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Ground Level Blog
Jennifer Vogel

New report finds entrepreneurism up slightly in Minnesota

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Minnesotans started more businesses in 2011 than in 2010, but only by a slim margin, according to the Kansas City-based Kauffman Foundation, which released its annual report on entrepreneurial activity today.

The foundation assigns an "index" to each state, which amounts to the number of residents per 100,000 participating in new business activity on a significant basis. In 2011, the index for Minnesota was 0.23, up from 0.21 in 2010. The national average, by comparison, is 0.32, down slightly. The index is based on data from the Census Bureau and the Bureau of Labor Statistics.

While the recession has led many people to start new businesses, including "necessity entrepreneurs" who may have trouble finding jobs, as we reported recently in our One Job at a Time project, tough economic times have also made people more cautious, according to the foundation.

Overall, the report found that the rate of new business creation nationwide dropped by almost 6 percent in 2011 and that fledgling businesses tended to be solo endeavors, rather than companies with employees. The western states continued to show the highest rates of entrepreneurism while the Midwest showed the lowest.

Other trends noted in the Kauffman report:

*Entrepreneurship rates for all ethnicities declined from 2010 to 2011, though Latinos remained much more entrepreneurial than other groups. Also, immigrants were more than twice as likely to start new businesses as people born in the United States.

*Growth in entrepreneurship was highest among 45- to 54-year-olds, though the proportion of new entrepreneurs in the 55- to 64-year-old category continued to grow due to a national population that's aging. This group represented more than 20 percent of new entrepreneurs in 2011.

*The least educated were the most likely to be entrepreneurial, perhaps due to outsourcing of manufacturing jobs and difficulty finding work. The largest drop in entrepreneurial activity occurred among college graduates.