Start-up Activity Actually Rose Last Year

Toward the end of 2014, some rather dour reports on the state of the small business sector began to emerge, with numbers showing that these companies were dying off more quickly than they were being started. However, new data suggests that this trend might finally be reversing itself, as more people chose to start companies in the past 12 months.

The latest data suggests that 0.31 percent of adults across the country (310 out of every 100,000) started a new business in the last year, according to the 2015 Kaufman Index on Startup Activity. That number was up slightly from the 0.28 percent observed in the same index a year earlier, marking the largest annual jump seen in some 20 years. However, that number is still well below historical norms, indicating just how far the market might still have to go before it can fully recover from the recession.

“This rebound in entrepreneurial activity lines up with the strength we’ve seen in other economic indicators, and should generate hope for further economic expansion,” said Dane Stangler, vice president of Research and Policy at the Kauffman Foundation. “But, it’s important to view this short-term uptick in context of the bigger picture – we are still in a long-term decline of activity, which affects job creation, innovation and economic growth.”

A closer look at the numbers
Of those who chose to start a new business in the past year, more than 3 in 5 were men, the report said. That brought the share of women who started their own companies to one of the lowest levels seen in the last 20 years.

However, there was mostly good news for all age groups of entrepreneurs, the report said. All but the 45-to-54 demographic saw increases in startup rates, and even that one simply held steady from the number seen last year, rather than decline. Likewise, there was growth among all racial or ethnic groups, with that of Latinos and Asians experiencing huge surges in particular. This is likely due to big entrepreneurship rates among new immigrants, as 28.5 percent of all such people started their own companies, up from 13.3 percent seen in 1997.

The improving economy helped more entrepreneurs reverse a trend of startup declines.The improving economy helped more entrepreneurs reverse a trend of startup declines.

The driving force
It should come as no surprise that, for many new owners, the reason they’re starting companies now is that they see the economy has improved significantly over the last few years, and believe they’re going to be in a good position to succeed as a consequence, the report said. Almost 4 in 5 entrepreneurs started their businesses not because they were out of work or looking for a new job, but because they just had a good idea for a company.

Of course, getting a new startup off the ground is one thing, but keeping it successful over a period of years is another entirely. As such, owners might need to find the best ways to keep their budgets streamlined, and that could include finding more affordable small business insurance. For instance, if they can keep costs down for things like general liability insurance, they may be able to save thousands of dollars each year.