The Entrepreneurship Job

Posted by: John Tozzi on April 3, 2009

Another 663,000 jobs vanished in March, according to this morning’s Labor Department release, with a staggering 5 million jobs lost in this recession.

One consequence that we’ve written about is how people laid off into a terrible job market often start their own businesses: either one-person micro businesses, often intended to tide them by until the job market recovers, or the seeds of larger enterprises. (We profiled some of them in our Rebounders slide show last month.)

One nugget to add to the start-up job creation research: the average startup has 1.4 entrepreneurs behind it, because many companies have multiple co-founders. That’s according to forthcoming research by Ying Lowery, senior economist at the the SBA’s Office of Advocacy, based on data from the Kauffman Firm Survey, which is one of the most comprehensive datasets on startups out there. (It’s important to note that the sample is not nationally representative, that is, it isn’t a perfect stand in for the US business universe.)

That means, Lowery told me, that for the roughly half-million new businesses started each year, there are about 750,000 entrepreneurs employed as founders. (That doesn’t count passive investors — only entrepreneurs involved in the company’s operations.) Of course, about the same number of firms disappear each year — likely more this year. The data won’t be available for years, but it will be interesting to see how it’s affected by what’s going on in the economy now, with payrolls in sectors like manufacturing, construction, and services decimated.

Will this cause some shift, either temporary or long-term, toward a more entrepreneurial economy, with more people working for themselves in small enterprises for longer periods? Obviously that’s a trend that’s easier to see in information and service businesses than in goods-producing businesses. But with jobs disappearing, will more people see entrepreneurship as the next step?

Reader Comments

Ying Lowrey

September 2, 2009 4:36 PM

Hello John!
Here is the link for the data report: "Startup Business Characteristics and Dynamics: A Data Analysis of the Kauffman Firm Survey" at http://www.sba.gov/advo/research/rs350tot.pdf.
Love to read your stuff, great work!
Ying

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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