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U.S. Entrepreneurship On The Rise

Written by Ken Gaebler
Published: 12/14/2012

Global Entrepreneurship Monitor report shows that entrepreneurship increased by 60 percent in the U.S. from 2010 to 2011.

In the wake of the economic downturn, there has been significant anecdotal evidence pointing to an increase in entrepreneurial activity in the U.S. But recently, the Global Entrepreneurship Monitor (GEM) released a report confirming that U.S. entrepreneurial activity increased by more than 60 percent from 2010 to 2011.

Number of Entrepreneurs in US Growing

Released in conjunction with Babson College and Baruch College, the report showed that 12.3 percent of the U.S. adult population engaged in some form of entrepreneurial activity. The 60 percent increase in total entrepreneurial activity (TEA) brings the current TEA back to a level that hasn't been seen in the U.S. since 2005. The report also indicated that the U.S. leads all developed global economies in TEA.

"We saw an unprecedented jump in entrepreneurial activity in 2011," said the report's lead author, Donna J. Kelley, of Babson College. "Most of these entrepreneurs were in the process of just getting started, which means a lot of people took the leap into entrepreneurship during 2011. In addition, compared with 2010, more people reported that they were intending to start businesses in the next three years, showing a more positive future outlook for entrepreneurship in the United States after two years of declining indicators."

Also, the number of individuals starting a business due to necessity (e.g. being laid off or terminated) declined in 2011. " Necessity-based entrepreneurship accounted for a lower proportion of entrepreneurial activity in 2011," said Kelley. "In the depths of the recession, we saw a tremendous increase in people starting businesses out of necessity. In 2011, the entrepreneurship rate was pulled up primarily by those starting businesses to pursue promising opportunities -- a strong sign of entrepreneurial activity occurring as a result of optimism, not desperation."

Some of the most interesting demographic-based findings in the report included:

  • Gender. Although there are fewer female entrepreneurs than male entrepreneurs overall, the female/male ratio in the U.S. is higher than the global average at 80 percent.
  • Age. Adults 18-24 years old are most likely to start a business despite the fact that 10 percent of adults aged 55-64 and 4.5 percent of adults over the age of 65 also plan to launch businesses. Young, male entrepreneurs are most motivated by perceived opportunities; young, female entrepreneurs are most discouraged by factors related to why businesses fail.
  • Race. African-Americans (19.3%) are approximately twice as likely to launch new businesses as white entrepreneurs (9.7%).
  • Education. College graduates (15%) are 50 percent more likely to start companies than high school graduates, and more than twice as likely to enter entrepreneurship as individuals with no high school education (7 percent).

For more information, visit the Global Entrepreneurship Monitor website.

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