Eighty-five percent of startup owners express confidence the next 12 months will bring greater profitability
(KANSAS CITY, Mo.) Sept. 5, 2013 – In the latest Kauffman/LegalZoom Startup Confidence Index, startup business owners' confidence reached the highest level since the study was initiated in first quarter 2012. That's according to the second-quarter 2013 Index, released today by the Ewing Marion Kauffman Foundation and LegalZoom.
Business owners' confidence in achieving greater profitability over the next 12 months saw an overall increase driven primarily by the 31-40 and 60-plus age groups, with 91 percent and 76 percent, respectively, either somewhat or very confident. Younger entrepreneurs – those 18 to 30 years old – remain more certain about their businesses' future profitability than older entrepreneurs, with 93 percent either somewhat or very confident in their prospects.
The second-quarter survey included several new questions that provided insights into respondents' characteristics and their companies' profiles. As expected, businesses in the study were very small, with 87 percent having just one to four employees, including the owner. However, 37 percent of young businesses said they plan to hire employees, and an astonishing 69.5 percent of the startup owners anticipate having six or more employees within the next five years.
"Tracking the perspectives of new business owners provides us with an important economic gauge," said Dane Stangler, director of Research and Policy at the Kauffman Foundation. "Their growing confidence in the future, even incremental, is a sign of how they are experiencing economic conditions right now. And it appears to be very good, based on these findings."
Mirroring their optimism for their companies' profits in the year ahead, entrepreneurs' faith in the economy shot up. Seventy-four percent said they believe the economy will improve or stay the same over the next 12 months, a jump of 10 percent over the first-quarter survey.
The percentage of entrepreneurs expecting steady or increased consumer demand over the next year also rose to its highest number since inception of the index, from 71 percent in first quarter to 83 percent in second quarter.
Startup owners ages 18-30 expressed 91 percent confidence that consumer demand would hold or increase, and were the most optimistic of any age group.
"In past surveys, a jump in optimism over the economy did not always correlate with increased plans to hire," said John Suh, CEO of LegalZoom. "In this survey, conviction about the future seems to translate into a higher intention to hire, signaling a promising year for job growth."
The Kauffman Foundation sponsors the Startup Confidence Index surveys in conjunction with LegalZoom, a leading national provider of online legal solutions and legal plans to young companies.
The second-quarter findings are based on 1,742 responses to a nationwide, July 2013 survey distributed via email to LegalZoom customers who formed their entities within the last six months. The Index is conducted quarterly to gauge entrepreneurial confidence.
View the Kauffman/LegalZoom Startup Confidence Index infographic. Follow the conversation online at #startupconfidence.
About LegalZoom.com, Inc.
LegalZoom is the nation's leading provider of personalized, affordable online legal solutions for families and small businesses. Founded more than 12 years ago by attorneys with experience at some of the top law firms in the country, LegalZoom has helped more than two million Americans become protected with binding legal documents. Although LegalZoom is not a law firm, it can help people access an attorney through its legal plans. The company is headquartered in Glendale, California and Austin, Texas. For more information, visit www.legalzoom.com.