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Since the economic downturn of 2008, the continued financial difficulties Americans are experiencing seems to come as no surprise.  Various government efforts, such as the expansion of safety-net programs, extended unemployment benefits and increased non-profit funding, have all been made in order to lower poverty rates. However, a recent study suggests that these measures may not constitute the entire answer to bringing more people out of poverty. In fact, in Indiana one researcher concludes that government may actually be inhibiting entrepreneurship and self-sufficiency.

Dr. Doug Noonan, PhD., of Indiana University-Purdue University of Indianapolis, recently published a study that examines county by county data from the last 10-20 years. According to the study,

“The evidence shows that substantial investment in low-income micro-entrepreneurs has not yet occurred, but instead many formidable barriers disproportionately constrain them.”

Noonan concludes that new entrepreneurial efforts to create micro-businesses will help lower poverty rates, but that certain factors in the state prevent this from happening.


One of the points Noonan discusses in his study relates the consequences for micro-businesses that come as a result of the many various policies and regulations levied at small businesses. In a recent news release, Noonan uses the example of a food truck. He said that in order to operate a food truck in Marion County, your hours of operation are restricted, you need to get multiple permits, and you must provide two photographs of each employee. The sheer weight of so many regulations for micro-businesses like food trucks, landscaping services, and daycares effectively bars the poor from quickly and easily executing legitimate business ventures. While certainly not the original intent of these regulations, the result may be the preservation of unnecessarily high poverty rates in some Indiana counties.

Lack of Loans

Noonan also notes that low-income Hoosiers have almost no access to loans. Combined with the cost of starting a business, the lack of micro-lending prevents would-be entrepreneurs from getting the materials or equipment necessary to launch or accelerate the growth of their businesses. The inability to create legitimate self-sustaining enterprises creates a continued reliance on government safety-net programs and underground commerce – because sometimes taking advantage of state assistance is just easier and more financial sound than the navigating the regulatory and financial curve of entrepreneurship. Further, many underground business owners want to legitimatize their businesses, but quickly give up on that idea when faced with the high cost of doing so.

Noonan concludes that poverty in Indiana can be reduced by opening a path for small micro-businesses through the reduction of regulations and an increase in micro-finance options.

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A Texas non-profit is taking a different approach to rehabilitation. The Prison Entrepreneurship Program (PEP) aims to reduce convict recidivism by teaching prison inmates the entrepreneurial skills they need to be self-sustaining on the outside. Started in 2004, the PEP trains soon to be released inmates marketable business skills, encouraging them to think about the training in the context of starting their own businesses. The program has quickly become highly respected, with individuals and private foundations contributing more than $2 million each year to the PEP’s mission and Baylor University becoming a partner in 2013.


Inmates attend classes for six months with a diverse curriculum, starting out with character development and computer skills. Next, they complete courses in market research, finance and professional etiquette. In 2013, the Hankamer School of Business at Baylor University partnered with PEP to provide each graduate with a certificate of entrepreneurship, adding credibility and extra incentive for the inmates to work hard. According to Marc Levin, criminal justice researcher at the Texas Public Policy Foundation, “Studies have shown that vocational education reduces recidivism more than anything else you can do.” The educational opportunity gives the inmates practical skills, a sense of self-worth and a drive to improve their lives.

The Logistics

Each year more than 5,000 inmates apply for the program. However, only 120 are chosen. The program targets inmates who are close to being released. PEP Chief Executive Bert Smith says the two most important questions for applicants are, “Is the man genuinely committed to change?” and “Do we believe based on everything he’s done before, he’s got a strong work ethic?” Inmates from any prison in Texas can apply. If selected, they are transferred to the Cleveland Correctional Center. The program also has two transitional houses in Dallas and Houston that many released graduates are allowed to live in for two to three months after their release from prison.

Benefits are two-fold. Inmates learn valuable business skills and cultivate an entrepreneurial spirit. Business plans range from indoor paintball centers to healthy vending machines to a custom baby blanket website. The state benefits too. Program officials estimate PEP saves Texas more than $6 million annually by keeping former inmates out of the prison system. It appears that programs like PEP are making a real difference in the lives of many current and former Texas inmates.

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According to data collected by Expert Market, female entrepreneurship in the U.S. has been growing steadily over the last 20 years, increasing from 4.1 million female owned firms in 1997 to 9.1 million female owned firms in 2014. While the District of Columbia and Maryland are the states with the top two (respectively) highest percentages of female owned firms, southern states have seen the largest gains in female entrepreneurship over the span of the analysis – benefitting from record numbers of female owned businesses.

Southern States Benefit from Biggest Increase

Southern states occupied four of the top five states that saw the biggest increases in women-owned firms. Georgia took the lead, seeing a 117.9 percent increase, followed by a 98 percent leap in Texas. North Carolina, Nevada and Mississippi filled in the last three spots. Notably, the southern states of Florida and Alabama made top 10 appearances. Additionally, Georgia ranked No. 5 overall for the total number of women-owned businesses by state. Click here to see how all the states measured up.

Women Owned Businesses Generating Serious Revenue

Women entrepreneurs aren’t just launching businesses. They are bringing in serious revenue. These women owned firms have brought in $1.4 trillion so far in 2014, compared to $819 billion in 1997. Interestingly, the number of employees has not increased by much, staying around seven million, indicating that revenue is being generated mostly by small businesses finding ways to increase efficiency and profitability.

Entrepreneurial Drivers

What’s driving this growth in women-owned businesses in the South? First, many southern states like Georgia have an abundance of programs and nonprofit organizations aimed at supporting female entrepreneurs. Second, the cost of living is lower in many southern states – reducing the opportunity cost of starting a new business. And third, Taxes. States like Florida and Texas have no state income tax, relieving some of the financial burden associated with starting a new business.

Experts also point to generational changes as a possible reason for the surge in women entrepreneurs. The emergence of crowdfunding has made access to capital easier. Whereas college graduates used to look for secure employment within large corporations, more of today’s graduates are exploring entrepreneurship as a real way to make ends meet.

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Photo credit: Flickr user Tax Credits (Creative Commons)

A recent entrepreneurship study showed that crowdfunding could be an important resource for female entrepreneurs. The research, conducted by Kauffman and the Hebrew University of Jerusalem, claims that women account for 44 percent of investors on Kickstarter, a popular crowdfunding website.  Comparatively, female entrepreneurs only received 2.7 percent of venture funding between 2011 and 2013.

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city of denver open data website

Entrepreneurs are being handed free public data by the government in an effort to improve transparency, engage the community, and spark entrepreneurial growth.  Public information that has not been open to the general public in the past is now being posted online by federal agencies.  The posted data ranges from a cities list of back taxes on properties to all of the fishing and hunting areas.  Entrepreneurs are then taking this information and turning it into cash.  The open data programs are finally gaining steam and business is booming for entrepreneurs across the country.

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entrepreneurs in government

Look – just because government hasn’t done an awesome job on some things doesn’t mean I believe we should move to privatize everything. But I absolutely believe that employing some lessons from entrepreneurship and the input and implementation strategies of real entrepreneurs could be of tremendous value – and not just for government, but for grocery stores, and banks, and airlines and any other company that has gotten a little too big for its britches.  That is why I was super excited to hear about some legislative efforts to include entrepreneurs at the local and federal levels of government.