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Are Americans Overly Confident About Entrepreneurship?
 

Americans are some of the most entrepreneurial citizens in the world. But is this a good thing?

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The Global Entrepreneurship Monitor, a yearly report funded by Babson College, concluded Wednesday that Americans are more bullish than ever about starting a business--even if their entrepreneurial ambitions will never materialize into the profitable business they believe it will become.

So does their entrepreneurial optimism actually lead to starting businesses?

According to the report--yes. But are those businesses successful? That's harder to prove.

In 2012, about 43 percent of Americans "believed there were good opportunities for entrepreneurship around them." A year earlier, that figure was around 23 percent.

The study also looked at several other innovation-driven economies, and researchers noticed a curious cultural discrepancy: While perceptions of entrepreneurship jumped in the United States from 2011 to 2012, they generally languished almost everywhere else. 

"This assessment of attitudes suggests that Americans see entrepreneurial opportunities in light of current economic conditions, but assess their own abilities as distinct from external shifts," the authors note. 

In 2012, the Total Entrepreneurial Activity--a measure of entrepreneurial intentions--rose to nearly 13 percent, up from 7 percent in 2009. Of course, the recession had largely influenced those numbers, but again, Americans displayed more entrepreneurial activity than other countries surveyed.

Part of it has to do with the relative level of opportunities elsewhere. The authors speculate that in wealthy, well-developed countries, where job protection and security are rooted in the economic landscape, there's less incentive to pursue entrepreneurship.

Still, that doesn't fully explain why the U.S. would rank so highly for would-be entrepreneurs. Perhaps it's a cultural phenomenon: 

The digital generation has grown up entrepreneurial, a fact reflected in the boom in entrepreneurship among young people. Additionally, amid the economic cycle of the previous years, the data indicate that the appeal of entrepreneurship has returned to the United States earlier than in many innovation-driven economies.

Now, of course, comes the question of whether or not these soon-to-be entrepreneurs will launch successful, job-creating, revenue-generating businesses. Start-up failure rates are notoriously difficult to measure, but Wednesday's report highlights a growing problem for America's future entrepreneurs: Access to financing.

It's worth noting, too, that the lion's share of funding for new ventures comes from personal savings and loans from friends and family. About 73 percent of all financing comes from an entrepreneur's own bank account--less than two percent comes from venture capital. So while the report generally highlights a positive trend, there will be obstacles to overcome.

IMAGE: ms. coffey/Flickr
Last updated: May 22, 2013




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