Trends in Entrepreneurship

New Business Startup Data

What are the trends in business startups? Are more or fewer people becoming entrepreneurs? New research suggests a slowdown in new business starts.

Small business journalist Anne Field reports that the trend for entrepreneurship over the past 20 years or so is down.

New Business Startup Data

In her article, Field discusses research by Scott Shane, a professor of entrepreneurial studies at Case Western, who has found evidence of a downward trend in entrepreneurial activity after analyzing several public datasets from the Census Bureau and other sources.

Needless to say, these finding run against popular wisdom, as well as many news reports, that entrepreneurship is on the rise.

Indeed, recent data from the Census Bureau notes that the U.S. added a million new non-employer businesses in 2007, bringing the total number of non-employer businesses to 21.7 million.

There are approximately 217 million adults in the United States. If we assume each of the 21.7 million businesses mentioned above is owned by a single individual, it suggests that 10% of U.S. adults own a non-employee business.

Regardless of how the entrepreneurial ranks are trending, the number of entrepreneurs in the United States remains amazingly high. Meet 10 people at a social event and odds are that one of them is a self-employed entrepreneur.

Mind you, we've only touched on self-employed small business owners who have no employees. The number of business owners in the United States is of course much higher when you included businesses that have employees.

It's unclear what the right ratio of entrepreneurs to non-entrepreneurs ought to be. Should one out of three of us own a business? Should one out of eight of us own a business?

In any case, we know that entrepreneurship is what can make the world a better place and improve global living standards.

As such, it's key to make it as easy as possible to start and grow a business.

In this respect, Shane's study is disturbing. If entrepreneurship is slowing down, it's essential that we understand why and remove any roadblocks that discourage startups.

In her blog post, Field notes that perhaps "the high cost of health insurance is dissuading people from leaving a job that offers benefits or starting a company where they have to provide benefits to employees."

If healthcare costs are indeed stunting entrepreneurial activities, it's clear that we need to fix that particular systemic sickness as soon as possible.

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What's your take on entrepreneurship trends? Are you aware of any other relevant studies on entrepreneurship? What are you seeing in your neighborhood? More startups or fewer startups?

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