A few weeks ago, we wrote that the creation of new businesses had drastically slowed in recent years due to the economic recession. In that blog post, we argued that an increase in new business formation was a necessary step in achieving true economic recovery. Now, a new report is indicating that entrepreneurship and new business formation may be on the rise in California and throughout the country. However, as most solo ventures are, by nature, one-person operations, it may be some time until the influx of new businesses affects the unemployment rate.

According to the Kauffman Foundation's annual Index of Entrepreneurial Activity, Americans created approximately 565,000 new businesses during each month in 2010, which is the highest startup rate in 15 years. California is among the top three states for new-business creation: for every 100,000 adults in the state, approximately 470 launched new ventures in 2010.

Jim O'Neal, the district director of the Sacramento branch of the United States Small Business Administration offices, says that his office has definitely noticed the increase in entrepreneurship. "[We're] getting a lot of interest from startups," he said. "Out of necessity, a lot of people are looking to start businesses."

Of course, not all new small businesses succeed. Recent U.S. census figures indicate that three out of 10 new businesses fail within two years. Certainly, small or solo ventures are a risky proposition that require a lot of work. However, as the country's economic and job market landscape continues to shift in the wake of the recession, many economists are predicting that small and solo businesses will continue to be a big part of recovery and whatever comes after it.

Source: The Joplin Globe, "Jobless entrepreneurs hire themselves with startup businesses", 19 April 2011