Fewer Americans Are Launching Businesses. Here's the Silver Lining. (Infographic) U.S. entrepreneurial activity has declined for the last three years, but the percentage of entrepreneurs who are launching businesses out of necessity has also fallen, according to a study.
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Doing something because you have to is very different than doing something because you want to. Not to say that being driven into a corner doesn't produce results. But chasing a dream from a position of strength is a more positive, optimistic pursuit.
And so is the trend in entrepreneurship in the U.S. right now.
Fewer Americans started businesses in 2013 than in 2012, marking the third straight year of declines, according to the latest Kauffman Index of Entrepreneurial Activity. But the silver lining is that, due to a rebounding economy, more people are starting their own companies because they see an opportunity -- not because joblessness has forced them to.
In 2013, 78.2 percent of new entrepreneurs were not coming out of unemployment when they launched their businesses, the Kauffman Foundation found. In 2009, as the economy struggled to emerge from the Great Recession, that number was a lower 73.8 percent.
A big reason that people launch businesses is because they are unemployed and unable to re-enter the workforce; in other words, they do so out of necessity. This kind of entrepreneurship, while real, is very different than the case of a gainfully employed person who sees an opportunity in the marketplace and decides to strike out on his own to pursue it.
With the unemployment rate down to 6.7 percent at the end of 2013, fewer people fall into the category of "necessity entrepreneurs," the nonpartisan Kauffman Foundation argues.
"While we have speculated in recent years that changes in entrepreneurship rates could be driven by labor market conditions, this new data provides the strongest evidence we've seen of this correlation," said Dane Stangler, vice president of Research and Policy at the Kauffman Foundation, in a written statement.
For additional data on the demographics, gender and geographic location of those adults who are starting businesses in the U.S., take a look at the infographic generated by the Kauffman Foundation below.