Amid Solid Business Optimism, Rates of Entrepreneurship Are on the Rise
Entrepreneurship rates in the first quarter of 2018 neared peak levels following the recession, according to new research released today by Paychex. The report, entitled “Accelerating the Momentum of American Entrepreneurship,” evaluates the rate of entrepreneurship before, during, and after the recession, and the attitudes and perceptions of small business owners.
The research shows that the rate of entrepreneurship grew steadily for several years following the recession in 2009, moderated from 2014 to 2016, started to accelerate again last year, and nearly reached its highest level since the recession in the first quarter of 2018. Additionally, the rate of small business failures has consistently trended lower since the start of 2014.
The report is based on payroll data of a subset of Paychex start-up clients with 1-49 employees and survey responses from more than 500 business owners (1-500 employees). Entrepreneurship data is broken down by business owner gender, geography, age, and industry. An overview of the data was shared today in Washington, D.C. at “Small Businesses, Big Ideas: Entrepreneurship in Action,” a policy briefing event presented by The Hill.
“Our data affirms that entrepreneurship played an important role in the growth of the economy coming out of the recession,” said Martin Mucci, Paychex president and CEO. “Coupled with the positive feedback we received from business owners about their attitudes and perspectives, the clear message from this report is that the state of entrepreneurship is strong. We’re proud to salute and support the vital role of entrepreneurs in creating jobs and driving the economy.”
Small Business Optimism
Reflecting the overall growth in entrepreneurship, today’s business owners are positive about the business environment. Nearly two thirds (64 percent) are optimistic or very optimistic about their business’ ability to make a profit; and 58 percent are optimistic or very optimistic about their business’ prospects for growth.
Further demonstrating the overall positive outlook of business owners, more than three quarters of business owners (79 percent) would recommend starting a business today, and 71 percent of business owners describe today’s business environment as better or the same compared to when they started their business. Based on their experience, business owners who started their company during or closely following the recession (4-9 years ago) were more likely (57 percent) to say the business environment is better today than when they started compared to those who started their companies 20 or more years ago (32 percent).
Barriers to Success
Survey respondents were also asked to identify barriers to starting and running a successful business. The clear majority (90 percent) of business owners are at least slightly concerned about rising costs. In today’s tightening labor market, hiring is also a growing concern: 67 percent of business owners are at least slightly concerned with finding quality employees.
Business owners agree that there are steps the government can take to combat these barriers and help encourage business formation, including: offering more government support for businesses, e.g., coaching, networking, or mentoring (34 percent); and decreasing regulations (33 percent).
Geographic and Generational Insights
Among the four states in the U.S. with the highest population (California, Florida, New York, and Texas), New York and Florida are the leading states for start-ups. When examining the data by generation and gender, it reveals the percentages of entrepreneurs age 50 and older and business starts by females have increased during the past decade.
The full report can be downloaded here.
About the Accelerating the Momentum of American Entrepreneurship Report
The data included in the Accelerating the Momentum of American Entrepreneurship Report references two sources: A historical analysis of a subset of Paychex clients, with 1-49 employees, measuring the rate of entrepreneurship in the United States over the past decade and results of the Paychex Small Business Survey, administered by Bredin. The survey was conducted online between March 9, 2018 and March 19, 2018 and polled 500 principals of U.S. companies with less than 500 employees.
Disclaimer: The data cited in this news release represents the opinions of the survey respondents and not those of Paychex or its employees.
Paychex, Inc. (NASDAQ: PAYX) is a leading provider of integrated human capital management solutions for payroll, HR, retirement, and insurance services. By combining its innovative software-as-a-service technology and mobility platform with dedicated, personal service, Paychex empowers small- and medium-sized business owners to focus on the growth and management of their business. Backed by 45 years of industry expertise, Paychex serves approximately 605,000 payroll clients as of May 31, 2017, across more than 100 locations and pays one out of every 12 American private sector employees. Learn more about Paychex by visiting www.paychex.com, and stay connected on Twitter and LinkedIn.