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Choice Or Necessity? The Changing Shape Of Entrepreneurism

Written by Tim Morral
Published: 12/3/2014

More than one in five entrepreneurs launched businesses directly from unemployment last year, as more and more accidental entrepreneurs discover the benefits of small business ownership.

Small-scale entrepreneurism continues to grow as more and more U.S. workers find themselves launching new businesses out of necessity rather than choice.

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Citing statistics from the Global Entrepreneurship Monitor, a recent article reported that in 2013, nearly 13 percent of the U.S. working-age population was either planning or operating a new business. Although this number is a slight decline from 2012, it represents a 67 percent increase from 2010.

Even more surprising is the fact that more than one in five (21%) new entrepreneurs said they were starting a company out of necessity rather than choice. In the wake of the recession, many workers discovered that they were unable to secure comparable positions in their fields, forcing them to become entrepreneurs whether they liked it or not.

"The Great Recession caused many businesses to close their doors or file for bankruptcy protection, but the rapid rise in unemployment also drove an increase in entrepreneurship," Robert W. Fairlie, professor and chair of the Economics Department at the University of California, Santa Cruz said to CNBC.

In addition to unemployment, the transition to a freelance or "gig economy" has also caused former employees to consider entrepreneurial careers. With corporations and businesses increasingly relying on independent contractors (rather than full-time employees), more workers are embracing entrepreneurial career paths, in either their current or unrelated fields.

But although they may not have intended to become business owners, many of these individuals have found entrepreneurism to be a rewarding vocational opportunity.

"People running their own businesses can have some element of control over their lives, particularly when the job market doesn't look so predictable or secure," Donna Kelley, professor of entrepreneurship at Babson College told CNBC. "Even if started out of necessity, some may have had ideas percolating and perhaps weren't ready to leave steady jobs with good benefits and pensions. But after losing a job and seeing few good prospects, their latent ambitions may get the push they needed to get started."

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