Women and minorities have fueled the start-up boom of the past two years in the United States
A survey found that nearly half of new entrepreneurs in 2021 were women, a significant increase from 28% in 2019. And the share of new black business owners has tripled to 9%, according to Gusto, a payroll and human resources management company.
The results confirmed similar gains in separate research conducted by web hosting company GoDaddy Inc. Among the factors driving the rise of women’s entrepreneurship: childcare responsibilities. With schools and daycare centers still disrupted last year, a growing share of parents, especially women, have started their own businesses out of necessity.
In the Gusto survey, more than a quarter of female business owners with school-aged children said they started their business in response to increased childcare duties.A record 5.4 million new businesses were created in the United States last year, according to the Census Bureau, showing that the explosion in creation seen in the early months of the pandemic has legs.
While some of COVID entrepreneurship was born out of necessity in the early days after millions of workers lost their jobs, today’s business owners are more likely to be driven by better opportunities.
Among black respondents to the Gusto survey, more than a third have started a business to improve their financial stability, a larger share than their white and Hispanic counterparts.
Overall, the study found that many workers “highly value the flexibility and autonomy offered by self-employment, and leave paid employment in favor of entrepreneurship.”
Business types have also changed compared to 2020. About half of new professional services businesses were started by owners who left their jobs in the same industry, creating competition for their old business.
To determine where entrepreneurs are, economists at UCLA Anderson Forecast developed an index of microbusiness activity using data from GoDaddy. At the top of the index was Santa Clara, California. Other highly ranked areas include counties around Washington, DC, where new businesses can feed off of government contracts, and Brooklyn and Manhattan in New York City.
Although business ownership can be risky business, especially in the midst of a pandemic, nearly nine in 10 respondents to the Gusto survey said their business performed as expected or better than expected. Yet more than one in five took on a side job to help cover operating costs.
Alex Tanzi reports for Bloomberg News.