In a sign that more Americans are feeling upbeat about their economic prospects, more people were running or starting new businesses in 2011 — the highest level since 2005, according to a study released Thursday.
More than 29 million Americans were engaged in entrepreneurship last year — a 60 percent gain from 2010, according to a report issued by Babson College and Baruch College. And nearly 40 percent of these entrepreneurs are expected to create more than five new jobs during the next five years.
"There is renewed interest in entrepreneurship," said Donna J. Kelley, associate professor of Entrepreneurship at Babson College.
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Are You An 'Opportunity Entrepreneur?'
Additionally, more Americans took the leap into entrepreneurship based on their perception of promising opportunities ahead, a group sometimes called opportunity entrepreneurs. In contrast during the depths of the recession, more people had started businesses because they couldn't find jobs and had no other option. This trend is referred to as necessity entrepreneurship.
The rate of necessity entrepreneurship dropped to 21 percent of all entrepreneurs in 2011 from 28 percent in 2010. In 2011, "not only did we see more entrepreneurship, it was being pulled up more by opportunity entrepreneurs," said Kelley, the lead author of the 2011 Global Entrepreneurship Monitor (GEM) U.S. Report.
The rise in overall entrepreneurship matched the gain recorded in 2005, when the economy and businesses were booming, according to the report.
Many of the new businesses in 2011 were direct-to-consumer ventures including small business such as retail shops, restaurants, hair stylists and tax preparation.