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New Businesses Continue to Form Despite Recession

On Behalf of | Jun 8, 2010 | Business Formation |

The annual study of new business creation, The Kauffman Index of Entrepreneurial Activity, has found that incidents of new business formation have continued to increase in spite of challenging economic times. The Wall Street Journal recently reported that the index found that in 2009 start-ups reached their highest level in 14 years. This number is even higher than that of the dot-com boom from 1999-2000. From 2007-2009, new business creation steadily increased. 

The Kauffman Index of Entrepreneurial Activity takes into account the percentage of the adult, non-business-owner population that starts a business each month. The index uses data from the monthly Current Population Survey (CPS), which is conducted by the U.S. Bureau of the Census and the Bureau of Labor Statistics.  The Kauffman Index also sorts its information into categories, such as estimates for specific demographic groups, select metropolitan areas, and states.

The Kauffman Index report found that in 2009, there was a 4 percent increase of the number of adults starting a new business each month than in 2008. In 2009, there were 27,000 more starts per month than in 2008 and 60,000 more starts per month than in 2007.   

The report also found that the states with the most entrepreneurial activity last year were Montana and Oklahoma. Both states had 470 per 100,000 adults forming businesses each month. While these states might not have the most venture capitalists around, entrepreneurs say that doesn’t mean investment capital can’t be found. Entrepreneurs say that once the infrastructure is built, the investment dollars will follow, no matter how far off the beaten path.

The five states with the least amount of entrepreneurial activity were Minnesota, Alabama, Pennsylvania, Nebraska, and Mississippi.



Montana, Oklahoma Outdo Usual Suspects In Entrepreneur Study (The Wall Street Journal)