The Kauffman Index of Main Street Entrepreneurship measures established small business activity – focusing on businesses more than five years old with less than fifty employees – from 1997 to 2016 for the United States.
The Kauffman Index of Main Street Entrepreneurship: Metropolitan Area and City Trends
Main Street entrepreneurship activity index trended upward for 38 of the 40 largest metros in 2016. The exceptions were San Jose and Nashville. Activity was particularly high among metros in the Northeast, Midwest and certain areas of the West Coast.
The five metros with the highest Main Street entrepreneurship activity are Pittsburgh, Boston, Portland, San Francisco and Washington, D.C. The first-five-years survival rate of businesses in the 40 largest metros ranges from an estimated 45.44 percent in Orlando to 54 percent in Boston.
The Kauffman Index of Main Street Entrepreneurship: State Trends
Main Street Entrepreneurship activity increased in all states except Alaska, Delaware and Louisiana in 2016.
Among the 25 larger states, the five with the highest Main Street entrepreneurship activity were Minnesota, Wisconsin, Massachusetts, Colorado and Pennsylvania. South Dakota, Vermont, Montana, North Dakota and Maine were the smaller states with the highest Main Street Entrepreneurship activity.
The Kauffman Index of Main Street Entrepreneurship: National Trends
For the first time since the recovery got underway, Main Street entrepreneurship activity is at higher levels in 2016 than those recorded before the onset of the Great Recession.
This increase was primarily driven by a jump in the business survival rates, which reached a three-decade high of 48.7 percent. This means almost half of new businesses are making it to their fifth year of operation.
Greater longevity for startup businesses marks a major turnaround from the Great Recession, which saw the business survival rate drop to a low of 42.9 percent in 2011. Survival rates have increased every year since then.
The national Rate of Business Owners and the Established Small Business Density remained steady in the 2016 Main Street Index. The Rate of Business Owners was 60 out of 1,000 adults, the same as the previous year. Business Density changed little, logging 676 established small businesses per 1,000 businesses.
However, the results show that U.S. small businesses have gotten smaller over the last 20 years. The smallest of those small businesses – companies with one to four employees – make up 53.1 percent of all established small businesses, up from 49.5 percent in 1996.
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