Startups, Small Businesses Stay Lean, Stick Around Longer

Small business tossed up a classic case of good news/bad news to cap off last week, care of a new report from the Kauffman Foundation. The good news: Smaller startups are living — or surviving — longer. The bad news: They are keeping to a modest number of employees and staying lean and mean.

“It’s a mixed bag of some good signs for the future but in a context of some troubling circumstances for American entrepreneurship,” said Jason Wiens, policy director at Kauffman.

According to the research, around six of 100 adults own a business, which represents a decline over two decades as twenty years ago that six was an eight. But the data also shows that a record number of small businesses are staying open past the five-year mark and that the most successful of the bunch have also been the smallest — firms with between one and four employees.

The report also noted the demographics of business ownership over the last few decades. Men are still more likely than women to own a small business at a rate of 8.3 percent to 3.9 percent, respectively. Latinos are making up a larger share — 14 percent, which is up from 5.6 percent in the 90s. The report also showed that entrepreneurship is particularly popular among immigrant groups who are consistently much more likely to own a business than native-born Americans.

The overall takeaway from the report, according to its authors, is that, while there are lit embers of possibility, business ownership and firm growth remain low, which both indicates and contributes to imperfect economic conditions.