American entrepreneurship is apparently on the decline, according to a recent article from FiveThirtyEight, but small business owners report consistently high levels of satisfaction with their choices despite the financial difficulties that they have faced.
“Americans started 27 percent fewer businesses in 2011 than they did five years earlier, according to data from the Census Bureau,” writes Ben Casselman on FiveThirtyEight. As a share of all companies, startups have been declining for more than 30 years.”
Decline in new businesses seems to track aging baby boomers
For some reason, Cassleman briefly mentions and then ignores one of the most obvious reasons why this thirty year trend might be happening. Young adults are more likely to start new businesses than older people, so the baby boomers would have caused a bulge in new business creation a few decades back that would slowly fall as demographics change. That’s roughly what we see, so it seems like an avenue worth exploring before declaring the death of entrepreneurship, with the change in national character that it implies.
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The sharp drop off in new businesses after the financial crisis is even less surprising. Financing was extremely tight, and there’s no telling how many people with business plans that would have been reasonable any other time in the last few decades were turned away as banks deleveraged and lending nearly fell off a cliff. The inflection point in 2010 could be a sign of growing business creation, supported by the more recent Bureau of Labor Statistics data that shows growing entrepreneurship in 2012 and 2013, which Casselman also mentions in passing.
Entrepreneurship: 84% of small business owners would do it again
Whatever the real story behind American business dynamism, a large majority of people who run their own businesses would do it again if given the chance, according to a recent Wells Fargo/Gallup poll, as they have for the last decade with striking consistency.
No surprise, 42% of small business owners said their biggest perk was the independence that comes with owning a company, followed by 17% who mentioned a sense of accomplishment. Financial rewards came in fifth behind flexible schedules and interacting with customers. The biggest problems facing small business owners were all financial with generating revenue, managing cash flow, and credit financing taking the top three slots followed by government regulations and marketing.