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Boundless Management
Entrepreneurship and Management
Small Business Owners: A Profile
Management Textbooks Boundless Management Entrepreneurship and Management Small Business Owners: A Profile
Management Textbooks Boundless Management Entrepreneurship and Management
Management Textbooks Boundless Management
Management Textbooks
Management
Concept Version 14
Created by Boundless

The Demographics of Modern Entrepreneurs

Due to technological aptitude, unemployment, and lack of dependents, a sizable percentage of U.S. entrepreneurs are young.

Learning Objective

  • Identify the demographic trends in modern entrepreneurs, and the factors which influenced them.


Key Points

    • With recent technological developments, starting a business requires far less capital than ever before.
    • With new technologies and business infrastructure, businesses can be scaled up and replicated in other places much more easily than ever before.
    • As a result of recent economic downturns and technological advances, younger generations have higher unemployment rates and are better equipped technologically, which has led to growth in youth entrepreneurship.
    • Women are now a dominant force in small-business ownership, and they are succeeding in industries that were once taboo for women.

Term

  • Barriers to entry

    One of Porter's five forces; these are the financial and nonfinancial obstacles for new entrants to entering a given industry.


Example

    • A very simple and small-scale example of how technology has made entrepreneurship potentially simpler is the rise of smartphone technology. Nowadays, anyone with an innovative idea and knowledge of smartphone programming is able to develop an original app and release it commercially.

Full Text

Entrepreneurs are catalysts for economic change. Research suggests that entrepreneurs are highly creative individuals with a tendency to imagine new solutions by finding opportunities for profit or reward. The ability of entrepreneurs to innovate is thought to relate to innate traits such as extroversion and a proclivity for risk taking.

Enabling Factors

There are entrepreneurs in all demographics and walks of life. There have never been lower barriers to entry when starting a new company. Thanks to developments in technology, less capital than ever before is required to start a business (depending on the industry). Moreover, advancements in engineering have allowed people to build software and Internet businesses from scratch with minimal obstacles.

The venture-capital sector has risen from nothing 40 years ago to investing billions in new businesses today. Technology has allowed for business to be scalable over a variety of countries and continents. Previously, scaling a new business would have taken extensive time, focus, and capital. Now there is infrastructure in place (e.g., the Internet, FedEx and UPS, and smartphones) that allows entrepreneurs to build a business that can be replicated in different cities globally.

Couple this with slow economic growth due to the banking collapse in the U.S. and a high number of over-educated and underemployed people and you get a great deal of people who are drawn to entrepreneurship as a way of creating their future.

Youth

All of these factors contribute to the trend of younger and younger business owners. The tendency of young people to take risks, coupled with the relative ease of starting a business in today's environment, has driven down the average age of entrepreneurs. Also, the younger generations (i.e., recent graduates) are facing high levels of underemployment as a result of economic factors. The younger entrepreneurs also have an interest in and familiarity with technology that provides some advantage.

Organizations have even risen to service the ever-younger, emerging entrepreneurs. The Young Entrepreneur Council (YEC) is an American nonprofit organization that provides entrepreneurs with access to tools, mentorship, and resources that support each stage of their business's development and growth. The organization has several hundred members—all successful young entrepreneurs and business owners, ages 17 to 40—including the founders and leaders of LivingSocial, Airbnb, Reddit, College Hunks Hauling Junk, Mint.com, myYearbook, Thrillist, Yodle, Threadless, ModCloth, Grasshopper, Likeable, HootSuite, and Blip.tv.

Trends and Statistics of Women in Business

Female entrepreneurship

Recent years have seen a dramatic rise in the number of businesses owned by female entrepreneurs. As the image shows, women are now founding businesses at a rate 1.5 times the national average; the most prevalent such businesses include healthcare / social assistance (15.8%) and professional / technical services (14.1%).

There are exciting things happening inside the world of female entrepreneurship. Women are now a dominant force in small-business ownership and they are succeeding in industries that were once taboo for women. Women are not only starting businesses, they are staying in business. Between 1997 and 2006, female-owned businesses grew at nearly twice the rate of all U.S. firms (42.3 percent vs. 23.3 percent). During the same time period, employment among female-owned firms grew 0.4 percent and annual sales grew 4.4 percent. In 2006, reports on women-owned (or majority owned by women) businesses in the United States returned the following impressive statistics.

  • There were an estimated 10.4 million privately-held firms.
  • These firms accounted for two in five (40.2 percent) of all businesses in the country.
  • These firms generated $1.9 trillion in annual sales and employed 12.8 million people nationwide.
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