- In recent years, many Americans have started businesses.
- They’re women, they’re immigrants, and they’re increasingly likely to be doing it as a side hustle.
- Entrepreneurs these days, young and old, are trying to increase their wealth through business.
Part of the American Dream is a whisper that maybe, just maybe, you can succeed on your own. And for many Americans, the call of entrepreneurship is hard to resist.
However, entrepreneurship is not always attainable for everyone and has its own barriers to entry. However, the tide may be starting to turn. Today’s new entrepreneurs come from different backgrounds and from different regions of the country.
It is true that many new businesses do not survive in the long term. According to the Bureau of Labor Statistics, of the more than 700,000 private businesses in the U.S. that were founded in March 2018, about 52% were still operating five years later in March 2023.
Still, Americans are increasingly embracing entrepreneurship, with 19% of working-age adults in the U.S. in the process of starting a business, according to Babson College’s annual report published in August 2023. Or, he had started a business over the previous three years. Half a year. This is the highest level since the survey began in 1999.
So who are the newest entrepreneurs? They are the most diverse group ever, and while most consider self-employment successful, they may also see it as a financial lifeline.
New entrepreneurs are more likely to be women, immigrants, and Midwest residents
According to a survey of more than 1,300 entrepreneurs who started their own businesses in 2023 by talent tech company Gusto, more women are starting their own businesses.
A Gusto survey conducted from January to March 2023 found that 49% of new business owners are women, compared to 45% of men. Some respondents declined to identify as male or female or to disclose their gender. Gust compared these numbers to 2019 Census Bureau data, where 29% of new entrepreneurs were women.
Self-employed workers are still more likely to be men, especially when compared to the larger workforce, according to a Pew Research Center study.
According to Gusto, 60% of new entrepreneurs were white, 14% were AAPI, 13% were Hispanic, and 6% were black. According to Gusto research, the percentage of new Hispanic entrepreneurs will rise from 8% in 2022 to 13% in 2023.
Entrepreneurs in the United States are increasingly likely to be born outside the United States, according to a 2022 report published by the nonprofit Ewing Marion Kaufman Foundation. Citing current census data, the report found that in 2021, more than 28% of new entrepreneurs will be foreign-born, up from about 13% in 1996.
According to the Census Bureau, business applications were filed in the Midwest between March 2023 and March 2024. New Hampshire saw an increase in aspiring entrepreneurs, and the number of applications increased by 20.7%, the highest year-over-year increase of any state. Similarly, Minnesota saw a 15.3% increase in business applications and Montana saw a 16.4% increase in applications.
But a new entrepreneurial boom is taking place in the South. According to the Census Bureau’s March 2024 business formation data, there were 195,341 business applications in the South. The Northeast saw some of his 64,355 cases, but that’s due to a decline in business applications in the South from February.
“The center of gravity for entrepreneurship is also shifting from coastal cities in the Northeast and West to the mountainous regions of the Southeast and West,” Gusto economist Luke Perdue said in a July 2023 analysis. This may be part of a larger shift as the center of the U.S. economy and population moves south.
In recent years, many young people have joined the ranks of entrepreneurs.between us According to the Babson report, 27% of adults ages 18 to 34 are actively starting or managing a new business, compared to 14.5% of those ages 35 to 64. It was almost twice as much.
However, a report by the Kauffman Foundation found that entrepreneurship rates among older workers are increasing. In 2021, about 23% of new entrepreneurs will be between the ages of 55 and 64, up from about 15% in 1996. Still, the largest proportion of new entrepreneurs, about 26%, were in the age group of 20-34 years. cohort.
Entrepreneurs are also concentrated in specific industries. According to the Babson report, the most common industries for new entrepreneurs in 2022 were wholesale, retail, and hospitality, accounting for approximately 28% of new business formations.
Why do Americans want to become entrepreneurs and what’s going on?
According to Gusto’s research, greater work-life flexibility, financial security and supplementing income were the top motivations for new entrepreneurs to start a business.
More than half of new entrepreneurs said they relied on personal savings to start their business. 8% took out a personal business loan, 7% got a loan from family or friends, and 3% got a loan sponsored by the Small Business Administration. 31% said they don’t need money to start a business.
56% of new entrepreneurs said they didn’t have a second job when they started, compared to 25% who had a full-time job and 19% who had a part-time job.
A Pew Research Center survey of 5,902 Americans conducted in February 2023 found that self-employed people are significantly more satisfied with their jobs once their business is up and running. They find their work more enjoyable and fulfilling, and report feeling less stressed. These self-employed workers still tend to be overwhelmingly male, with 53% of all workers being male and nearly 70% of self-employed respondents being male, compared to 64% of self-employed respondents. I’m white.
And new business owners are open to different ways of working. Gusto research shows that many emerging entrepreneurs are open to using AI tools and hiring remote workers. 22% say they have already incorporated generative AI tools into their operations, and 16% say they are open to using them but have not yet actively implemented them.
More than half of new entrepreneurs surveyed by Gust said they have hired employees to work remotely all or part of the time. 35% said their business is fully remote and 22% are hybrid. According to a Pew report, 60% of self-employed people who can work from home actually do so.
However, entrepreneurship alone doesn’t always pay the bills. The percentage of entrepreneurs who started a business while juggling another job rose from 27% in 2022 to 44% in 2023.
The Babson report found that most entrepreneurs in the United States (71%) are motivated by the prospect of increasing their wealth through their business. However, the percentage of respondents who said they were motivated by “necessity” rose from about 46% in 2021 to 54.5% in 2022.
“Perhaps the job insecurity experienced during the pandemic and the nature of the job market as unemployment eases has led many to try entrepreneurship as a viable career option,” the report said. There is.
Have you started a business in recent years? Want to share your story? If so, please contact the following reporters: jzikula@businessinsider.com and jkaplan@businessinsider.com.
