Immigrant Entrepreneurs on the Rise

By Devin Scott Monday, September 17, 2012

The American dream of owning your own business is on the rise for many entrepreneurial immigrants.  And why not?  With the choice of working for someone else or building a business that will provide for them and their family, the choice is clear.  Of  all the new firms that were created last year, 28% were created by immigrants.  Immigrants are also two times as likely to create a new business than someone born in the Unites States.  Part of the trend comes from the economy.  Immigrants have statistically represented the lower wage occupations in recent years such as construction, and landscaping and manual labor jobs.  With the recession, a lot of these workers found  themselves without a job and wondering what to do. Starting a business for themselves seems like the logical choice. For many, it has also become a very profitable choice.

Here are some statistics about immigrant entrepreneurs from the U.S. Small Business Association:

• Immigrants are found to have higher business ownership and formation rates than non-immigrants. Roughly one out of ten immigrant workers owns a business and 620 of 100,000 immigrants?(0.62 percent) start a business each month.

• Immigrant-owned businesses start with higher levels of start up capital than non-immigrant-owned businesses. Nearly 20 percent of immigrant-owned businesses started with $50,000 or more in start up capital, compared with 15.9 percent ?of non-immigrant-owned businesses.

• Roughly two-thirds of immigrant-owned businesses report that the most common source of start up capital is personal or family savings. Other commonly reported sources of start up capital by immigrant businesses are credit cards, bank loans, personal or family assets, and home equity loans. Overall, the sources of start up capital used by? immigrant businesses do not differ substantially from those used by non-immigrant firms.

• Businesses owned by immigrants have an average sales level of $435,000, roughly 70 percent of the ?average sales level of non-immigrant firms.

• Immigrant-owned businesses are slightly more likely to hire employees than are non-immigrant-owned firms; however, they tend to hire fewer employees on average.

• Immigrant-owned businesses are more likely to export their goods and services. Among immigrant businesses, 7.1 percent export compared with only 4.4 percent for non-immigrant businesses.

• More generally, there is a U-shaped relationship between entrepreneurship and education. Entrepreneurship rates are lower for high school graduates than for high school dropouts, but? entrepreneurship rates are similar between those with some college and high school graduates. College graduates have higher rates of entrepreneurship, and those with graduate degrees have the highest rates of entrepreneurship.

• Among immigrants, 52.1 percent owned a home compared with 70.8 percent of non-immigrants.

The nature of business for immigrant-owned businesses vary across different parts of the world and economy.  They range from transportation, to entertainment, to wholesale and retail trade along with a broad range of other services.  Immigrants own businesses in the lowest and highest skill sectors and in various industries.

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