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Entrepreneurship has become a popular career option for people from all across the United States.
New research has found that the number of Americans involved in early-stage entrepreneurial activity is the highest it has been since The Global Entrepreneurship Monitor (GEM) began tracking that information in 1999. Currently, 13 percent of Americans are involved in entrepreneurial activity, the research found.
"Despite a sluggish economy, 2012 was marked by entrepreneurs reporting greater optimism and confidence in their abilities to start new businesses," said Donna Kelley, lead author of the report and associate professor of entrepreneurship at Babson College. "In fact, nearly 13 percent of the U.S. adult population was engaged in entrepreneurship, with the vast majority starting businesses to pursue an opportunity rather than out of necessity. On the downside, Americans closing businesses were twice as likely as those in other innovation-driven economies to cite difficulties financing their ventures."
Respondents say they needed a median amount of $15,000 to start their own business. To get that money and other money needed to finance their business activities, entrepreneurs rely mainly on personal savings, friends and family; just 16 percent of funding comes from banks. Two-thirds of entrepreneurs say they have faced difficulty in obtaining financing.
Entrepreneurs not only rely on family for funding, but 23 percent also rely on at least one family member as an unpaid staff member. Twenty-one percent have at least one family member as a paid employee.
"We found that entrepreneurs in the United States exhibited a type of closeness," said Abdul Ali, report co-author and an associate professor of entrepreneurship at Babson. "More than two-thirds start at home. Further, little more than one-tenth make a significant portion of their sales from foreign customers. While this may demonstrate an ease of getting started in the United States, entrepreneurs with expansive ambitions are required in order to make a contribution to job growth and global competitiveness."
Even with the challenges they face, Americans have a positive view of entrepreneurs. Forty-three percent of Americans say there are good opportunities for entrepreneurship, the highest-ever percentage of people who hold that opinion. Additionally, 56 percent of Americans say they believe they have the resources needed to start a business.
Other interesting findings include:
- There are seven female entrepreneurs for every 10 male entrepreneurs.
- First-generation immigrants are more likely than nonimmigrants to start a business.
- Thirty-seven percent of entrepreneurs believe they will have more than five employees in the next five years.
- One in three entrepreneurs admit they are afraid of failing, up from 25 percent in 2008.
The research was based on the responses of entrepreneurs from 69 economies around the world. The report was authored by professors from Babson College and Baruch College.