It seems almost everyone wants to start a business – from college students to the retired and recent immigrants, Americans have created the largest entrepreneurial surge ever, according to a new report by CNN.
In 2005, 672,000 new companies with employees were created, making that year the largest in business birth-rate in US history, according to Small Business Administration. It was also 30,000 more start-ups than in 2004.
The first quarter of 2006 saw more businesses created than same period in 2005, says the Bureau of Labor Statistics. “It’s such a huge market,” says Gourab Nanda, who started MyBusinessAssistant.com last year to provide virtual business-management solutions to small companies. “All you have to do is identify your customers, provide the services, and keep prices low.”
The recent trend defies the usual demographics of both the owners and the business. Women, minorities, teenagers and corporate refugees have diversified the field of business owners. In 2005, recent immigrant started 25 percent more companies per capita than native-born citizens. And though the last entrepreneurial expansion was mostly technology firms, since 1996 construction has jumped 7 percent and manufacturing 43 percent.
Many factors add to the recent growth. First, rock-bottom interest rates have made it easier and cheaper to borrow money. Employers have started to skimp on the once promising pension funds and health-care benefits, and it has become easier for Americans to start businesses on the side while keeping their main source of income.
There are still many risks in starting up companies, according to the SBA. In 2005, almost 545,000 small businesses closed, which was up by 5,000 from 2003. Another 39,201 filed for bankruptcy in 2005. “That’s a great thing about America, that our culture accepts this risk and accepts people who try new things,” says computer entrepreneur Michael Dell, chairman of Dell. “Many nations have capital, many nations have smart people, but no nation really compares to the US in terms of its willingness to accept risk takers in society.”