The confidence of entrepreneurs is rising. Ceaseless uncertainty in Washington and mixed signals from economic indicators have not dampened the outlook of new business owners, who express rising confidence in their prospects in the third-quarter 2013 Kauffman/LegalZoom Startup Confidence Index. Just released by the Ewing Marion Kauffman Foundation and LegalZoom, the Index reports that entrepreneurs’ confidence climbed to 86 percent, setting a new high for the study, which was initiated in first quarter 2012.
“This helps illustrate the resilience of the American economy and the way in which new business creation constantly creates a new economic future, even as the surrounding economy appears stuck,” said Dane Stangler, director of Research and Policy at the Kauffman Foundation. “Business owners are trying to lead us forward.”
The youngest entrepreneurs, in particular, expressed the most confidence in achieving greater profitability over the next 12 months. Ninety-five percent of the 18-30-year-olds and 94 percent of the 31-40-year-olds feel certain about near-term profitability. This is the highest confidence level reported by the 31-40-year-old age group in any of the previous surveys. The youngest entrepreneurs’ confidence in future profitability, which had fallen in the second-quarter survey, rose by 2 percent.
Startup owners’ positive expectations increased despite the fact that they are less confident about the nation’s economic growth and about consumer demand than they were in the previous survey. Seventy percent are confident the economy will improve or stay the same in the next 12 months, a decrease of 4 percent from the second-quarter survey. Forty-two percent of the entrepreneurs expect consumer demand to increase moderately to significantly in the next 12 months, a 7 percent decrease from the previous survey and the lowest percentage all year.
“Entrepreneurial drive does not always correlate to ups and downs of the economy, as illustrated by so many companies that have famously started in the most difficult of times,” said John Suh, CEO of LegalZoom. “The younger generation of small business owners is indicating extremely high confidence in their ability to achieve near-term profits while acknowledging weakening consumer demand.”
Expectations of hiring additional employees also fell slightly, from 37 percent in the second quarter to 36 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 third-quarter findings are based on 1,250 responses to a nationwide, September 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.