The Kauffman Foundation this week released a study that says in 2011, owners of new startups preferred solo businesses.
The Kauffman Index of Entrpreneurial Activity shows that 543,000 new businesses were started per month in 2011 by new and repeat entrepreneurs, a slight decrease from 2010. This means that 0.32 percent of American adults created a business per month in 2011 — a 5.9 percent drop from 2010, but still among the highest levels of entrepreneurship over the past 16 years.
“The Great Recession has pushed many individuals into business ownership due to high unemployment rates,” said Robert Litan, vice president of research and policy at the Kauffman Foundation. “However, economic uncertainty likely has made them more cautious, and they prefer to start sole proprietorships rather than more costly employer firms. This ‘jobless entrepreneurship’ trend negatively effects job creation and the larger economic recovery.”
Highlights from the report:
By State: States with the highest rates of activity in 2011 were: Arizona,
Texas, California, Colorado and Alaska; the lowest-ranked states were: West Virginia, Pennsylvania, Hawaii, Illinois, Indiana, and Virginia.
By Metro area: The index rated entrepreneurial activity in the 15 largest U.S. metropolitan areas. Los Angeles had the highest rates, followed by Atlanta and Phoenix. The metropolitan areas with the lowest rates were Chicago, Detroit, and Philadelphia
By Gender: Entrepreneurial activity decreased slightly for men and women from 2010 to 2011. Overall, men are much more likely to start businesses than 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 55 to 64 age group. This age group represented 14.5 percent of new entrepreneurs in 1996, whereas it represented 20.9 percent of new entrepreneurs in 2011.
By Education Level: The entrepreneurship activity rate among the least-educated group (high-school dropouts) decreased from 0.59 percent in 2010 to 0.57 percent in 2011 but remains significantly higher than for groups with other educational levels. The largest decrease in entrepreneurial activity occurred for college graduates.
By Race: The Latino share of all new entrepreneurs rose from a little more than 10 percent in 1996 to 22.9 percent in 2011. The Asian share of new entrepreneurs also rose substantially from 1996 to 2011, but remains relatively small at 5.3 percent. The white share of new entrepreneurs declined during this time period, while the African American share increased slightly.
By Industry: By industry, construction had the highest entrepreneurial activity rate at 1.68 percent, continuing an upward trend over the past several years, followed by the services industry at 0.42 percent. The manufacturing startup rate was the lowest among all industries, with only 0.11 percent of non-business owners starting businesses per month during 2011.
By Native Birth: Both immigrant and native-born entrepreneurial activity declined slightly in 2011; however, immigrants remained more than twice as likely to start new businesses than the native-born.