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Business Startup Confidence Soaring

[ 0 ] Feb. 19, 2014 | SBO Editor

startup confidence

Small business startup confidence is soaring as newest entrepreneurs believe business prospects are highly promising in the year ahead, Kauffman/LegalZoom Quarterly Index shows

Buoyed by belief in an improving economy, the nation’s newest business owners’ startup 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.

“These findings reflect increasing positive economic news, such as the falling unemployment rate,” said Dane Stangler, vice president of Research and Policy at the Kauffman Foundation. “This jump in startup confidence and optimism among entrepreneurs is a good sign for the economy because despite the recovery, we still need more entrepreneurial growth.”

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 startup 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. Startup confidence is soaring.

Startup Confidence

“We are seeing very encouraging markers of optimism from small business owners,” said John Suh, CEO of LegalZoom. “Confidence in the US economy, expectation of profitability, and perhaps most importantly, intent to hire, are at the highest levels we’ve seen since we began tracking these metrics two years ago.”

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.

View the Kauffman/LegalZoom Startup Confidence Index infographic. Follow the conversation online at #startupconfidence.

About the Kauffman Foundation

The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that aims to foster economic independence by advancing educational achievement and entrepreneurial success. Founded by late entrepreneur and philanthropist Ewing Marion Kauffman, the Foundation is based in Kansas City, Mo., and has approximately $2 billion in assets. For more information, visit www.kauffman.org, and follow the Foundation on www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.

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 over 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 has offices in Austin, Glendale, and Mountain View. For more information, visit www.legalzoom.com.

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Category: Features