Even as finance resources become more scarce, interest in entrepreneurship is growing.
Kansas City In 2020, Food Business News launched Food Entrepreneur to follow and highlight the various companies aiming to upend every facet of the production and manufacture of food and beverages. The market seemed eager to invest in innovative applications and technology at the time, and interest rates were cheap. Venture capitalists and other investors have grown more cautious in the wake of a spike in inflation and several interest rate rises by the Federal Reserve. However, a recent study reveals that the market’s change hasn’t yet sapped the fervor of aspiring business owners.
According to Babson College’s “Global Entrepreneurship Monitor 2022-2023 USA,” the overall rate of entrepreneurial activity in the US reached a record high in 2022. According to the research, 19% of working-age persons polled were in the process of launching or operating a firm that was less than 42 months old.
Unsurprisingly, persons between the ages of 18 and 34 were nearly twice as likely to establish a business (27% versus 14.5%) as adults between the ages of 35 and 64. This led to an increase in entrepreneurship. The majority of American business owners claimed that the possibility of creating “great wealth or high income” drove them. But in contrast to the poll conducted in 2021, more than half also mentioned “necessity” as a driving force behind entrepreneurship.
The Babson study also monitors entrepreneurship in several global economies. Among the 21 economies studied, the United States has the greatest percentage of entrepreneurs who cited “making a difference” in relation to social and environmental concerns as their reason for starting a business—69%.
Professor of entrepreneurship at Babson College and co-leader of the survey and report Donna J. Kelley said, “It’s remarkable to see this record-breaking entrepreneurial activity, especially among young people, women, and innovators, who are not only reshaping the business landscape, but also propelling significant social and environmental advancements.”
The poll also revealed a change in the kinds of enterprises entrepreneurs are launching from service-oriented ventures to manufacturing ones. The survey states that in 2020 and 2021, the distribution of entrepreneurship across industries was comparatively comparable. Manufacturing and logistics surpassed banking, real estate, and business services in terms of industry distribution in 2022.
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One of the report’s authors, Jeff Shay, hypothesized that media attention to supply chain disruptions during and following the COVID-19 epidemic may have contributed to the increased interest in logistics.
It is important to highlight that, in tandem with the growth in entrepreneurship, there has been a steady increase in company failure. The study shows that this trend began in 2019 and reached 5.2% in 2022. Two food-related business owners that were affected by this dynamic were Nowadays, a processor of plant-based nuggets, and Hooray Foods, a producer of plant-based bacon. In September, both were in the process of closing.
It is a positive trend that entrepreneurship is still growing. It’s a conduit that might deliver fresh ideas and inventions to the market—but more significantly, it might draw in younger experts to the field. It is hoped that the momentum encouraging entrepreneurship in the US would continue as the market changes.