State is Well-Positioned to Weather Downturn
WELLESLEY – December 11, 2008 - Massachusetts is the top state in the nation for entrepreneurial activity, according to a study released today by Babson College. The 2008 Babson Entrepreneurship Monitor for the Commonwealth of Massachusetts also showed that the Commonwealth has a higher rate of both early stage and established businesses than the U.S. average, with a rate of 23% compared to 14.1% average across the country.
Results indicated that new businesses are being created more rapidly in Massachusetts than in the U.S. overall, that established businesses are growing, and that entrepreneurs are opportunity-driven and optimistic about their success. These findings suggest that Massachusetts is well-positioned to weather the current economic downturn.
“Massachusetts is #1 in the country in entrepreneurial activity. Babson College is #1 in the world in entrepreneurship education. Together, we are committed to leveraging our mutual strengths to stimulate economic growth through entrepreneurship,” said Babson President Leonard Schlesinger.
“The entrepreneurial spirit and drive of Massachusetts business owners has long been a hallmark of our economy and will no doubt help us to successfully cycle out of this current downturn,” said Governor Deval Patrick. “This report offers further evidence that our development strategies are creating significant opportunities for advancement and growth in Massachusetts.”
The Babson Entrepreneurship Monitor compared similarities and differences in entrepreneurial activity across the Commonwealth by stage of business development, region, and by examining the entrepreneur’s background. Massachusetts was measured against the rest of the nation by comparing survey results conducted by the Babson’s Global Entrepreneurship Monitor (GEM). Understanding how Massachusetts entrepreneurs behave will help better inform programs that promote innovation and economic growth.
The study, conducted by Babson College this past summer and commissioned in collaboration with the Executive Office of Labor and Workforce Development (Massachusetts Workforce Investment Board “MWIB”) and the Executive Office of Housing and Economic Development (Office of Small Business Entrepreneurship and State Office of Minority and Women Owned Business), offers an opportunity for Massachusetts to continue its work in job creation, maximize access to services and resources, examine regulations, and create a culture of opportunity that underscores the critical importance of entrepreneurship.
Key Findings Among Massachusetts Entrepreneurs
The rate of early and late stage entrepreneurial activity in Massachusetts is much higher than in the rest of the U.S.—23% compared to 14.1%
· Early stage entrepreneurs are more likely to be male, non-white, of immigrant status, and from a lower level of household income than established business owners.
· Massachusetts entrepreneurs average 50 years of age. Compared to the national average, early stage entrepreneurs in Massachusetts tend to be older, have a lower fear of business failure, and are more optimistic.
· Early stage entrepreneurs are at the high and low ends of the educational spectrum, being either high school educated or having more than a college degree. The majority of established entrepreneurs are high school educated.
· New businesses tend to be started by individuals who are already working full-time.
· Most businesses are started by a single founder.
Outlook and Challenges
· More than 90% use technology (computers, Internet, etc.) in their businesses.
· Half of the businesses reported equal focus on profit and social goals.
· Early-stage businesses tend to be relatively innovative in terms of the products and services they bring to market and the technologies they use within the business.
· Major challenges for start-ups are establishing necessary infrastructure, licensing, permits, and the cost of utilities.
· Few businesses have more than 10% international customers.
· Significant opportunities for technology transfer continue to exist.
About 2008 Babson Entrepreneurship Monitor for the Commonwealth of Massachusetts
The study was sponsored by the Commonwealth of Massachusetts and Babson College, and followed the well-established survey instrument of the Global Entrepreneurship Monitor (GEM) project. The GEM methodology takes a broad view of entrepreneurship and focuses on the role played by individuals in the entrepreneurial process.
Results of the 2008 Babson Entrepreneurship Monitor for the Commonwealth of Massachusetts have implications for training, and education across new ventures, established businesses, and the Massachusetts workforce. To view the complete report, go to www.babson.edu/bem.