   
• Half of respondents.
   
• Information from the Internet and referrals from other entrepreneurs were also key in helping entrepreneurs find assistance services.
   
• Roughly a quarter to a half of respondents (who did contact a source or sources for assistance) indicated that they received conflicting information.
   
• When examining the awareness and usage of assistance programs for more specific topics, it is clear that there is a lack of awareness and usage for the majority of these programs with awareness between 25% and 60% among those involved in the Entrepreneurial Process.
  • Programs for assistance with licenses/patents and other regulatory issues had the highest awareness and usage.

Acknowledgments 

We would like to thank Professors Paul Reynolds Ph.D. & Sammis White Ph.D. for their invaluable help and insights during the development and analysis of this study.  They also graciously allowed the use of their Entrepreneurial Climate scale for this study.   (The Entrepreneurial Process, 1997)  We would also like to acknowledge the Global Entrepreneurship Monitor, the Entrepreneurial Network Study (1999), and Panel Study of Entrepreneurial Dynamics (Kauffman Foundation) as invaluable sources of information.  We would like to thank the Department of Commerce, Wisconsin Governor Jim Doyle and the Edward Lowe Foundation for their contributions to the study.   Finally, we would like to acknowledge the excellent work of the University of Wisconsin Survey Center in the survey distribution and data collection process.