Number of Americans engaging in entrepreneurship is on the rise, as is optimism about success

If you’re starting a new business, you’re not alone. The 2012 Global Entrepreneurship Monitor, just released by Babson College and Baruch College, shows that nearly 13 percent of Americans are engaged in early-stage entrepreneurial activity. This is an all-time high since the colleges began tracking such data in 1999.

While that figure is encouraging, the reason behind the growing number of entrepreneurs may be even better news for our economy. Unlike during the recession, which drove many people to start a business because they’d lost their jobs, the vast majority of 2012’s new entrepreneurs said they were driven more by opportunity rather than necessity. According to the study, more than 43% of Americans believe there are good opportunities for entrepreneurship, a more than 20% jump from 2011 and the highest level recorded since the study was launched.

Also among the goods news is the fact that 37% of entrepreneurs project they would have more than five employees in the next five years. These growth expectations are above average when compared to other innovation-driven economies, the study says.

Also of interest is information the report provides about the circumstances under which many of the new American entrepreneurs are working. “We found that entrepreneurs in the U.S. exhibited a type of closeness,” commented Abdul Ali, associate professor of Entrepreneurship at Babson and one of the report authors. “More than two-thirds start at home, over 80 percent fund their efforts from personal, family, and friend sources and many employ family, nonpaid workers, and part-timers.”

On the downside, the study found that Americans closing businesses were twice as likely as those in other innovation-drive economies to cite difficulties financing their ventures, according to Donna Kelley, associate professor of Entrepreneurship at Babson College.


Who are these new American entrepreneurs? Here are some of the demographic findings:

• 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.  Regardless of the age group, when workforce participation rates are taken into account, 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.


The study authors pointed out these challenges faced by American entrepreneurs:

• Entrepreneurs in the U.S. needed a median level of $15,000 to start their businesses. Further, entrepreneurial finance still depends primarily on bootstrapping and close circles.

• Compared to other innovation-driven economies, U.S. entrepreneurs face two-thirds the proportion of “stops” stemming from difficulties obtaining financing.

• Continuing to inch up year-over-year is fear of failure. One-third of those who saw opportunities felt constrained by fear of failure in 2012 compared to one-quarter in 2008. • Difficulties selling in unfamiliar regions outside of the U.S., where language, customs and less favorable environments are faced, mean U.S. entrepreneurs are missing opportunities for growth and globalization.

The study, which is conducted in 69 economies worldwide, surveys individuals rather than firm registrations, analyzing how many individuals are participating in entrepreneurship, the types of businesses they are starting or operating, their attitudes about entrepreneurship and the challenges they face in starting and growing their businesses. To access the full 2012 Global Entrepreneurship Monitor U.S. Report, visit the Babson Global Entrepreneurship Monitor Web page.

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