According to the most recent Kauffman Index of Entrepreneurial Activity, the rate of small business creation fell last year. Additionally, those who do successfully launch startups remained more likely to stay sole proprietors rather than take on employees.
Despite the nearly 6 percent year-over-year decrease in small business creation, 2011 saw approximately 543,000 companies created per month, at a rate that remains above pre-recession levels.
Ironically, turbulent economic times typically generate a rise in the proliferation of small enterprises. This is because unemployed workers decide to try their hand at founding and running their own companies, explains Robert Litan, vice president of research and policy at the Kauffman Foundation.
At the same time, entrepreneurs see the economic instability and elect to start sole proprietorships rather than employer firms.
"This 'jobless entrepreneurship' trend negatively affects job creation and the larger economic recovery," Litan said, as quoted by The Street.
Despite the overall fall in entrepreneurial activity rates at a national level, the Northeast actually experienced a slight uptick. With regard to entrepreneurship rates, the Western region had the highest while the Midwest had the lowest.
At a state level, Arizona, Texas, California, Colorado and Alaska ranked highest while West Virginia, Pennsylvania, Hawaii, Illinois, Indiana and Virginia were at the bottom of the list. The index also ranked entrepreneurial activity in the 15 largest metropolitan areas in the United States. Los Angeles was found to have the highest rate, followed by Atlanta and Phoenix, while Chicago, Detroit and Philadelphia trailed with the lowest activity.
As during every other year since 1996, 2011 saw more men starting companies than women. Other statistics changed more, however. For example, the number of Latino entrepreneurs has more than doubled over the past 15 years, from 10.5 percent in 1996 to 22.9 percent in 2011. The country's growing immigrant population is thought to have contributed to a rise in immigrant entrepreneurship, from just 13.7 percent in 1996 to 28 percent last year.
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