More than 25 Million Americans Are Starting or Running New Businesses

According to the Global Entrepreneurship Monitor (GEM) 2016 United States Report released on November 13th by Babson College, during the past two years, more than 25 million Americans were starting or running new businesses in the United States. Additionally, the report also states that more than half of Americans see good opportunities around them for starting a business.

The GEM report conducted a city-level analysis of entrepreneurship in BostonMiami, and Detroit. Babson College believes that collectively, these three cities provide a window into how entrepreneurship occurs locally in different parts of the United States.

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This latest GEM report provides a comprehensive and detailed account of entrepreneurship in the United States. A key aim is to provide a broad audience—educators, researchers, policymakers, practitioners—with information and analysis that can enhance understanding, decision making, and actions regarding entrepreneurship. In its 18th consecutive year, GEM continues to serve as the largest and most comprehensive single study of entrepreneurship in the world.

Some of the findings from the report include:

  • U.S. entrepreneurs also are driven most by opportunity (88 percent). Necessity motives dropped to only 11 percent—below the low level reported in 2008, before the recession depressed entrepreneurship rates in the years that followed.

  • Age patterns show high entrepreneurship rates among young people in Detroit, those in mid-career in Miami, and people in their late careers in Boston.

  • Compared to 2009, twice as many Americans saw good opportunities around them for starting a business in 2016 (57 percent in 2016 versus 28 percent in 2009).

  • Fear of failure took an upward turn in 2016, reversing a three-year trend of gradual declines that had followed four years of post-recession increases.

  • Opportunity motives are higher in the United States than among its innovation-driven peers (88 percent versus 78 percent on average for the 26 other innovation-driven economies).

  • The majority of entrepreneurs, 64 percent, are white, reflective of the U.S. population.

    • African Americans and Hispanic ethnicities, however, also contribute substantially to entrepreneurship in the United States, accounting for 14 percent and 8 percent of entrepreneurs, respectively.
    • Results from 2014 to 2016 suggest that entrepreneurship rates are more stable among the white population and less stable among the other two ethnicities, particularly the African American group.
  • Entrepreneurial intentions in the United States are lower than the average of the 26 other innovation-driven economies (12 percent versus 16 percent), but nascent activity levels are higher (9 percent versus 5 percent).

  • Thirty-seven percent of all entrepreneurs in the United States are developing and delivering innovative products or services, representing the highest level for this indicator in 15 years and higher than the average for all other innovation economies (31 percent).

  • Forty-two percent of U.S. entrepreneurs and 35 percent of U.S. established business owners expect to hire six or more employees in the next five years.

  • While the United States generally has a low percentage of entrepreneurs who state they started their businesses out of necessity, a higher proportion of necessity motives drive entrepreneurs older than 45 compared to younger age groups.

  • Women’s perceptions of opportunities and entrepreneurial intentions rose in 2016 (to 54 percent and 11 percent respectively), and the gender gap in these indicators narrowed.

    • The gap between women and men in perceived capabilities increased slightly, however, with women exhibiting less confidence than men in their ability to start a business (48 percent versus 62 percent).
    • Fear of failure has inched upward for both women (from 33 percent to 36 percent), and men (from 27 percent to 31 percent).
  • Among entrepreneurs, women are more likely than men to introduce products and services that are new to customers and not generally offered by competitors (40 percent compared to 35 percent). They are less likely than men to report that more than 25 percent of their sales are international (8 percent versus 14 percent).

Read more here

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