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July 27, 2004
Data on the American Entrepreneurial Economy
The Kauffman Foundation has released its latest report on entrepreneurship that is part of its Global Entrepreneurship Monitoring project. United States Global Entrepreneurship Monitor 2003 Report, by Maria Minitti and William D. Bygrave, offers more evidence of the robust nature of our entrepreneurial economic recovery. "Entrepreneurship in the United States continues to thrive at very high levels and seems to be moving ahead of the general economic recovery of the country." The full report is available on-line (44 page pdf file).
Here are some of the highlights of this report:
-Almost one out of every eight Americans (11.9%) is engaged in entrepreneurial activity. This is one of the highest rates in the world and the highest rate of the largest, most developed economies. Our culture remains the strongest force driving entrepreneurial activity that differentiates us from other nations studied. America outranks the rest of the world in all of the key entrepreneurial indexes.
-One myth that the cynics like to perpetuate is that these are mostly people out of work who cannot find a job. This study found that 76% of new start-ups were created to pursue opportunities their founders saw in the market, while only 24% were folks looking to create some income between jobs, typically as self-employed consultants.
-Another myth is that these businesses do not really create jobs. This study found that 70% of new start-ups already employ at least one person, and 80% plan to hire at least one more employee in the next year, and 20% plan to add at least 19 new employees in the next few years.
-Who are these American entrepreneurs? They tend to be young, as the study found the highest rate of entrepreneurship (17.3%) in 25-34 year olds. African Americans and Hispanics have the highest rates overall, and men are almost twice as likely to be new entrepreneurs as are women.
-Where is the money coming from to finance these ventures? Everywhere! The study estimated that 5% of the adult American population had invested in someone else's start-up business. In contrast, only 2500 businesses received venture capital funding, and very few of these were start-ups.
There are many voices, especially in Boston this week, that are still looking to the old economy to move us ahead. This report offers more evidence that this is a new economic age. The new economy will require leadership that understands that the old strategies of duplicity between big government and big corporations no longer will create growth or progress. An age of entrepreneurship requires a strategy of truly free markets, and not a managed economy using tax policy and governmental corporate largess to pick winners and losers.
Posted July 27, 2004 06:49 AM
Comments
"One myth that the cynics like to perpetuate is that these are mostly people out of work who cannot find a job."
I've come across this too and I find it completely absurd. Even if it were true, so what? Isn't it a good thing that out of work people would take the initiative to create a job for themselves where none before existed? How can that be bad?
What the critics don't get is that entrepreneurship is the perpetual frontier. It is a place where people can through their own initiative, creativity and hard work create their lives anew and pursue their dreams. Maybe they do get it and they oppose it because it undermines their vision of individuals as the victims of evil capitalism in need of nurturing by a welfare state.
Posted by: phil at July 27, 2004 08:38 AM
I knew the entrepreneurial industry had taken off, but this report actually gives it numbers. Wow! 1/8 Americans is an entrepreneur. As the economy continues to increase, won't this percentage increase too?
It also appears that entrepreneurial ventures are being started based on people's desires and abilities. This is more satisfying than having to start a "business" b/c you don't have any other options. As Phil said in his post, critics must be completely against the industry for selfish reasons.
On the other hand, I was surprised to see the age of entrepreneurs being relatively young. I had the perception that most "men" who start businesses are well-establishes businessmen who essentially got bored with their job. However, this age bracket includes those in the "twenty something" bracket, who have chosen entrepreneurship out of college.
Posted by: Raven Teeples at July 29, 2004 12:48 PM
at Belmont University in Nashville, Tennessee. He consults with a variety of businesses on start-up and growth related issues, and with larger corporations on re-establishing entrepreneurial cultures within their organizations. Dr. Cornwall's current research interests include entrepreneurial finance and entrepreneurial ethics. He has authored or co-authored four books.
