#435. U.S. Entrepreneurship Rates Reach Highest Level in More Than a Decade

We have always believed that entrepreneurs can play a vital role in economic development. The following is, in part, the findings of a recent study on American entrepreneurial rates:

U.S. Entrepreneurship Rates Reach Highest Level In More Than A Decade

U.S. entrepreneurship rates climbed to the highest level in more than a decade according to the 2012 Global Entrepreneurship Monitor (GEM) U.S. Report (http://www.babson.edu/news-events/babson-news/pages/052213-2012-global-entrepreneurship-monitor-u.s.-report.aspx) issued May 2013 by Babson College and Baruch College. In 2012, the average Total Early-Stage Entrepreneurial Activity rate (TEA) increased to nearly 13 percent, an all-time high since GEM first began tracking entrepreneurship rates in 1999.

“Despite a sluggish economy, 2012 was marked by U.S. entrepreneurs reporting greater optimism and confidence in their abilities to start new businesses,” commented the GEM Report’s lead author, Donna J. Kelley, Associate Professor of Entrepreneurship at Babson College. “In fact, nearly 13 percent of the U.S. adult population was engaged in entrepreneurship with the vast majority starting businesses to pursue an opportunity rather than out of necessity. On the downside, Americans closing businesses were twice as likely as those in other innovation-driven economies to cite difficulties financing their ventures.”

Among the Report’s key findings:

A diverse population –

• There are seven women for every 10 men engaged in entrepreneurship in the U.S.
• Entrepreneurship is not age specific; it attracts everyone from youth to seniors. Approximately 15-20 percent of adults in the workforce in each age group are engaged in entrepreneurship.
• First-generation immigrants are highly entrepreneurial: more than 16 percent of first-generation immigrants were starting and running new businesses in 2012, compared to 13 percent of nonimmigrants.

A ‘close’ environment –

• Majority of entrepreneurs (41 percent) are operating in the consumer sector.
• More than two-thirds of U.S. entrepreneurs start at home.
• U.S. entrepreneurs are rarely selling outside U.S. borders. Only 12 percent of entrepreneurs have more than 25 percent international customers.
• With only 16 percent of funding stemming from banks, 82 percent of all funding received is drawn from personal savings, family and friends.

Highly optimistic –

• More than 43 percent of Americans believe there are good opportunities for entrepreneurship, a more than 20 percent jump from 2011.
• 56 percent of Americans believe they have the capabilities to start a business –
• Approximately three-quarters of entrepreneurs start businesses to pursue an opportunity rather than out of necessity.

The report concludes by stating that “The U.S. has made positive progress along a wide range of entrepreneurial indicators. Much remains to be done…”

The full report is available at: www.babson.edu/GEM.