Wealthier Nascent Entrepreneurs More Likely to Start Businesses

Wealthier Nascent Entrepreneurs More Likely to Start Businesses

For Release: July 19, 2007
Contact:
John McDowell, (202) 205-6941


john.mcdowell@sba.gov

SBA Number:
07-25 ADVO

Press Kit

WASHINGTON, D.C. – The wealthiest nascent entrepreneurs are more likely to
start a business than are their less wealthy counterparts, concludes a study
released today by the Office of Advocacy of the U.S. Small Business
Administration. However, this effect differs when the race and ethnicity of the
entrepreneur are considered as factors.

“Self-employment rates among minorities are generally less than would
otherwise be predicted,” said Dr. Chad Moutray, Chief Economist for the Office
of Advocacy. “Yet, there tends to be more ‘pre-business’ activity among nascent
minority entrepreneurs. This study looks at some of the possible factors that
might explain that gap.”

Wealthier Nascent Entrepreneurs More Likely to Start Businesses

For Release: July 19, 2007
Contact:
John McDowell, (202) 205-6941


john.mcdowell@sba.gov

SBA Number:
07-25 ADVO

Press Kit

WASHINGTON, D.C. – The wealthiest nascent entrepreneurs are more likely to
start a business than are their less wealthy counterparts, concludes a study
released today by the Office of Advocacy of the U.S. Small Business
Administration. However, this effect differs when the race and ethnicity of the
entrepreneur are considered as factors.

“Self-employment rates among minorities are generally less than would
otherwise be predicted,” said Dr. Chad Moutray, Chief Economist for the Office
of Advocacy. “Yet, there tends to be more ‘pre-business’ activity among nascent
minority entrepreneurs. This study looks at some of the possible factors that
might explain that gap.”

The study finds that as a whole, the wealthiest (top 25 percent as determined
by net assets) nascent entrepreneurs (individuals putting effort towards opening
a business, but who have not yet done so) are four times more likely to open a
business than those in the lower part of the wealth distribution. However, even
controlling for net wealth, white nascent entrepreneurs are more likely to open
a business than are Black or Hispanic nascent entrepreneurs.

The study, The Effect of Wealth and Race on Start-up Rates, written by
Maritza Salazar of BCT Partners, LLC with funding from the Office of Advocacy,
also found that:

· The existence of a formal
business plan did not influence start-up rates;

· Nascent entrepreneurs who
sought funds for start-up are more likely to open a business than those
who did not;

· Having entrepreneurial parents
did not affect start-up rates;

· Nascent entrepreneurs with
experience in their intended industry are less likely to open a business
than those with no experience in the field.

The Office of Advocacy, the “small business watchdog” of the federal
government, examines the role and status of small business in the economy and
independently represents the views of small business to federal agencies,
Congress, and the President. It is the source for small business statistics
presented in user-friendly formats, and it funds research into small business
issues.

For more information and a complete copy of the report, visit the Office of
Advocacy website at

www.sba.gov/advo
.


###

The Office of Advocacy of the U.S. Small Business Administration (SBA) is an
independent voice for small business within the federal government. The
presidentially appointed Chief Counsel for Advocacy advances the views,
concerns, and interests of small business before Congress, the White House,
federal agencies, federal courts, and state policy makers. For more information,
visit

www.sba.gov/advo
,
or call (202) 205-6533.

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