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The Ebb and Flow of Entrepreneurship

Thom Ruhe, Director of Entrepreneurship, The Kauffman Foundation

The Kauffman Foundation has released its “Kauffman Index of Entrepreneurial Activity” for 2011. The numbers reveal a decline in the rate of new business creation in 2011 as compared to 2010. It also noted that startup founders were more likely to remain the sole employee than to employ others. I would imagine that this documented dip from 2010 to 2011 might embolden those quick to dismiss entrepreneurship and entrepreneurs themselves as the heroes within our national economy. To those I say: keep reading.

Entrepreneurship is not an easy life choice to make, but it is arguably among the most vital to our future. Despite the 2010 to 2011 drop, entrepreneurship remained the choice of .32 percent of American adults in 2011—that’s among the highest levels of entrepreneurship over the past 16 years.

There are going to be dips and climbs from year to year—like any market-driven activity it will ebb and flow—and we understand this is a marathon, not a sprint. The Kauffman Foundation has been publishing this index since 1996 and some positive trends have emerged in that timeframe, like the fact that the Latino share of all new entrepreneurs rose from a little over 10 percent in 1996 to 22.9 in 2011. Or that entrepreneurial activity among immigrants increased from .35 percent in 2005 to .55 percent in 2011.

When considering entrepreneurial activity within your own communities, check out the state-by-state rankings. How does your MSA stack up with others? Does your entrepreneurial ecosystem reflect the trends we are seeing in the report?

We have supported this study for 16 years to provide communities with data that can help drive and justify economic development priorities and optimize the allocation of scarce resources for this incredibly vital activity. From educators to policy makers to economic development practitioners, we want people to use the information within this report and hopefully pull the numbers back up.

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