Fewer Students Plan to Become Business Owners

College students are more concerned with making money now than they were before the start of the Great Recession, research by the Cooperative Institutional Research Program (CIRP) at UCLA, reveals.

Maybe that’s self-evident.

But here’s a more surprising finding: The fraction of students intending to become business owners has also declined since 2007. That’s troubling because Americans have generally believed that business ownership is an important path to financial success.

Between 2007 and 2012, the fraction of incoming college freshmen who consider “being very well off financially” to be an “essential” or “very important” goal rose from 74.4 percent to 81 percent, the “American Freshman” reveals.

The surveys show that the share of students reporting “business owner” as their probable career declined 24 percent between 2007 and 2009 as the economy sank under the weight of the financial crisis and Great Recession. The fraction has risen modestly since the economic recovery began, but its 2012 level was 15 percent below the 2007 mark.

Business ownership was not the only career objective to take a hit in recent years. Between 2007 and 2012, the fraction of students planning to become architects or urban planners dropped 44 percent; the portion intending to become secondary school teachers declined 40 percent; the slice planning to be elementary school teachers slid 34 percent; the portion aiming to become foreign service workers dropped 30 percent; the slice intending to become business executives slid 22 percent; and the fraction planning to become lawyer or judges went down by 19 percent.

As students shifted their career plans in response to the weak economy, plans for other occupations increased. The share of students reporting military service as their probable career rose 50 percent; the fraction indicating nursing increased 40 percent; the share planning engineering went up 39 percent; the fraction aiming to become physical, occupational and speech therapists rose 38 percent; the portion planning to become social, welfare or recreational workers increased 30 percent; the fraction intending to be computer programmers or analysts rose 18 percent; and the fraction aiming to be scientific researchers went up 16 percent.

The drop in the share of students intending to become business owners was much larger among men than women. According to the CIRP surveys, the percentage of male incoming students intending to become business owners declined from 5 percent in 2007 to 4.1 percent in 2012. By contrast, the share of female students planning to be in business for themselves slipped from 2 percent in 2007 to 1.9 percent in 2012.

The declines were present at most, but not all, types of academic institutions. A smaller fraction of students indicated that business owner was their probable career in 2012 than in 2007 at public four-year colleges; non-sectarian private four-year colleges; non-Catholic, religiously-affiliated four-year colleges; public universities; and historically Black colleges. However, the fraction of incoming freshmen at Catholic four-year colleges intending to become business owners rose from 3.0 to 3.2 percent between 2007 and 2012, while at private universities, the share of students planning a business ownership career rose from 2.9 percent in 2007 to 4 percent in 2012.

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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.

7 Reactions
  1. Being a business owner can be arduous at times (I know because getting my taxes prepared is a major pain right now). I just wish the government could make the regulatory side easier to manage.

    • Amen to that, Robert. Unfortunately I don’t see that changing any time soon.

      Many of my friends with regular jobs see how hard I’m working and they are a little scared off.

  2. Pretty amazing stats, Scott.

    Frankly, I’m surprised. So many young people visit my franchise websites and inquire about getting into business.

    Thanks for this update.

    The Franchise King®

  3. Robert M. Donnelly

    I’m somewhat surprised, too. Technology is automating jobs out of existence and altering traditional career paths in the process. Those being displaced typically do not have the skills for the new world of work, nor can they acquire them quickly. My experience is that more young people are exploring new opportunities in fields where they can demonstrate what they do best and enjoy the most, the majority of which are in new entrepreneurial pursuits. Anyone interested in determining their unique skill set and persona should get: Personal Brand Planning for life, available on Amazon.

  4. I think it may be because there are a lot of people who went into business because of the Recession. Some people lost their jobs and they simply have no choice but to go on business. The problem is that students are now seeing how difficult running a business can be and that may be the reason why they don’t want to do business anymore.

  5. Our most recent college student roundtable showed work-life balance and job stability as the highest “wants” in employment.

    We see parallels in the CPA Profession where more and more young professionals do not see themselves working to be a partner or shareholder in the firms. Mostly due to the extreme hours and risks inherent in owning a professional services firm (personal liability, etc.).

    The answer is less government regulation and more stability and predictability in the business environment so that young people can see a path focused on the entrepreneurial passions instead of countless hours trying to comply with the sea of local, state and federal regulations and restrictions.

  6. Dr. Shane, this is shocking to me. We need new startups now more than ever. I hope this trend is turned around as the economy gets better and people will be more confident in the future.