By Heather Johnson.
The 2016 Kauffman Index, a detailed analysis of entrepreneurship released by the Ewing Marion Kauffman Foundation, reports more than half of U.S. states and large metro areas saw an uptick in entrepreneurial activity over the past year.
Thirty states saw higher levels of total new business activity compared with 2015. Of the 40 largest metro areas, 23 saw an increase in new business activity.
The past two years of growth come after a five-year downward trend brought on by the recession. Startups rebounded in 2015 by about 10 percent—the largest year-over-year increase in the past 20 years. In 2016, that figure rose again by about eight percent.
The Kauffman Index’s opportunity share data refer to the percent of new entrepreneurs that started businesses because they saw market opportunities. The increase in opportunity share for 2016 indicates a positive environment for small business.
The figure, which measures the percent of new entrepreneurs who were not unemployed when they started their businesses, rose from about 79.5 percent in 2015 to 84 percent in 2016. The numbers indicate small business owners are gaining confidence to start new ventures.
Texas, Florida, California, and New York held the highest entrepreneurial activity of the 25 larger states. Despite the oil and gas industry downturn, Texas moved up two places to claim the top spot, with an entrepreneur rate (percentage of entrepreneurs per month for every 100,000 adults) of .39 percent.
Florida, the eighth most densely populated state in the U.S., has the second-highest startup density (number of new startups for every 1,000) at 101.8. It placed second on the state rankings.
Of the smaller states, Montana, Nevada, Wyoming, and Oklahoma topped the list. Montana and Nevada reclaimed their first and second place positions, respectively, from last year, while Wyoming moved up from fifth place in 2015 to third place in 2016.
With its strong energy and healthcare sectors, Oklahoma rose from number eight to number four. According to the Small Business Administration’s Office of Advocacy, Oklahoma small businesses employed 52.8 of its private workforce in 2016.
Austin, Miami, Los Angeles, San Francisco, and Las Vegas boasted the highest startup activity in Kauffman’s metro rankings. With the wave of high-tech innovators moving to San Francisco, the city by the Bay jumped from number nine to number four. Orlando, Kansas City, Cincinnati, Nashville, and Detroit also saw impressive shifts up.
Orlando, Florida, made the most significant move in startup activity, rising from 33 to 21. Its home state’s diverse workforce, solid infrastructure, and easy global access makes it one of the most attractive areas for small business. The U.S. Census Bureau ranked the Orlando-Kissimmee-Sanford Metropolitan Statistical Area number one for population and job growth in 2015.
The 2016 Kauffman Index provides city and state agencies and organizations insights they can use to build stronger small business communities. “All entrepreneurship is local,” Colorado Governor John Hickenlooper said in the Kauffman report’s forward. “And the policymakers, entrepreneurship supporters and communities that overlook this reality do so at their own peril.”
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