Report Finds Entrepreneurial Activity Declined In 2015

Date: July 20, 2016

Fewer People See New Business Opportunities

A new report finds that the four year positive trend of entrepreneurial activity in the US reversed course in 2015, a reflection of the dour mood on Main Street. Babson College released its Global Entrepreneurship Monitor 2015 U.S. Report, which shows overall, US entrepreneurial activity fell to 12 percent in 2015 from 14 percent in 2014. CNBC notes the report shows “a drop in ‘nascent activity,’ meaning that fewer people overall entered into entrepreneurship in 2015,” and says the research shows the post-recession recovery on Main Street “is still a work in progress, with sentiment and overall levels of entrepreneurship potentially wavering.” In addition, Americans saw fewer opportunities to start new businesses, with the survey finding 47 percent of respondents saw new business opportunities in 2015, down from 51 percent in 2014. Of those entrepreneurs who did embark on new enterprises, 69 percent cited the independence and the pursuit of opportunity as their motivation. Babson professor Donna Kelley said, “It could be that people have good jobs and don’t feel motivated to go out and start businesses. But this is an indicator to watch. If the general environment is saying that there are few opportunities and the entrepreneurship rate goes down, that all suggests less optimism about entrepreneurship right now.” Delving deeper into the data reveals some interesting particulars. The peak age range for entrepreneurship is between 35-44, where 17 percent meet the qualification. Entrepreneurial activity among men came in at 15 percent and 9 percent for women, respectively. The African American community had the highest level of entrepreneurial activity at 14 percent, while Caucasians were next at 12 percent.

What This Means For Small Business

The declining rate of entrepreneurship, which reflects falling optimism, is of great concern for the small business community. The Babson College report reinforces the view that small business owners are caught in the post-recovery economic doldrums. As NFIB Chief Economist Bill Dunkelberg recently said, “Uncertainty is high, expectations for better business conditions are low, and future business investments look weak.”

Additional Reading

The NFIB Small Business Optimism Index, which remains below the report’s 42 year average of 98, also reflects lower expectations among small business owners.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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