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Study: Most U.S. Entrepreneurs Start Their Business at Home

When it comes to launching a small business, American entrepreneurs don't go very far. In fact, sixty-nine percent get started at home, according to the latest Global Entrepreneurship Monitor report.

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When we think of entrepreneurs, we think of visionaries working with a brilliant team of coders, disrupting an industry for millions of fans. 

That may be true of Mark Zuckerberg and Jack Dorsey, but the average American entrepreneur is far less glamorous, says Donna Kelly, a professor of entrepreneurship at Babson College.

Recently, a team of researchers from Babson College and Baruch College interviewed nearly 6,000 U.S. adults as part of the 2012 Global Entreprenurship Monitor report. Most respondents were just starting out, but had taken significant strides, writing business plans and securing financing. Others had been running their businesses for less than three-and-a-half years, notes Kelley. 

According to the report, an increasing number of U.S. entrepreneurs (69 percent) start their business at home, and many (59 percent) continue to work from home, even after it's up and running. 

Many entrepreneurs choose to go it alone -- with no partners or employees to speak of, says Kelley. Some (23 percent) rely on at least one unpaid family member for help, while another 21 percent count one or more paid relatives among their staff. Only 37 percent expect to hire more than five people in the next five years. 

In contrast, many of these entrepreneurs (30 percent) choose to outsource various aspects of their business, such as payroll, taxes, and legal duties, because it's easier thanks to the Internet and other web-based services. 

As far as launching a business goes, "it's a lifestyle preference," says Kelley. "They are opportunity-driven. They see an opportunity to improve their income or to pursue independence." 

That may explain why the average entrepreneur is wary of accepting venture capital or an angel investment. "Outside investors, as opposed to family members or close friends, have expectations and by imposing them they'd be restricting the entrepreneur's vision," Kelley says. To her point, only 16 percent of funding received by entrepreneurs surveyed came from banks, whereas 82 percent came from personal savings, family, and friends. 

IMAGE: coffeegeek/Flickr
Last updated: Jun 26, 2013

JANA KASPERKEVIC is a graduate of Baruch College, City University of New York, where she earned a bachelors degree in Journalism and Political Science. She covers start-ups, small businesses, and entrepreneurship for Inc. Her work has appeared in The Village Voice, InvestmentNews, Business Insider, and Houston Chronicle, among others. She lives in Brooklyn.
@kasperka




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