With 500,000 business created monthly, is US the land of entrepreneurs?
By Joanna Yeo 29 May, 2012
Is America really the land of opportunity?
America is widely known as “the land of the free and the home of the brave”, the best place to start a business and live the American Dream. Starting with Silicon Valley, who has taken the lead in fueling the world with some of the best entrepreneurs such as Steve Jobs, Mark Zuckerberg and Bill Gates. And by best entrepreneurs, I also refer to the big corporations led by them, that make some of the biggest decisions that can impact the world.
Docstoc recently released an article describing entrepreneurial statistics in the United States. According to the infographic (see below), 543,000 new businesses sprout out all over the country each month. By the end of 2011, the total number of businesses, big and small in America came up to a whopping figure of 6,516,000. With a total population of 311,591, 917 as of July 2011, this means that one out of every 48 people you meet in America, is the boss of a certain company.
The best and worst states to start a business in America.
California, Alaska, Arizona, Colorado and Texas tops the list of states that contributed to the most entrepreneurial activity. ‘Complacent’ states that contributed the least to America’s entrepreneurial activity are Hawaii, Illinois, Indiana, West Virginia and Pennsylvania.
According to the Kauffman Index of Entrepreneurial Activity, the top three fastest growing industries in entrepreneurialism in terms of revenue growth are internet publishing and broadcasting, wind power and e-commerce & auctions with a growth rate of 25.2%, 16.2% and 12.9% respectively from the period of 2000 to 2011. It is forecasted that these 3 industries will continue to grow at a rate of 6.8% (internet publishing & broadcasting), 11.2% (wind power) and 9.4% (e-commerce and auctions).
It’s not surprising to see internet publishing and broadcasting topping the charts in terms of revenue growth as a result of a major shift of print media to digital media.
But how many of these startups actually succeed? A research article written by Carmen Nobel for the Havard Business School reveals:
“If failure means liquidating all assets, with investors losing most or all the money they put into the company, then the failure rate for start-ups is 30 to 40 percent, according to Shikhar Ghosh, a senior lecturer at Harvard Business School who has held top executive positions at some eight technology-based start-ups. If failure refers to failing to see the projected return on investment, then the failure rate is 70 to 80 percent. And if failure is defined as declaring a projection and then falling short of meeting it, then the failure rate is a whopping 90 to 95 percent.”
And the numbers get even more depressing as the percentage of businesses that succeed (acquired/ IPO) gets even lesser.
On a more comforting note, entrepreneurs who have had previous venture experiences, be it successful or not, are more likely to succeed in their next entrepreneurs as compared to first-time entrepreneurs. The percentage of success of a startup are as follows:
Entrepreneurs who have succeeded in a past venture- 30%
Entrepreneurs who have failed in a past venture- 20%
First-time entrepreneurs- 18%
Leave me a comment below on what you think of the entrepreneurship scene in Singapore and Asia.
For more information on the other top industries in entrepreneurialism, see infographic below: