Entrepreneurial Confidence Survey Brief: Kauffman/LegalZoom Q2 2013 Survey

In this, the second quarter 2013 release of the Kauffman/LegalZoom Startup Confidence Index, startup business owners' confidence reached the highest level since the study was initiated in first quarter 2012.

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.

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.

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.