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Diverse entrepreneurship on the rise: Trends in new business ownership

Trends in new business ownership

The trend of starting new businesses has reached record heights, with a notable increase in the diversity of entrepreneurs as we read in AP. Recent studies reveal that an increasing number of these entrepreneurs are women and minorities. This shift suggests a broader change in the business landscape, where more diverse voices and perspectives are being brought to the forefront, contributing to a richer and more varied entrepreneurial community.

The surge in new business applications began in 2020 with the onset of the COVID-19 pandemic and has continued unabated. Over the last three years, more than 5 million applications were filed annually, with 2023 alone witnessing an unprecedented 5.5 million new business applications. This sustained high level of new business formation indicates a robust interest in entrepreneurship and reflects the resilience and adaptability of the economy during challenging times.

Gusto, a payroll management firm, conducted a survey involving 1,300 business owners who launched their enterprises in the previous year. The purpose of the survey was to shed light on the demographics of these new business owners, exploring aspects such as gender, ethnicity, and the motivations behind starting their businesses. Such data is crucial for understanding the evolving dynamics of the business sector and for identifying the changing needs of new entrepreneurs.

The participation of women in entrepreneurship has seen significant growth. In the survey conducted by Gusto, women comprised 49% of the new business owners. This proportion is consistent with trends over the past few years but represents a substantial increase from 2019, when only 29% of new business founders were women. This rise indicates a closing gender gap in entrepreneurship, suggesting that more women are seizing the opportunity to create and lead businesses.

However, despite the increased participation of women in the business world in US, they continue to face significant challenges, particularly in securing investment. In 2023, only 3% of female entrepreneurs received private capital investment to start their businesses, compared to 9% of their male counterparts. This disparity highlights ongoing issues of gender bias in investment circles, where women entrepreneurs are not receiving the same level of financial support and confidence from investors as men.

The representation of Black and Hispanic entrepreneurs among new business owners has also increased. In 2023, Black entrepreneurs accounted for 6% of the new business owner population, doubling the rate observed prior to the pandemic. Similarly, Hispanic entrepreneurs comprised 13% of new business owners, up from 8% the previous year. These figures indicate progress in the inclusivity of entrepreneurship, making it more reflective of the broader society.

There is a noticeable trend towards people starting businesses while continuing to work other jobs, often referred to as "side hustles." In 2023, nearly half of all new entrepreneurs (44%) launched their businesses while still employed in another job, either on a full-time or part-time basis. This increase from 27% in 2022 suggests that more individuals are looking to entrepreneurship as a viable way to supplement their income, balancing it with their primary employment to manage financial risk and stability.



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