Kauffman Foundation Report on New Business Startups
The Kauffman Foundation just released its report on new business startups. Their findings lend some support to the theory that there are “green shoots” beginning to sprout in the economy. New business starts overall was up across ethnic groups (except for African-Americans) and most geographic regions (other than the Midwest). However, the report also indicates that most new business starts comes from the creation of low-income potential and middle-income potential businesses, suggesting that most new business starts are more out of necessity than opportunity.
The findings show an increase in new business starts in 2008 over 2007:
On average, 320 out of every 100,000 Americans created a new business each month. As a whole this mean that 530,000 new businesses were created each month during 2008. These numbers were an increase over 2007 when 300 out of every 100,000 Americans started a new enterprise.
“The overall pace of entrepreneurial activity did not suffer during the recession in 2008, which is great news. This is consistent with historical patterns, to the extent we understand them, which indicate that entrepreneurial activity is largely insensitive to the economic cycle,” said Robert Litan, vice president, Research and Policy at the Kauffman Foundation. “So far, at least through 2008, this pattern is holding up.”
[...] much of the increase is certainly due to “entrepreneurship by necessity“ as laid off workers facing a bleak job market started new businesses, the signs are [...]