Stay Informed!

By Sarah Schaefer on 05/18/2011 @ 11:30 AM

Tags: Entrepreneurship

Myth #3: Only those with financial means can start their own businesses

The term ‘entrepreneurship’ is often associated with wealthy venture capitalists who can easily secure their financial futures, yet many entrepreneurs are low- and moderate-income Americans. Indeed, self-employment has proven to be an effective income-earning strategy for some traditionally-disadvantaged groups, including immigrants and those living in rural communities.

Immigrant-owned businesses, for example, make substantial contributions to the economy, especially in particular sectors and geographic areas. Immigrants are 30% more likely to start a business than non-immigrants (Fairlie, 2008), and these business owners generate nearly one quarter of all business income in places such as New York, New Jersey and Florida. Likewise, data from the Center for Rural Entrepreneurship shows that rates of self-employment are higher in rural areas than in urban areas.

In other words, some of the same groups that are most vulnerable to poverty are the ones who are likely to turn to entrepreneurship. As we discussed in yesterday’s post, this is especially true during times of economic downturn when low job availability means many people have no other choice than self-employment. Some research finds that entrepreneurship can generate higher earnings for some low- and moderate-income individuals, compared to what they would earn in traditional wage-earning employment. In addition to opening the door to upward economic mobility, entrepreneurs in low-income areas contribute to community revitalization by strengthening the local economy.

Trivia question of the day: Besides immigrants and those living in rural communities, which population is increasingly (and successfully) turning to self-employment as a means of securing their financial future? Use the comments section below to share your guess.

National Small Business Week, May 16-20, 2011, celebrates the contributions of small businesses to the economic well-being of America. CFED would like to thank our sponsor, Sam’s Club Giving Program for its commitment to help start and grow small businesses and for its support of the Self Employment Tax Initiative. To find out more about National Small Business Week, click here. To find out more about how Sam’s Club is helping small businesses, click here.

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