Study: Rates of New Solopreneurship Rose in 2010, but Was It Driven By Lack of Options?

The Kauffman Foundation this week released a study that shows the rate of solopreneur start-ups was up in 2010, but the report says the lack of other options may have driven the growth.

The Kauffman Index of Entrpreneurial Activity, an annual report that was started in 1996, reveals that in 2010, 565,000 new businesses were started per month by new and repeat entrepreneurs, the same rate as in 2009.

“Since it began, the recession has triggered annual declines in the rate of employer enterprise births,” said Carl Schramm, president and CEO of the Kauffman Foundation.

“Far too many founders are choosing jobless entrepreneurship, preferring to remain self-employed or to avoid assuming the economic responsibility of hiring employees,” he said. “This trend, if it continues, could have both short- and long-term impacts on economic growth and job creation.”

The rate of entrepreneurship for the construction industry has risen 51 percent since 2006. That’s by far the largest rate of growth for any industry, and it’s an indication that people who have lost jobs because of the housing bust have gone into business for themselves out of necessity, not choice.

Click here for an interactive look at the Kauffman data by trend, demographics, and state. Highlights:

By State: States with the highest rates of activity in 2010 were Nevada, Georgia, California, Louisiana, and Colorado. States with the lowest rates in 2010 were West Virginia, Pennsylvania, Wisconsin, South Dakota, and Indiana.

By Gender: Entrepreneurial activity increased slightly for men and decreased slightly for women from 2009 to 2010. Overall, men are substantially more likely to start businesses each month than are women.

By Age: An aging population and increasing rate of entrepreneurship among older adults has led to a rising share of new entrepreneurs in the fifty-five to sixty-four age group. This age group represented 14.5 percent of new entrepreneurs in 1996, whereas it represented 22.9 percent of new entrepreneurs in 2010. 

By Education Level: Entrepreneurial activity rates increased substantially in 2010 for the least- educated group, going from 0.49 percent in 2009 to 0.59 percent in 2010 for those with less than a high-school degree, suggesting an increased number of people entering entrepreneurship more out of necessity.

By Race: Latinos and Asians had their highest rate of entrepreneurial entry in the past decade and a half of available data. Latinos experienced the largest increase (0.46 percent to 0.56 percent) in rates between 2009 and 2010.

By Industry: Entrepreneurial activity rates differed substantially by major industry groups. In 2010, entrepreneurial activity rates were highest in construction (1.60 percent) and services (0.44 percent). 

By Native Birth: The rate for immigrants rose from 0.51 percent in 2009 to 0.62 percent in 2010, continuing an upward trend from 2006. In 2010 immigrants were more than twice as likely to start businesses each month as the native born.

Other findings:

• The rate of entrepreneurship for Latinos has increased by about 50 percent since 2006.

• The rate for men has increased by 25 percent since 2006.

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Hi, I'm Gregory Rouse, owner of The Solopreneur Life. Subscribe to The Solopreneur Life newsletter and receive how-to's, tips, and inspiration for living your solopreneur life.

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