Current Entrepreneurship Statistics and Trends

The Business Administration recently released the 2012 Small Business Economy, its statistical report on small business. Because the report provides the latest available data on several key small business statistics, its publication provides me with an opportunity to update five charts that I have published at various times in various places, including Small Business Trends.

Employer Firms Continue to Shrink as a Fraction of all Businesses

As the figure below shows, businesses with employees comprised only 20.6 percent of all U.S. companies in 2010, down from 26.4 percent in 1997.

entrepreneurship statisticsSource: Created from data from the 2012 Small Business Economy

Small Business’s Share of Private Sector Employment Continues to Decline

As the figure below shows, small business employed a minority – 49.1 percent – of private sector workers in 2010, down significantly from the 54.5 percent it employed in 1997.

entrepreneurship statisticsSource: Created from data from the 2012 Small Business Economy

The Number of Employer Firms Per Capita Continues to Decline

As the figure below shows, the number of employers per member of the population continued to fall in 2010, continuing a decline that began in 2005, before the start of the Great Recession. Between 1988 and 2005, the number of employer firms per capita fluctuated between 1.98 and 2.23 firms per thousand people.

entrepreneurship statistics Source: Created from data from the 2012 Small Business Economy

Employer Firm Formation has Stabilized, Though at Below Pre-recession Levels

As the figure below shows, the number of new employer firms founded per thousand people edged up from 1.70 to 1.73 in 2010, after having declined significantly from 2006 through 2009.

entrepreneurship statistics Source: Created from data from the 2012 Small Business Economy

Self-employment Rates Continue to Fall

As the figure below shows, the combined incorporated and unincorporated self-employment rate declined from 10.3 percent of the civilian labor force in 2000 to 9.5 percent in 2012. While the incorporated self-employment rate was higher in 2012 than in 2000, its rise did not offset the decline in the unincorporated self-employment rate.

The latter had been trending downward since the mid-1990s, after remaining largely flat between the early 1970s and mid-1990s.

entrepreneurship statisticsSource: Created from Bureau of Labor Statistics data.

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Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

13 Reactions
  1. This is not going to stop me from starting my own company, ONLY THE ONES THAT PERSIST IN A BAD ECONOMY WINS. Is not the time to cut is time to Dominate and kick butt.

  2. And, the way to analyze the data? We need more support from the bottom up. Help more micros and main street businesses start, and start stronger, and the graphs will tick up again. Continue to focus on gazelles and large employers, and economic gain will continue to line investor pockets to the detriment of the net job growth that benefits us all, including investors.

  3. I agree with Luis, there is never a perfect time to start a company, and if you can generate business during a downturn, then you will thrive when the times are good.

    The reason many went down in 2010 was because they were not really watching their budgets, had no real marketing strategy and had stopped growing.

    Never quit, even when everything seems against you, fight to the end because you never know when you get that last chance which could save you.

    All the best

    • Fantastic point and words of encouragement, Phil. You definitely have to have an iron gut, iron will for the matter to push through tough times in business. If you can see it through, you’ve pretty much proven to yourself and your clients that you can make it through anything, ensuring you’ll be around for the long run.


  4. These numbers confused me because my belief is that there are a lot of free-lancers out there who are not being included. Thoughts?

  5. Martin Lindeskog

    It is always “right” (or “wrong”) to start a new company! 😉 What we have to do is to fight for a better business climate on moral ground.

    Could you correlate the entrepreneurship statistics trend with the Purchasing Managers’ Index?

  6. Scott, you may be right. I don’t trust government reports, but I think Dr. Shane’s article is a good data point to gauge what’s happening in the private sector.