- Associated Press - Monday, July 20, 2015

MEDFORD, Ore. (AP) - Oregon is known for innovative startups and entrepreneurs with an eye on opportunity.

So it came as an unsettling surprise this spring when the state’s Economic Analysis Office reported business startups were at a 40-year low.

“Indicators of entrepreneurship and business formation all show that the recessionary declines are over, but that not much progress has been made in terms of regaining lost ground,” wrote Josh Lehner, a senior economist at the Economic Analysis Office.

In the early 1990s, new companies accounted for 12 percent of all Oregon businesses, but the most recent reading pegged the number at 8 percent. Those figures coincide with national trends as well. Economic developers, small business coaches and investors possess varying opinions as to why business launches have declined.

Jessica Gomez, CEO of Southern Oregon Micro Devices and a recent appointee to the Business Oregon Commission, suggests a gradually expanding economy has kept people working, but within a couple of years the next generation of spinoff startups will begin.

“I don’t think it’s a bad thing,” Gomez said. “There’s a lot less urgency for people to go out and do their own thing. Innovation happens a lot of times when there are no other options.”

People who aren’t forced to go off on their own are biding their time, saving money and preparing to take a leap down the road.

“There’s an overlap where you have an economy getting better, people getting jobs and companies are making money,” Gomez said. “Then you reach a turning point when people begin leaving because they have a new idea or they are done with their current job. I don’t think we’ve reached that point where there is a huge boom yet, when the spinoffs begin.”

John Lamy, a member of Southern Oregon Regional Economic Development Inc.’s Technical Advisory Group, is waiting for those entrepreneurs to make their move.

The retired Hewlett-Packard research and development manager thinks potential start-ups don’t make their first bet. After looking at their cards, they fold before investing too much in a losing hand.

“People are realizing that it requires more of a business plan than it used to,” Lamy said. “Maybe they realize it’s not going to work. Perhaps they would’ve done it in the past and failed four or five years later. They would’ve started as a business and become a statistic, but maybe they figured it out in advance.”

Nonetheless, Lamy admitted he was mystified by the dearth of startups. He sits on a SOREDI panel that works with entrepreneurs.

“We’ve had to scramble to find these entrepreneurs,” Lamy said. “We keep saying to ourselves they must be out there, but maybe they’re not.”

Bill Thorndike, president of Medford Fabrication, counts himself among the perplexed in explaining the tepid growth of startups.

“People must be finding the types of employment that are meeting their expectations,” said Thorndike, a longtime Medford industrialist whose involvement in state and regional economic boards has put him face-to-face with entrepreneurs and investors. “They don’t feel the need to start their own company when they can go to work for someone else.”

At the same time, Thorndike thinks tech start-ups in rural areas may be taking a back seat to other sectors.

“It certainly hasn’t been stopping people from starting vineyards, wineries, breweries, cideries and distilleries,” Thorndike said. “Maybe we’re simply in a different cycle, at least in manufacturing.”

At the ground level, where somebody is toying with the idea of going into business and is looking for help to develop a concept, Southern Oregon University’s Small Business Development Center is seeing similar activity to a year ago. That, of course, would mean things aren’t deteriorating, but neither are the engines winding up for takeoff.

“We’re running almost exactly 50 percent of where we were through our total of statewide networks,” said Director Jack Vitacco.

While about half of his local clients are already in business, he anticipates his staff’s counseling will help launch 15 startups this year.

“At some point you reach market saturation in terms of how many startups we can support,” Vitacco said. “Unless you have something that is very different and very unique than what someone else offers. How many duplications of the same things can we support?”


Information from: Mail Tribune, https://www.mailtribune.com/

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