In a post-pandemic paradigm shift, a new report from Babson College reveals that Americans are embracing entrepreneurship at unprecedented rates, with nearly 1 in 5 adults either in the process of founding a business or having done so in the past 3½ years.
This surge, marked by a diverse array of new ventures, is propelling women and people of color into the forefront of the entrepreneurial landscape.
The Global Entrepreneurship Monitor’s annual report indicates that the entrepreneurial wave, now at its highest level since the survey’s inception in 1999, is contributing to innovation, job creation, and the overall competitiveness of the United States.
Donna Kelley, a professor at Babson College and the lead author of the report, notes that this trend has persisted through the pandemic, signifying a positive trajectory for the nation’s business landscape.
Globally, the United States ranks third in entrepreneurship rates among 21 high-income economies, surpassed only by the United Arab Emirates and Saudi Arabia.
The report attributes this surge to the momentum initiated early in the pandemic when sudden job losses prompted individuals to venture into entrepreneurship.
Notably, July 2020 saw an unprecedented spike in new business applications, with over 550,000 Americans filing paperwork to establish their companies, fueled in part by government funding, including stimulus checks, unemployment benefits, and small-business loans.
However, the report also underscores the challenges faced by nascent businesses. Economic uncertainties, increased costs, and a potential slowdown in consumer spending pose hurdles for many ventures founded during this period.
Business closures rose from 2.9 percent in 2019 to 5.2 percent in the past year, indicating that while starting a business has become more accessible, sustaining and growing businesses present ongoing challenges.
Cheryl Shao, a Boston-area dentist, exemplifies the struggles of entrepreneurship. Despite spending two years developing a device blending braces and clear aligners, Shao has faced setbacks, including partnership failures and difficulties securing funding.
Shao, a double minority as an Asian woman, emphasizes the additional challenges faced by entrepreneurs from marginalized groups in securing funding and support.
The report highlights a notable shift in entrepreneurship dynamics, with rates being highest among Black and Hispanic adults, at 35 percent and 27 percent, respectively, compared to 15 percent among White adults.
Other marginalized groups, including those with criminal records, are also turning to entrepreneurship as a viable alternative to traditional employment.
As the Babson report provides a snapshot of American entrepreneurship, it reveals that adults between 18 and 34 are nearly twice as likely to start businesses compared to those between 35 and 64.
Moreover, the gender gap in entrepreneurship is gradually narrowing, with men only slightly more likely than women to embark on their ventures.
The shift in focus from service industries to manufacturing and logistics indicates a diversification in business sectors.
Joseph Smith’s journey in South Mississippi exemplifies this diversification, as he transitioned from unemployment to selling homemade soap online.
Despite facing challenges when online sales dipped post-lockdown, Smith adapted, now selling products at local markets and planning to open a mobile bakery.
While uncertainties loom over the sustainability of these newly established businesses, the surge in entrepreneurship is reshaping the American business landscape, fostering innovation, diversity, and economic resilience.
The stories of individuals like Cheryl Shao and Joseph Smith reflect the multifaceted challenges and opportunities embedded in this entrepreneurial surge, marking a profound transformation in how Americans approach work and business ownership.