I was browsing my weekly issue of the Atlanta Business Chronicle the other day and came across an article that fascinated me. The article discussed a recent decline in startup activity, but that’s not what surprised me. I was intrigued by the data quoted regarding just who’s starting those startups, based on a study by the Kauffman Foundation.
While the stereotypical entrepreneur is a twenty-something college kid (think Mark Zuckerberg of Facebook), the reality is that less than a third of startups – in fact, only 29% - were headed by someone under the age of 35. Surprisingly, nearly 21 percent of entrepreneurs in 2011 were in the 55-64 year age group and another 29 percent were ages 45-54.
For the 55-64 years olds, this represents a significant increase. The author of the study, Robert W. Fairlie, of the University of California, Santa Cruz, explained that, “Despite a slight decline in entrepreneurial activity rates this year, the share of new 55- to 64-year-old entrepreneurs has risen from 14.3 percent in 1996 to 20.9 percent in 2011.”
Why the sudden boom in older entrepreneurs? Both economic and demographic factors are at work. This age group was among hardest hit by layoffs during the great recession, and they have had some of the greatest challenges in getting back to work. Many opted out of the search, choosing instead to strike out on their own.
At the same time, more fortunate boomers are seeking second acts, looking for opportunities to pursue dreams and challenges they hadn’t enjoyed during prior employment. Given an opportunity to retire early or simply change gears, lots of older entrepreneurs are seizing the day and starting anew.
These trends could also be part of the reason that entrepreneurial growth was highest among 45- to 54-year-olds, increasing from .35% of that age group in 2010 to .37% in 2011.
Overall, new business starts declined nearly 6% from 2010 to 2011, possibly a reflection of the nascent recovery and more people going back to work. On average, .32% of the adult population started a business in 2011, creating 543,000 new enterprises each month in the U.S. last year.
Some more interesting facts from the study include:
- Immigrants are more than twice as likely to start new businesses as native-born Americans.
- Men outpace women significantly, with men starting businesses at a rate of 0.42% versus just 0.23% of women.
- Entrepreneurial activity among high school dropouts decreased to 0.57% percent in 2011 but is still much higher than groups at other educational levels.
- The largest decrease in entrepreneurial activity occurred for college graduates.
- More startups are soloprenuers, individuals who work on their own rather than employing others.
To read more about the study or to download the infographic, visit the Kauffman Foundation at www.Kauffman.org.