By Tatiana Bailey
Southern Colorado Economic Forum
The state of Colorado stands out as one of the superstars in the otherwise prolonged and anemic recovery. Colorado is ranked No. 4 in the nation in the “State Economic Activity Index” from 2012 to April 2014, according to the Philadelphia Federal Reserve, and is almost tied with the No. 2 and 3 states, Oregon and Texas.
What is remarkable about the Colorado story is that much of the growth is attributable to new businesses and small business growth, which often defines robust, diversified and sustainable economic growth in the medium and long run.
Entrepreneurship and innovation create new jobs through the identification of niche markets and completely new products and technologies, which is why it is robust. These niche markets and products are usually diversified by definition since they are a result of new ideas and technologies.
That diversification can, in turn, mean that a given community is not overly reliant on two or three large employers or a sole sector, making the economic growth sustainable.
Colorado is experiencing this phenomenon: In 2011, there were 36,300 new jobs in the state and the estimated number of new jobs for 2014 is 74,500. This is all taking place during the weakest economic recovery in American history.
These new businesses, when they succeed, are critical to the U.S. economy as a whole.
Small businesses with fewer than 20 workers make up 90 percent of all firms.
The economic boom in the state is being led by Fort Collins, Boulder and Denver, all hotbeds of everything entrepreneurial.
All three cities have unemployment rates between 4 percent and 5 percent, which most economists consider the “natural” rate of unemployment, yet Colorado Springs’ unemployment stands at 6.5 percent as of July.
The lack of job growth is painfully apparent if we juxtapose population growth and employment levels.
From 2000 to 2014, there was a 24.2 percent increase in the city’s population — but only a 7.1 percent increase in employment.
Some would argue this is because Colorado Springs has a high proportion of individuals who come here to retire.
This may be true, but it’s a small part of the picture: During those 14 years there was a 13.5 percent increase in the civilian labor force — people who want to work.
The question then becomes, what can Colorado Springs do to change this negative trend?
Can some of the state’s successes be translated to Southern Colorado, and if so, how can we as a community create an environment conducive to entrepreneurship and innovation?
If we look at the successful cities in Colorado and in fact, at successful, entrepreneurial cities across the nation, it is clear that there are some core elements that enable new business startups.
One critical component is having a comparative advantage in some sector. Colorado Springs has this in its topography, conducive to exercise, health and wellness.
The identification of this sector is not new; it just needs structure so the region can begin to brand and market itself more aggressively as a cutting-edge city with respect to the new health care landscape, which has prevention and wellness as a linchpin to success.
Already there are key players in the city like Colorado Springs Health Partners, which has a fully integrated care model.
The city has another obvious advantage in the aerospace and defense industry. Companies such as Boecore have capitalized on this advantage in spades.
The new agreement between the Air Force Academy and the Colorado Springs Technology Incubator is an exciting development and certainly a move in the right direction. Another critical success factor is the presence of co-working spaces such as Galvanize and Industry in Denver.
Colorado Springs has Epicentral, which recently expanded, and two, large emerging ones spearheaded by Nor’wood Development Group and The O’Neil Group. These co-working spaces bring down costs for emerging businesses, provide a venue to share ideas, and increase networking and mentorship.
Communities that are welcoming to immigrants are also more likely to succeed. Immigrants start almost 30 percent of new businesses in this country but account for less than 13 percent of the population.
An educated community is more likely to have successful startups and small businesses. Although Colorado Springs matches the average rate of individuals with a bachelor’s degree or higher, the state of Colorado is second in the nation in this metric when looking at the people who move here from other states.
Colorado is fifth in the nation for in-migration, so there is definitely an influx of smart, young people. If Colorado Springs can define itself as the next entrepreneurial hot spot, some of those educated, young people will move here.
Initiatives like One Million Cups, Mashup and Startup Week are the seeds of this entrepreneurial wave and they are gaining momentum in the city.
So the answer is yes: The very American approach of entrepreneurship can happen in Colorado Springs. There is already some traction in this realm and a general awareness that homegrown, organic growth is the pathway to success.
Relative to other developed countries, it is easier to start a business in the U.S., and that in and of itself is a national, comparative advantage.
Colorado Springs can capitalize on this and catch the Colorado wave of entrepreneurship and innovation — building upon its wealth of incredible assets. n CSBJ