It takes gumption to start a business. But there a lot of other factors, including the availability of jobs, ethnicity, and geography.
Immigrants, for instance, are much more likely to be business owners than people born in the United States. Western states, with a legacy of adventure, have more startups than Midwestern and Southern states. And a weak economy tends to spur entrepreneurship, as people who can't find corporate jobs strike out on their own. That appears to have happened in 2009, when the rate of new-business startups hit the highest level in 14 years, according to a new study by the nonprofit Kauffman Foundation—while the unemployment rate peaked at 10.1 percent.
A breakdown of entrepreneurship rates by state shows some familiar and some surprising trends. Oklahoma and Montana top the list, and both states are bucking the trend, with unemployment rates well below the national average. So new businesses in those states are probably being started by people who are genuinely optimistic and plan to keep at it, even as the economy improves. Other states with high startup rates, like Arizona, California, and Florida, have been hammered by the recession, so there may be a lot of reluctant business owners who can't find other jobs. And a few states with low startup rates, like West Virginia, Missouri, and Wisconsin, have nonetheless seen a big jump in new businesses since the recession began, possibly signaling a cultural shift. Robert Fairlie, a University of Southern California economist who authored the Kauffman study, warns against drawing conclusions from big changes in startup rates, since sample sizes in a given year can be small. Yet entrepreneurship clearly seems to be on the rise in many places. Here's how all the states rank:
|State||Individuals per 100,000
starting a new business
each month, 2009
|District of Columbia||320||10%|