The vital entrepreneur: high impact at its best

High-impact entrepreneurs: the ripple effect

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According to a 2012 Endeavor report, in a single year, the average high-impact entrepreneur will generate 30 more jobs than the average comparable company. At EY, we have had the privilege of getting to know entrepreneurs like these.

We’ve met, honored and been inspired by them during the more than 27 years of the EY Entrepreneur Of The Year™ Awards. In fact, our 2013 finalists are what you might call “super-impact” — surpassing the benchmarks for high impact by a large margin.

In good times and bad, we can always depend on high-impact entrepreneurs to help energize our economy and infuse it with resilience, stability, discipline and long-term growth.

The importance of balanced entrepreneurial ecosystems: Ewing Marion Kauffman Foundation

The term “entrepreneurial ecosystem” has become popular as a term to describe geographically defined areas with high rates of start-up activity. As a label gains more currency, however, we get further and further from its original meaning.

With that in mind, it’s useful to revisit the original intent behind the use of the word “ecosystem” and how it relates to efforts around the country to spur economic development.

The idea of an ecosystem conveys a sense of balance and integration. A natural ecosystem like a rainforest has several different parts that reinforce each other and contribute to the stability of the whole.

For example, the ratio of large trees to smaller ones within any given vector of a rainforest will be constant across the entire area. A healthy ecosystem is one that maintains such balance.

A similar idea applies, or should apply, to entrepreneurial ecosystems. Start-ups are rightly celebrated as necessary to introducing new ideas and challenging the established positions of incumbent companies.

But an entrepreneurial ecosystem — or a healthy and vibrant one, at least — that subsisted entirely on high rates of start-up activity would be unbalanced. Any community or geographic area needs mid-market and large companies to provide integration and balance.

That, roughly, is the ecosystem role played by the EY Entrepreneur Of The Year companies celebrated in this report. They contribute just as much to entrepreneurial vibrancy as the start-ups and young companies that get most of the attention.

These high-impact companies serve as first customers for start-ups; they serve as a fertile source of spin-offs and founders; and in some cases they provide an outlet for exits in the form of acquisitions.

Every high-impact firm began life as a small and young company. It is the process of growth, of expanding market share, of a growing footprint, that provides the core of a healthy ecosystem.

These are the three primary sources of job creation and innovation in any region: start-ups, big companies and growth companies. Support for entrepreneurial ecosystems — whether through public policy or private programs — must account for these differences. A one-size-fits-all approach will do a disservice to all involved.

As leaders across the country look for ideas as to how to create a healthy ecosystem, we would do well to keep in mind the essential notion of balance embedded in the concept of ecosystem, and how the different parts relate to the whole.

The EY high-impact firms are the linchpins of a healthy entrepreneurial ecosystem.

The capital markets need them. The economy needs them. And most of all, our communities need them. Our Entrepreneur Of The Year 2013 finalists exemplify the best traits of these high-impact entrepreneurs, brimming with vitality and new ideas.

To create and maintain economically stable communities, it takes a diverse blend of high-impact entrepreneurs. Analysis of our 2013 finalists clearly shows the unique strengths that private, public, family, sponsor-backed and women-led companies provide.

“When you get to know some of the best entrepreneurs on planet Earth, you develop a healthy respect for courage, vision, insight and perseverance. These qualities are evident in the high-impact entrepreneurs we honor annually in the EY Entrepreneur Of The Year™ Awards.”

— Herb Engert, EY Americas Leader, Growth Markets

Private companies operate with a freedom that encourages innovation and expansion, while public companies’ operational rigor helps them to remain disciplined and focused.

The strength of public companies is their ready access to capital and the discipline and focus that must accompany having publicly traded securities.

Venture capital-backed firms are the innovators and disruptors that are creating the future, and private equity-backed companies are in a partnership to promote growth. Private equity helps entrepreneurs establish stronger companies, with more aggressive growth strategies, access to a wider range of capital and other advantages.

Family businesses add their stability and resilience to the mix, and women-owned companies are making their mark in transforming industries from retail and consumer products to technology and health care.

In this report, we examine the various success factors of outperformance, including how high-impact entrepreneurs differ from one another and how they operate, grow and compete. Illuminating these differences should help us all understand more about what it takes to grow a truly high-performing company.