2013 Kauffman LegalZoom Startup Confidence Index

Buoyed by belief in an improving economy, the nation’s newest business owners’ confidence leapt in the fourth-quarter 2013 Kauffman/LegalZoom Startup Confidence Index.

The survey data, released today by the Ewing Marion Kauffman Foundation and LegalZoom, showed that 91 percent of these entrepreneurs were confident or very confident that their companies’ profitability would increase in the next 12 months. The result was a stunning jump of 5 percentage points over the third-quarter survey, and an all-time high for the study, which debuted in first quarter 2012.

Leading the way were the youngest entrepreneurs. Eighteen- to 30-year-olds and 31- to 40-year-olds expressed 94 percent and 95 percent confidence levels, respectively. Though confidence dropped 1 percentage point from the previous survey for the 18- to 30-year-olds, it rose 1 point for the 31- to 40-year-olds, marking the highest level for that group in any of the previous surveys.

Startup owners’ positive expectations were fostered by growing confidence in U.S. economic performance and consumer demand. Seventy-nine percent are confident the economy will improve or stay the same in the next 12 months, a marked increase of 9 percentage points over the third-quarter survey. Anticipation of growing consumer demand grew higher still, with 55 percent of entrepreneurs saying they believe consumer demand will increase moderately or significantly in the next 12 months, a striking 13 point increase from the previous survey and the highest number in any of the 2013 surveys. Plans to hire additional employees also rose, from 36 percent in the third quarter to 43 percent in the most recent survey.

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 fourth-quarter findings are based on 1,375 responses to a nationwide, January 2014 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.