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Jan. 19, 2006


Number of U.S. entrepreneurs reaches eight-year high

ANN ARBOR, Mich.—After a 20 percent dip in 2004, the number of U.S. entrepreneurs increased by 30 percent in 2005, with more than 23 million people starting new businesses or managing firms less than four years old.

That is the latest finding from an ongoing study by the University of Michigan and Florida International University that tracks entrepreneurial activity over time.

Percent of U.S. adults who are entrepreneurs

"This level of entrepreneurial activity reflects an increase of nine million people from the late 1990s," said Paul Reynolds of FIU, the principal investigator of the study. "Despite the passing of the dot-com boom, entrepreneurship is an increasingly popular career option."

Reynolds and co-principal investigator Richard Curtin, an economist at the U-M Institute for Social Research (ISR), have been assessing long-term trends in business startups through the Panel Studies of Entrepreneurial Dynamics, funded primarily by the Ewing Marion Kauffman Foundation.

As part of the studies, the researchers surveyed a nationally representative sample of 26,000 U.S. adults ages 18 to 74 in fall 2005. The survey, conducted by Opinion Research Corp. of Princeton, N.J., identified about 2,000 active nascent entrepreneurs.

They found the highest level of entrepreneurial activity since the study began in 1998. Then, 7.6 percent of Americans had started new businesses or were managing young firms. By 2005, the proportion had reached 11.5 percent.

Nearly two-thirds (63 percent) are men, with 18-to-34-year-olds accounting for about 44 percent of new firm creations, compared to 47 percent for those ages 35-54 and 9 percent for those 55 and older.  

"Very young adults have neither the resources nor the experience to get involved, while early career adults tend to have both, along with the optimism and drive needed to start a new business," Reynolds said.

Among the other findings from the 2005 survey:

More than 80 percent of entrepreneurs have full- or part-time jobs, or are managing an existing business.

Blacks and Hispanics are twice as likely to be engaged in business creation as are whites.

About two-thirds are in the startup phase and one-third are managing a new business less than four years old.

More than half (57 percent) of those starting a new business have completed high school, about 23 percent have finished college and 12 percent have graduate training.

The project will follow people in the process of starting a new business, interviewing them in each of the next three years.

"The goal is to understand what facilitates the business startup process and what are the barriers to their eventual success," Curtin said.  

The interviews will gather data on a broad range of factors, including the characteristics and motivations of the entrepreneur, the help and assistance from other members of the startup team, details about the new business and its market potential, and the available financial and technical resources.

Related links:

U-M Institute for Social Research

ISR Panel Study of Entrepreneurial Dynamics

Florida International University, Pino Global Entrepreneurship Center

The Eugenio Pino and Family Global Entrepreneurship Center strives to make entrepreneurship an important part of education in the arts, sciences, business, engineering and humanities at Florida International University. The Center facilitates entrepreneurial activities at FIU with the support of the College of Business Administration, the College of Engineering and Computing Sciences, and the College of Arts & Sciences. These unique partnerships have brought campus-wide academic experiences. FIU has been designated a Kauffman Campus by the Kauffman Foundation of Kansas City. For more information about the Pino Center, visit or call (305) 348-7156.

Established in 1948, the Institute for Social Research is among the world's oldest survey research organizations, and a world leader in the development and application of social science methodology. ISR conducts some of the most widely cited studies in the nation, including the Survey of Consumer Attitudes, the National Election Studies, the Monitoring the Future Study, the Panel Study of Income Dynamics, the Health and Retirement Study, and the National Survey of Black Americans. ISR researchers also collaborate with social scientists in more than 60 nations on the World Values Surveys and other projects, and the Institute has established formal ties with universities in Poland, China, and South Africa. ISR is also home to the Inter-University Consortium for Political and Social Research (ICPSR), the world's largest computerized social science data archive. Visit for more information.


Contact: Diane Swanbrow
Phone: (734) 647-9069


Contact: Lourdes Balepogi
Phone: (305) 348-7526