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You Can Start a Business in America Easy, But You'll Be Broke in a Year

written by: •edited by: Michele McDonough•updated: 7/15/2011

Who knew way back in 1492 when Christopher Columbus set sail, the United States would become a place for entrepreneurs of all races to prosper and find opportunity? History has shown America has had its ups and downs, but is it still the best place for a profitable business?

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    Confusing Statistics

    Statistics can be confusing On June 29 2011, The New York Times offered a report by the Organization for Economic Cooperation and Development (OECD) indicating America was not so favorable to start up a businesses. Israel invested way more venture capital funds in new businesses, and both Australia and France had more new business startups through the first quarter of 2010—more than even the United Kingdom and the U.S.

    Another alarming factor was the number of bankruptcies that rose in the United States and the U.K. on those same businesses. Like a revolving door so to speak—you're in, you’re out.

    So if the OCED report is correct, it’s easier to open a new business in countries overseas than America and those opened in America are finding themselves in Chapter 11 or Chapter 7—and fast.

    This information, however, leaves me somewhat confused.

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    More From the New York Times

    Again, on June 30, 2011—only this is from NY Times reporter Catherine Rampell—offered while United States new business owners may find it harder to obtain venture capital funds, government restrictions are more favorable in the U.S. compared to overseas. What I mean by being less restrictive than foreign companies is America makes it easier to incorporate and register business names—generally getting the business up and running. Also according to Ms. Rampell, startup capital, based on a “firm with up to 50 employees," is lower than in other countries or what OCED calls, “less restrictive."

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    Analyzing the Statistics

    Things are easy in France After reviewing the neat charts, graphs and numbers provided by OCED via the New York Times (you can find links to all the stats in the reference section), my mind was a mush! Is the U.S. still the land of opportunity or not? Let’s take a closer look using numbers I can determine by counting on one hand because math is not my strong suit.

    Personal Money for Startups – The U.S. gets an average score here, so a 3. The best score goes to France here through Quarter One of 2010, so they get a 5.

    Number of New Business Bankruptcies Through 2010 Quarter One - The USA had the highest so they get a 1 and Canada came in with the least bankruptcies so they get a 5.

    Number of Businesses with Fewer Restrictions – The US gets a 5 and China achieves a 1.

    Venture Capitalist Investments – The U.S. gets a 3 and Israel scores high with a 5.

    So, if I look at these stats (using the fingers on one hand to count correctly):

    • Business Owners with Money to Invest – Winner: France
    • Least Amount Business Bankruptcies – Winner: Canada
    • Venture Capitalist Money – Winner: Israel
    • Easiest Place to Open (Less Restrictions) Winner: USA

    As a business owner looking at these interesting (and in my opinion humorous statistics), I guess I need the money of a French person and the venture capitalist commitments from Israel. If I open the business in Canada, I probably won’t go bankrupt but the easiest (and fastest) place to start a business is the good old U.S. of A.

    On the other side of it being so easy to startup a biz in the U.S, it’s also the fastest place for a bankruptcy so really, I’d say the answer to the question, “Is America still the land of opportunity?" Sure it is, but you’ll be broke in a year.

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    The Land of Lost Souls

    We could all open hot dog stands I only live in one place—in the U.S.—so I can only judge from the business startups and closures around me. It seems in my town at least one business goes out of business every week and those nasty “for lease" signs go up.

    I remember a friend telling me (or maybe I heard it on TV somewhere)—if you went to New York City and tried to eat your way through every restaurant, it would be impossible because by the time you would get closer to the first restaurant you visited, it would be a different restaurant under new ownership. Yes, those “less restrictions" do seem to apply in the United States, but once the doors are open, the problem becomes keeping them open.

    These days Republicans and Democrats both say they want to fight for the small business owner, but their main fight seems to be how to fund two wars and raise the debt ceiling—so as a business owner, I don’t have much faith in either party.

    I guess it’s nice to know anyone with a good idea and a little cash can start a hot dog or pizza business or a home-based business repairing cars in their garage—even a daycare business is possible in America with not much funds.

    The problem with America is maintaining profitability and that’s tough. With unemployment higher than ever (I love the way those propaganda politicians say it’s falling because it’s not), small business in America is not on the rise—it’s drowning fast.

    Thanks to the OECD (I guess) for making things even bleaker or perhaps after plowing through the nifty charts and graphs, things just seem more depressing than ever.

    I guess what I’m really trying to say here is let’s stop with the charts and graphs already. The small American business owner doesn’t want to know they can get money easier if they start a business in Israel. They don’t want to move their entrepreneurial dreams to Canada with hopes of avoiding a bankruptcy.

    What we do want is America to fix itself, stop the political battles and get something done for a change. And that, my friends, isn’t likely to happen any time soon. Maybe we need another Great Depression? At least the whole family could eat at the same table after standing in soup kitchen lines. And that would be progress—no iPhones, no texting, no video games, no computers. Wow, we all would actually have to talk to each other. Now there’s a concept.

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    References

    OECD Report (June 29, 2011) retrieved at http://www.oecd.org/document/8/0,3746,en_21571361_44315115_48276232_1_1_1_1,00.html

    NY Times (June 30, 2011) "Is America Really he Land of Entrepreneurship and Small Business?" retrieved at http://boss.blogs.nytimes.com/2011/06/30/is-america-really-the-land-of-entrepreneurship-and-small-business/?scp=1&sq=Is%20America%20really%20the%20land%20of%20entrepeneurs%20and%20small%20business&st=cse

    Rampell, Catherine – NY Times (June 30, 2011) "Nurturing Startups and Small Businesses Around the World" retrieved at http://economix.blogs.nytimes.com/2011/06/30/nurturing-start-ups-and-small-businesses-around-the-world-part-2/

    Image Credits:

    Graph - Sxc.hu/guitargoa

    Marie Antoinette - Wikimedia Commons/Public Domain

    Hot Dog Cart - Wikimedia Commons/Yanks9596