Changing demographics of Entrepreneurs

Over the past 10 years, the demographic makeup of entrepreneurial firms has changed in the United States and around the world. Of the 23 million busi-nesses in the United States,43 women, minorities, seniors, and young people own an increasingly larger number of them. This is an exciting development for the entrepreneurial sector of the U.S. economy.

1. Women Entrepreneurs

While men are still more likely to start businesses than women, the number of women-owned businesses is increasing. According to a study commis- sioned by American Express OPEN, there were 8.6 million women-owned businesses in the United States in 2013, generating over $1.3 trillion in rev- enues and employing nearly 7.8 million people. In addition, between 1997 and 2013, the number of women who owned businesses increased at a rate of one-and-a-half times the national average. Particularly impressive is the growth in the number of firms owned by women who are minorities. A total of 33 percent of women-owned firms are now owned by minorities, up from 17 percent 16 years ago.44

Additional data is available from the 2007 U.S. Census Beureau’s report on Women Owned Business (the most recent year the data was collected). According to the report, in some industries, women control a significant share of the business. For example, women-owned businesses accounted for 52 per- cent of all businesses in the health care and social assistance sector. The three states with the highest number of women-owned businesses in 2007 were California, Texas, and New York. There were 141,893 women-owned busi- nesses earning more than $1 million in 2007.45

The number of groups that support and advocate for women-owned businesses continues to increase. An example of these groups is Count Me In  (www.countmein.org),  which  is  the  leading  national  not-for-profit  pro- vider of resources, business education, and community support for women entrepreneurs.46

These are the faces of the entrepreneurs of the future. Collectively they will be older, more ethnically diverse, and will include more women than any time in the past.

2. Minority Entrepreneurs

There has been a substantial increase in minority entrepreneurs in the United States. The most comperhensive statistics are reported by the Minority Business Development Agency (www.mbda.gov). According to the MBDA, between 2002 and 2007 (the most recent years the data was collected), minority-owned firms outpaced the growth of non-minority firms in gross receipts, employment, and number of firms. In 2007, there were 5.8 million minority-owned firms. Minorities represented 36 percent of the U.S. population in 2010, and will be- come the majority of the population by 2042.47

In 2007, there were about 1.9 million African American–owned firms in the United States. The African American firms with employees had average receipts of over $911,000 and average employment of 9 workers. Similarly, in 2007 there were 1.5 million Asian American–owned firms. The Asian American firms with employees had average receipts of more than $1.1 million and 7 employees. Finally, in 2007, there were about 2.3 million Hispanic-owned firms in the United States. The Hispanic firms with employees had average receipts of $1.1 million and 8 workers.48

Similar to women entrepreneurs, an important factor facilitating the growth of minority entrepreneurs is the number of organizations that promote and provide assistance. Examples include the Latin Business Association, Black Business Association,  National  Indian  Business  Association,  The  National  Council  of Asian American Business Associations, and the Minority Business Development Agency, which is part of the United States Department of Commerce.

3. Senior Entrepreneurs

The number of seniors (those 50 years of age and older) starting businesses is substantial and growing. According to the Kauffman Foundation and LegalZoom study cited earlier in the chapter, in 2012, 20 percent of new businesses were started by people between 50 and 59 years old while another 12.5 percent were founded by individuals 60 years old and older.49 This increase is attributed to a number of factors, including corporate downsizing, an increasing desire among older workers for more personal fulfillment in their lives, and growing worries among seniors that they need to earn additional income to pay for future health care services and other expenses. Many people in the 50 and older age range have substantial business experience, financial resources that they can draw upon, and excellent vigor and health, which make them ideal candidates to start businesses in many industries. In addition, the steady increase in life ex- pectancy means that Americans are not only living longer, but are living health- ier longer, and are likely to remain engaged in either a job or an entrepreneurial venture longer in their lives than earlier generations.

4. Young Entrepreneurs

A desire to pursue an entrepreneurial career is high among young people. According to a recent Gallop survey, about 4 in 10 kids in grades 5–12 say they plan to start their own business. Interestingly, the percentage is higher among girls (46 percent) than boys (40 percent). About 59 percent of students in grades 5–12 say their school offers classes in how to start a business. This per- centage represents a 9 percent jump from 2011 to 2012. About one-third (32 percent) of young people say their parents or guardians have started a busi- ness, which provides them a firsthand look at the entrepreneurial lifestyle.50

A number of organizations are involved in spurring interest in entrepreneur- iship among young people. The Network for Teaching Entrepreneurship (NFTE), for example, provides entrepreneurship education programs to young people from low-income communities. A nonprofit organization called Lemonade Day, sponsored in part by Google, is a 14-step process that walks young people from a business concept to a business plan and beyond. The idea is to expose young people to entrepreneurial concepts by helping them start and operate their own business—a lemonade stand. Launched in 2007, Lemonade Day has grown from 2,700 kids in Houston, Texas, to more than 200,000 kids in cities across the United States. The organization’s goal is to eventually provide this experi- ence to 1 million kids in 100 cities each year.51

In addition to organizations targeting elementary and middle-aged school kids, a growing number of colleges and universities are offering entrepreneur- ship-focused programs for high school students. Babson College, for example, offers a five-week summer program for high school juniors and seniors. The program, called the Babson Entrepreneurial Development Experience, allows students to work together on new business ideas. The students can earn college credit and learn from top-ranked faculty in a challenging college atmosphere.52

On university and college campuses, interest in entrepreneurship education is at an all-time high. More than 2,300 colleges and universities in the United States offer at least one course in entrepreneurship at the undergraduate or graduate level.53 Although the bulk of entrepreneurship education takes place within business schools, many other colleges and departments are offering en- trepreneurship courses as well—including engineering, agriculture, law, hospi- tality management, and nursing.

A growing number of organizations are popping up that focus on helping college student entrepreneurs. These organizations range from the Dorm Room Fund, which is a student-run venture fund that invests in student-initiatied start-ups, to Startup Weekend, which helps students organize teams and launch start-ups in 54 hours. A sample of these organizations is shown in Table 1.5.

Source: Barringer Bruce R, Ireland R Duane (2015), Entrepreneurship: successfully launching new ventures, Pearson; 5th edition.

2 thoughts on “Changing demographics of Entrepreneurs

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