The Year of the Solo Entrepreneur

Entrepreneurs started more businesses in 2010 -- about 565,000 per month -- than at any time in the past 15 years, according to the Kauffman Index of Entrepreneurial Activity, an indicator of new business creation. Unfortunately for the economy -- and job seekers -- fewer new business owners are looking for employees.

Between 2007 and 2010, the monthly rate of business creation increased from .30 to .34 percent, but creation of businesses with employees dropped from .13 percent to .10 percent.

Since it began, the recession has triggered annual declines in the number of newly created companies that take on employees, Carl Schramm, president and CEO of the Kauffman Foundation, said in a statement. "Far too many founders are choosing jobless entrepreneurship, preferring to remain self-employed or to avoid assuming the economic responsibility of hiring employees."

Given the economic downturn and high unemployment rates, it's likely that a lot of these new entrepreneurs are setting up shop because they can't find work elsewhere. "In the short run, business ownership might provide a way to get by for some individuals," says Rob Fairlie, report author and economics professor at U.C. Santa Cruz.

The rate of entrepreneurship was also highest among the least educated demographic -- people who had less than a high school education -- "suggesting an increased number of people entering entrepreneurship out of necessity," the report says.

Following a 15-year trend, the rate of entrepreneurship also increased among different immigrants and decreased among native-born individuals, In 1996, immigrants accounted for 13.9 percent of new businesses owners, but by 2010 they made up 29.5 percent.

The survey results make a lot of sense given the slumping economy and the still-high unemployment rate, but it's also important to note the limitations of the data. It comes from the U.S. Census Bureau's Current Population Survey, which measures labor force characteristics, such as unemployment, earnings, new business creation, etc. It's the same data that the government uses, but it comes from only 50,000 American households. That perfectly round figure of 565,000 newly created businesses is an extrapolation, and like other census data, it's self-reported. So when census-takers go to people's homes, they count anyone who did not previously report having a business but claims to have started one.

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