5.8 Trends in Entrepreneurship and Small-Business Ownership
- What trends are shaping entrepreneurship and small-business ownership?
Entrepreneurship has changed since the heady days of the late 1990s, when starting a dot-com while still in college seemed a quick route to riches and stock options. Entrepreneurial opportunity comes from a variety of sources, including demographic changes, economic conditions, and technological advancements. Developments in areas such as AI and health tech represent a sector of growth potential for entrepreneurs. Additional emphasis is also being placed on ethics and sustainability. We have created a society in which we expect to have our problems taken care of, and the technological revolution stands ready with already-developed solutions. Evolving social and demographic trends, combined with the challenge of operating in a fast-paced technology-dominated business climate, are changing the face of entrepreneurship and small-business ownership.
Into the Future: Start-ups Drive the Economy
Do new business ventures drive the economic recovery from recent recessions and economic downturns, and are they continuing to make significant contributions to the U.S. economy? Data show that small businesses facilitate economic recovery. Small businesses significantly contribute to their local communities as well as to the overall economic health of the nation. Small businesses are responsible for job creation and are the foundation of economic resilience and growth. Numbers alone do not tell the whole story, however. Are these newly self-employed workers profiting from their ventures, or are they just biding their time during a period of unemployment?
U.S. small businesses employed over 60 million people in 2023, representing nearly 47 percent of the workforce. Small businesses were responsible for 70 percent of the net new jobs added to the economy since 2019.23
A significant rate of growth is coming from woman-owned firms, with nearly 50 percent of all businesses started in 2024 being launched by women. This was a 69 percent increase since 2019. There were an estimated 12.8 million woman-owned businesses employing over 9 million people in 2025, generating more than $1.9 trillion in annual revenue.24
Between 2019 and 2023, woman-owned firms increased at a rate twice that of firms owned by men. From 2022 to 2023 specifically, that rate increased to nearly 5 times. Even during the COVID-19 pandemic, woman-owned businesses thrived, creating 1.4 million jobs and boasting revenues of nearly $600 billion.25
These trends show that more workers are striking out on their own and earning money doing it. It has become very clear that encouraging small-business activity leads to continued strong overall economic growth.
Changing Demographics Create Entrepreneurial Diversity
The traditional view of retiring has evolved with individuals still being active in the workplace past the typical retirement age. The AARP predicts that older adult entrepreneurs will continue to rise in the coming years. As Baby Boomers look toward the future, many are likely to pursue selling the businesses they have spent years building. According to the SBA, there are over 12 million small businesses owned by Baby Boomers.26 This represents a unique buying opportunity for other generations. The supply of existing small businesses is larger than the demand, so entrepreneurial Millennials and Gen Xers can take advantage of this position. Boomers are looking for someone to carry on the business legacy and could therefore be open to items such as seller financing. Gen Z leads the way in business startups, with nearly 25 percent of total entrepreneurial activity (TEA) attributed to individuals between the ages of 18 and 24.27
The growing numbers of Boomers working during retirement has prompted some forward-thinking companies to recognize business opportunities in technology. At one time there was a concern that the aging of the population would create a drag on the economy. Some Baby Boomers choose entrepreneurship to carry them through their retirement years. These businesses could be simply for fun or to pursue a passion they now have time for. The Boomer generation has built sizable wealth, and data indicate that some in this generation use that wealth to start businesses.
Minorities are also adding to the entrepreneurial mix. As we saw in Table 5.3, minority groups and women are increasing business ownership at a much faster rate than the national average. The increase in minority business ownership and the lack of funding through other sources prompted the SBA to help fill the gap. About one-third of all SBA-backed loans are with minority business owners.28
Data show that Latino-owned businesses surged by 35 percent between the years 2019 and 2024. Funding from venture capital firms for Latino-owned businesses was over $3 billion in 2024.29
How Far Will You Go to Get Rich?
With enough intelligence and determination, people can get rich almost anywhere in the United States. Whether you own chains of dry cleaners in Queens, car dealerships in Chicago, or oil wells in West Texas, fortunes have been made in every state in the Union. There are some places, however, where the chances of creating wealth are much greater than others. That is the reason why people who hope to strike it rich move to places such as Manhattan or Palo Alto. It’s not because the cost of living is low or the quality of life as a struggling entrepreneur is fun. Whether starting a software or soft-drink company, entrepreneurs tend to follow the money.
But not all companies follow the herd. Guild (formerly Guild Education), founded in Denver in 2015 by Rachel Carlson and Brittany Stich, briefly moved to San Francisco, but quickly left due to the high cost of living that could slow down the company’s growth. “We have a lot of women who are executives and department heads here, starting with myself and my cofounder,” CEO Rachel Carlson said. “So when we left, we deliberately chose a place where you can have a family.” Guild's original mission was to help large employers in offering education and tuition reimbursement as a benefit to working-age adults that lacked a college degree, but their vision has now evolved beyond just college education/tuition reimbursement to broader career mobility services.30
Since moving back to Denver, Guild has raised over $650 million with a company valuation of $4.4 billion. The firm now has approximately 850 employees.31 “We were joking that we’re the polar opposite of Apple,” said Carlson. “Remember when the new ‘mothership’ came out? Every single parent noticed that it had a huge gym but not a day care.”
According to Morningstar, the top regions in the United States for venture-backed deals in 2025 were the Bay Area ($94 billion), New York ($14.3 billion), and Los Angeles ($9.2 billion).32
Nontraditional funding sources are gaining traction with entrepreneurs. Options such as crowdfunding, grants, revenue-based financing, and community-backed investments offer entrepreneurs opportunities for access to funding without giving up part of their business as would be the case with equity funding. In 2024, nearly $350 million was raised through crowdfunding. The top U.S. industries with the most deals and funding are healthcare, manufacturing, e-commerce, financial technologies, and robotics.33
Concept Check
- What significant trends are occurring in the small-business arena?
- How is entrepreneurial diversity impacting small business and the economy?
- How do ethics impact decision-making with small-business owners?