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Are you self-employed or trying to be? Congratulations because the number of people going for it the last few years has been down. Check out this article
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Entrepreneurs failed to follow popular notion
Bizlines/by Cromwell Schubarth
Thursday, August 14, 2003
The economic downturn of the past few years hasn't brought a surge in business creation, contrary to what one popular entrepreneurial theory says should have happened.
Slow economic times spawn start-ups, that theory goes, as the newly unemployed and the frustrated decide it's time to take matters into their own hands.
But a Babson College study, released yesterday, shows new business activity nationwide was flat in 2002, after dropping dramatically the previous year.
One in 10 Americans were involved in starting or growing a venture last year, according to Babson's annual Global Entrepreneurship Monitor that's funded by the Kaufman Foundation, of Kansas City, Mo.
That's down by more than a third from the peak year of 2000, but it's nearly twice the pre-Internet bubble levels reported in 1998.
``We think 2000 was an extreme year. It looked like everybody was starting new businesses and succeeding,'' says the report's author, Heidi Neck, an assistant professor of entrepreneurship at Babson. ``We think we're stabilized at a good level now.''
More than half of all American adults thought the time was ripe to launch a business in 2000. That optimism level dropped to about one in three last year.
``People are a little more scared, but we think you are going to see an increase in optimism and start-up activity this year, especially in family businesses,'' Neck says.
That's because venture capital investments have been surpassed by ``informal investments'' by family and friends.
``Venture capital is less than half what it was in 2000, while funding from family and friends is down only about 20 percent,'' Neck says. ``About half the informal investments went to companies owned by relatives, so we see the potential for a big boom in family businesses.''
The study also found that gender and education continue to be major factors in entrepreneurship.
There were 1.6 men to every woman taking the entrepreneurial plunge last year, but in the 18- to 24-year-old bracket, men were three times more likely than women to start or grow a business.
Among entrepreneurs with less than a high-school education, nearly a third expected to remain self-employed over the next five years.
Among highly educated entrepreneurs, on the other hand, a third expected to employ 20 or more people within five years.
``Given the importance of new businesses to job creation, this tells us that education is very important to encouraging entrepreneurial activity,'' Neck says.
Cromwell Schubarth writes about small business and entrepreneurship. Contact him at 617-619-6458 with story ideas.
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Entrepreneurs failed to follow popular notion
Bizlines/by Cromwell Schubarth
Thursday, August 14, 2003
The economic downturn of the past few years hasn't brought a surge in business creation, contrary to what one popular entrepreneurial theory says should have happened.
Slow economic times spawn start-ups, that theory goes, as the newly unemployed and the frustrated decide it's time to take matters into their own hands.
But a Babson College study, released yesterday, shows new business activity nationwide was flat in 2002, after dropping dramatically the previous year.
One in 10 Americans were involved in starting or growing a venture last year, according to Babson's annual Global Entrepreneurship Monitor that's funded by the Kaufman Foundation, of Kansas City, Mo.
That's down by more than a third from the peak year of 2000, but it's nearly twice the pre-Internet bubble levels reported in 1998.
``We think 2000 was an extreme year. It looked like everybody was starting new businesses and succeeding,'' says the report's author, Heidi Neck, an assistant professor of entrepreneurship at Babson. ``We think we're stabilized at a good level now.''
More than half of all American adults thought the time was ripe to launch a business in 2000. That optimism level dropped to about one in three last year.
``People are a little more scared, but we think you are going to see an increase in optimism and start-up activity this year, especially in family businesses,'' Neck says.
That's because venture capital investments have been surpassed by ``informal investments'' by family and friends.
``Venture capital is less than half what it was in 2000, while funding from family and friends is down only about 20 percent,'' Neck says. ``About half the informal investments went to companies owned by relatives, so we see the potential for a big boom in family businesses.''
The study also found that gender and education continue to be major factors in entrepreneurship.
There were 1.6 men to every woman taking the entrepreneurial plunge last year, but in the 18- to 24-year-old bracket, men were three times more likely than women to start or grow a business.
Among entrepreneurs with less than a high-school education, nearly a third expected to remain self-employed over the next five years.
Among highly educated entrepreneurs, on the other hand, a third expected to employ 20 or more people within five years.
``Given the importance of new businesses to job creation, this tells us that education is very important to encouraging entrepreneurial activity,'' Neck says.
Cromwell Schubarth writes about small business and entrepreneurship. Contact him at 617-619-6458 with story ideas.
