Who Changing Demographics of Entrepreneurs?
Entrepreneurship has traditionally been defined as the process of designing, launching and running a new business, which typically begins as a small business, such as a startup company, offering a product, process or service for sale or hire. It has been defined as the “Capacity and willingness to develop, organize, and manage a business venture along with any of its risks in order to make a profit.” While definitions of entrepreneurship typically focus on the launching and running of businesses, due to the high risks involved in launching a start-up, a significant proportion of businesses have to close, due to a “Lack of funding, bad business decisions, an economic crisis or a combination of all of these” or due to lack of market demand. In the 2000s, the definition of “Entrepreneurship” has been expanded to explain how and why some individuals (or teams) identify opportunities, evaluate them as viable, and then decide to exploit them, whereas others do not, and, in turn, how entrepreneurs use these opportunities to develop new products or services, launch new firms or even new industries and create wealth.
Traditionally, an entrepreneur has been defined as “A person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.” “Rather than working as an employee, an entrepreneur runs a small business and assumes all the risk and reward of a given business venture, idea, or good or service offered for sale. The entrepreneur is commonly seen as a business leader and innovator of new ideas and business processes.” Entrepreneurs tend to be good at perceiving new business opportunities and they often exhibit positive biases in their perception (i.e., a bias towards finding new possibilities and seeing unmet market needs) and a pro-risk-taking attitude that makes them more likely to exploit the opportunity. “Entrepreneurial spirit is characterized by innovation and risk-taking.” While entrepreneurship is often associated with new, small, for-profit start-ups, entrepreneurial behavior can be seen in small-, medium- and large-sized firms, new and established firms and in for-profit and not-for-profit organizations, including voluntary sector groups, charitable organizations, and government. For example, in the 2000s, the field of social entrepreneurship has been identified, in which entrepreneurs combine business activities with humanitarian, environmental or community goals.
Now, Here are Who 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 27.5 million businesses in the United States, 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.
Women Entrepreneurs: While men are still more likely to start businesses than women, the number of women-owned businesses is increasing. According to the U.S. Census Bureau, there were 6.5 million privately held women-owned firms in the United States in 2002, the most recent year the U.S. Census Bureau collected ownership data. These firms generated an estimated $940 billion in sales and employed 7.1 million people. The number of women-owned firms increased by 19.8 percent from 1997 to 2002, compared with a growth rate of 10.3 percent for United States firms overall.
According to a survey of both women-owned and men-owned businesses in the United States, the average age of the individuals who lead women-owned firms is 44.7 years old. A total of 52.7 percent of women-owned firms are home-based, 31.9 percent are multi-owner firms, and 19.5 percent were started for less than $2,000. The top industry for women-owned business is retail (19 percent) followed by professional, management, and educational services (16.3 percent). Women-owned firms still trail male-owned businesses in terms of sales and profits. The average women-owned firm has annual sales of $60,264 and annual profits of $14,549, compared to annual sales of $118,987 and profits of $30,373 for male-owned businesses.
There are a growing number of groups that support and advocate for women-owned businesses. An example is Count Me In (www.makemineamillion.org), which is the leading national not-for-profit provider of resources, business education, and community support for women entrepreneurs.
Minority Entrepreneurs: There has been a substantial increase in minority entrepreneurs in the United States from 1996 to 2010. The biggest jump has come in Latino entrepreneurs, which increased from 11 percent to 23 percent from 1996 to 2010, followed by Asian entrepreneurs, which jumped from 4 percent to 6 percent during the same period. While these numbers are encouraging, in general, the firms created by minority entrepreneurs lag behind averages for all firms in terms of economic indicators. The Kauffman Foundation is one group that is actively engaged in research to not only track the growth in minority entrepreneurs but to better understand how to strengthen the infrastructures and networks to enable minority entrepreneurs to reach higher levels of financial success.
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.
Senior Entrepreneurs: The increase in entrepreneurial activity among senior entrepreneurs, consisting of people 55 years and older, between 1996 and 2010 is substantial (from 14 percent to 23 percent). 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 55 and older age range have substantial business experience, financial resources that they can draw upon, and excellent vigor and health.
There are a number of interesting statistics associated with the increasing incidence of senior entrepreneurs. For example, 39 is now the average age of the founders of technology companies in the United States, with twice as many over age 50 as under age 25. Similarly, the steady increase in life expectancy means that Americans are not only living longer, but are living healthier longer, and are likely to remain engaged in either a job or an entrepreneurial venture longer in their lives than earlier generations.
Young Entrepreneurs: Interestingly, a drop in new entrepreneurial activity for people in the 20 to 34 age range occurred between 1996 and 2010 (from 35 percent in 1996 to 26 percent in 2010); nonetheless, the number of young people interested in entrepreneurship remains strong. At the high school and younger level, according to a Harris Interactive survey of 2,438 individual ages 8 to 21, 40 percent said they’d like to start their own business someday. A total of 59 percent of the 8- to 21-year-olds said they know someone who has started his or her own business. The teaching of entrepreneurship courses is becoming increasingly common in both public and private high schools. Not-for-profit agencies are involved in these efforts too. The Network for Teaching Entrepreneurship (NFTE), for example, provides entrepreneurship education programs to young people from low-income communities. The organization’s largest annual event is called “Lemonade Day” and is held each May. In 2011, over 120,000 kids attended one-day entrepreneurial training sessions in 31 cities. The program teaches children and teens how to borrow money and repay investors who help start their stands, and what to do with the profit, including donating some to nonprofit causes. Since its founding, the NFTE has reached more than 300,000 young people, and currently, has programs in 21 states and 10 foreign countries.
In addition to the NFTE, a growing number of colleges and universities are offering entrepreneurship-focused programs for high school students. Babson College, for example, offers three Summer Study Programs for high school students. The first two programs, Babson Entrepreneur Development Experience and Babson Idea Generation Program, are resident programs for high school students entering their junior or senior year. Members of the Babson faculty teach in these programs; each program last seven weeks. The third program, Service Learning Experience, is a nonresident program for high school sophomores who are passionate about social outreach.
On college campuses, interest in entrepreneurship education is at an all-time high, as will be described throughout this book. More than 2,000 colleges and universities in the United States, which is about two-thirds of the total, offer at least one course in entrepreneurship. Although the bulk of entrepreneurship education takes place within business schools, many other colleges and departments are offering entrepreneurship courses as well—including engineering, agriculture, theater, dance, education, law, and nursing.
Notes: Here are read it Who Changing Demographics of Entrepreneurs? Would you like more read it; What is an Entrepreneur?, and also read it What Is Entrepreneurship?, don’t forget read it; Why Become an Entrepreneur?, and Common Myths About Entrepreneurs.