Who Are America’s Entrepreneurs Today
Part of the American dream is the whisper that maybe, just maybe, you could make it striking out alone. And for many Americans, the siren call of entrepreneurship is one that’s hard to resist.
But entrepreneurship isn’t always attainable for everybody and it has its own systemic barriers to entry. The tides, however, might be changing a bit. Today’s new entrepreneurs are coming from different backgrounds — and different parts of the country.
To be sure, many new businesses don’t survive in the long run. Of the more than 700,000 US private sector businesses formed in March 2018, about 52% were still operating five years later, in March 2023, according to the Bureau of Labor Statistics.
Still, Americans are increasingly embracing entrepreneurship: According to an annual report by Babson College published in August 2023, 19% of working-age US adults were in the process of starting a business or had done so over the prior three-and-a-half years. That was the highest level since the survey began in 1999.
So who are the newest entrepreneurs? They’re a more diverse group than ever before, and for the most part, think self-employment is going well — but they might also see it as a financial lifeline.
New entrepreneurs are increasingly likely to be women, immigrants, and live in the Midwest
Women are increasingly taking the plunge into entrepreneurship, according to a survey of more than 1,300 entrepreneurs who started their businesses in 2023 conducted by the human-resources tech company Gusto.
The Gusto survey, conducted between January and March 2023, found that 49% of new business owners were women, compared to 45% of men — some respondents declined to identify as male or female or disclose their gender. Gusto compared these figures to Census Bureau data from 2019, when 29% of new entrepreneurs were women.
Broadly, self-employed workers are still more likely to be male — especially compared with the larger workforce, according to a Pew Research Center survey.
Sixty percent of new entrepreneurs were white, 14% were AAPI, 13% were Hispanic, and 6% were Black, per Gusto. The share of new Hispanic entrepreneurs rose from 8% in 2022 to 13% in 2023, Gusto found.
America’s entrepreneurs are also increasingly likely to be born outside the US, according to a 2022 report published by the nonprofit Ewing Marion Kauffman Foundation. Citing current population survey data, the report found that in 2021, over 28% of new entrepreneurs were foreign-born — up from about 13% in 1996.
From March 2023 to March 2024, business formation applications were up in the Midwest, per the Census Bureau. New Hampshire saw more aspiring entrepreneurs, with applications up 20.7% — the highest year-over-year rate among all states. Similarly, in Minnesota, business applications were up 15.3%, and Montana saw applications up 16.4%.
But the South is seeing a new entrepreneurship boom. According to the Census Bureau’s March 2024 business formation data, the South saw 195,341 business applications; the Northeast saw a fraction of that 64,355 — and that’s with business applications in the South ticking down from February.
“The center of gravity of entrepreneurship is also shifting from coastal cities in the Northeast and West to the Southeast US and Mountain West,” Gusto economist Luke Pardue wrote in a July 2023 analysis. That might be part of a larger shift as the center of the US economy — and the country’s population — moves South.
Many young people have entered the ranks of entrepreneurs in recent years. Among US adults between 18 and 34 years old, 27% were actively engaged in starting or running a new business, per the Babson report, That was nearly twice as high as the 35-to-64 age group, at 14.5%.
However, the Kauffman Foundation report found rising entrepreneurship rates among older workers. In 2021, nearly 23% of new entrepreneurs were between the ages of 55 and 64, up from about 15% in 1996. Still, the largest share of new entrepreneurs, about 26%, came from the 20 to 34-year-old age cohort.
Entrepreneurs are also clustered in certain industries: In 2022, the most common industry for new entrepreneurs was wholesale, retail, and hospitality, which accounted for about 28% of new business formations, per the Babson report.
Why Americans want to be entrepreneurs — and how it’s going
Having more work-life flexibility, becoming financially stable, and supplementing income were the top motivations new entrepreneurs gave for starting their businesses, according to the Gusto survey.
More than half of new entrepreneurs said they relied on personal savings to start their businesses. Eight percent took out a private business loan, 7% got a loan from family or friends, and 3% got a Small Business Administration-backed loan. Thirty-one percent said no funding was needed to start their businesses.
Fifty-six percent of new entrepreneurs said they didn’t have another job when they started their business, compared to 25% who had a full-time job and 19% who had a part-time job.
Once they get their businesses up and running, self-employed workers feel pretty good about their gigs, according to a Pew Research Center survey of 5,902 Americans conducted in February 2023. Compared to workers who are not self-employed, the Americans working for themselves report finding their jobs more enjoyable and fulfilling — and they’re not as stressed. Those self-employed workers still tend to be overwhelmingly male — 64% of self-employed respondents were men, compared to 53% of all workers — and nearly 70% are white.
And newfound business owners are receptive to different ways of working. Many new entrepreneurs are open to using AI tools and hiring remote workers, per the Gusto survey. Twenty-two percent said they were already incorporating generative AI tools into their operations, while 16% said they’re open to using them, but not yet actively doing so.
More than half of new entrepreneurs surveyed by Gusto said they hired employees who worked remotely all or some of the time. Thirty-five percent said their businesses were fully remote, while 22% were hybrid. According to the Pew report, 60% of self-employed workers who can do their work from home are indeed clocking in from their houses.
Entrepreneurship isn’t always enough to pay the bills, though. The share of entrepreneurs who started a business while juggling another gig rose from 27% in 2022 to 44% in 2023.
The Babson report found that most US entrepreneurs, 71%, were motivated by the prospect of boosting their wealth through their businesses. However, the share who said they were motivated by “necessity” rose from roughly 46% in 2021 to 54.5% in 2022.
“Perhaps job insecurity experienced during the pandemic and the nature of the job market as unemployment eased led many to venture into entrepreneurship as a viable career choice,” the report said.
Have you started a business in recent years? Are you willing to share your story? If so, reach out to these reporters at jzinkula@businessinsider.com and jkaplan@businessinsider.com.
