President Barack Obama may have had the opportunity to point out a silver lining regarding the ongoing economic recession if it weren’t for his recent “you didn’t build that” remarks. High rates of unemployment resulting from the struggling economy have resulted in a surge in American entrepreneurship, according to one report.
Researchers at the University of Missouri’s Truman School of Public Affairs found that from 2007-2010, the amount of necessity entrepreneurship rose from 16 to 28 percent of total entrepreneurship in the Nation. Necessity entrepreneurship results directly from an individual’s need to create a new income stream because of job loss or pay cuts. Other entrepreneurs are known as opportunity entrepreneurs; they decide to start a business based on the perception of achievable success and often leave other successful careers to do so.
“We’ve seen similar trends occur in past economically slow periods that have led to economic booms,” researcher Maria Figueroa-Armijos said. “The doldrums in the 1980s led to increased entrepreneurship and the economic growth in the 1990s.”
The researchers note that the rising number of necessity entrepreneurs means the Federal government should do more to protect people running small businesses as they begin to make up an even larger portion of the Nation’s economy.
“Currently, there is much more economic support for opportunity entrepreneurs than for people starting their own businesses out of necessity,” Figueroa-Armijos said. “With the rise of necessity entrepreneurs during the recession there is obviously a need for more help from lenders and policy makers. These necessity entrepreneurs could create jobs and economic growth for long-term economic prosperity.”