You might’ve heard that 2021 was an incredible year for new businesses in the United States. 2020 had set the previous record at just over 4 million new enterprises formed. But 2021 sailed past that, setting a new record of 5,388,282 new American businesses starting on their journey to success.
But did you know 2021 also set another American record? In November 2021, there were a total of 46.2 million immigrants in the U.S. That’s the largest number of immigrants (legal and illegal) ever recorded in any U.S. government survey or census going back to 1850.
So some are asking, is there a connection between these two facts?
Well, of the five states with the highest number of new business starts – California, Florida, Texas, New York, and Georgia – four of them also rank as the states with the highest rates of immigration. Specifically, the states with the largest increases of immigrants in 2021 were Florida (up 615,000) and California (up 451,000).
Every year, the U.S. Census releases a list of which American counties had the highest annual business formation. Care to guess where those two counties were in 2021? That’s right! Florida (Miami-Dade) and California (Los Angeles)! Importantly, new business applications in Florida, the year’s leader for new immigrants, totaled 631,748. That’s about 12% of the 5.4 million new U.S. enterprises, meaning more than one in every ten U.S. businesses formed in 2021 was in Florida.
Of course, correlation isn’t causation. But if we dig a little deeper, there’re definitely signs that immigration has a direct effect on the rate of new businesses. So let’s take a look:
MIT News reports that, per capita, immigrants are about 80% more likely than U.S.-born citizens to found a firm. Those firms also average about 1% more employees than those founded by U.S. natives.
In the United States, 13.7% of the population is foreign-born, but immigrants represent 20.2% of the self-employed workforce and 25% of startup founders.
According to the National Foundation for American Policy, immigrants founded or cofounded 55% of the United States’ billion-dollar companies.
Let’s not forget that each new business formed has the potential to create more jobs for Americans. Researchers from MIT concluded that immigration to the U.S. is associated with a net gain in job availability. This is a direct refutation of the idea that immigrants “steal” jobs from U.S.-citizens. According to the data, immigrants are job creators.
Interestingly, this holds true outside of the U.S. In the sixty-nine (69) countries analyzed, all of them showed the same trend! So why do immigrants create so many new businesses compared to native-born citizens?
Harvard Business Review provides an interesting answer: it’s all about risk. Those who have a high tolerance for risk are more likely voluntarily emigrate, and that same high-risk mentality is exactly what makes them excellent entrepreneurs. This makes sense. Emigrating to a new country is a daunting prospect, in which you leave behind your home and support system for only a chance at success in a brave new world. Similarly, entrepreneurship takes a certain level of courage. When you are self-employed, there’s no safety net to fall back on, nothing but your own will to achieve your dreams standing between you and failure. Emigration and entrepreneurship both require an adventurous and daring spirit.
Statistical analyses from Harvard Business Review confirmed that even after controlling for age, gender, professional experience, and other variables, it was the high willingness to take risks that contributed most to an individual’s likelihood of both emigration and starting a new business.
Are you one of the elite few that can face the world fearlessly? Call Visa Business Plans. We’re ready to help risk-takers achieve their dreams of living and working in the U.S. As they say, fortune favors the bold.
Visa Business Plans is led by Marco Scanu, a certified coach from the University of Miami with a globally based practice coaching Fortune 1000 company executives, entrepreneurs, as well as professionals in 4 different continents. Mr. Scanu advises clients on turnaround strategies and crisis management.
Mr. Scanu received a bachelor’s degree in Business Administration (Cum Laude) from the University of Florida and an MBA in Management from Bocconi University in Milan, Italy. Mr. Scanu was also a Visiting Scholar at Michigan State University under the prestigious H. Humphrey Fellowship (Fulbright program) with a focus on Entrepreneurship, Venture Capital, and high-growth enterprises.
At present, Mr. Scanu is the managing partner and CEO at Visa Business Plans, a Miami-based boutique consulting firm providing attorneys and investors with business planning services in the areas of U.S. and Canadian immigration, SBA loans, and others.