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Vermont Ranks #2 Among Small States in Kauffman Foundation’s “Main Street Entrepreneurship” Index

Tuesday, November 29, 2016   (0 Comments)
Posted by: Jeff Couture

A report from the Kauffman Foundation focusing on small business activity in states and metropolitan areas ranks Vermont second among 25 smaller U.S. states. The report also lists Vermont in the top five among smaller states for female business owners, older business owners and rate of business ownership.

The nation as a whole and most states and metros are experiencing higher rates of small business activity, according to the 2016 Kauffman Index of Main Street Entrepreneurship, released by the Ewing Marion Kauffman Foundation.

The index uses three indicators to measure U.S. entrepreneurship:

  • The rate of business owners in the economy, calculated as the percentage of adults owning businesses as their main jobs.
  • The survival rate of firms, calculated as the percentage of firms that remain in operation throughout their first five years.
  • The established small business density, measured as the ratio of established (five years or older) small (fewer than 50 employees) businesses to the total number of firms.

Combined, these indicators provide a view of small business activity in the country across national, state and metro-area levels. These businesses make up a large share of U.S. firms: U.S. Census Bureau business statistics show that established small businesses represent almost 68 percent of all employer firms in the country.  

The report also provides demographic information, including state and metro business ownership rates for females and both younger and older adults.

The report divides states in two groups based on size: the 25 largest states by population and the 25 smallest states by population.

Among the 25 largest states: The five states with the highest activity were Minnesota, Wisconsin, Massachusetts, Colorado and Pennsylvania.

Among the 25 smallest states: The states with the highest activity were South Dakota, Vermont, Montana, North Dakota and Maine.  

Rate of Business Ownership: Vermont also ranked in the top five among the 25 smallest states for rate of business ownership: Montana, South Dakota, Vermont, North Dakota, and Maine were states with the highest rates.  

Business Survival Rate: Vermont also ranked among the top five of smallest states for the survival rate of firms: North Dakota, Nebraska, South Dakota, Iowa, and Vermont had the highest rates.

Female Business Owners: Among the smaller states, Montana, Vermont, Wyoming, South Dakota and Oregon have the highest rates of female business ownership.

Older Adults (Ages 55 to 64): Among the smaller states, the five with the highest rate of business ownership for older adults are South Dakota, North Dakota, Vermont, Montana and Maine.

Younger Adults (Ages 20 to 34): South Dakota, North Dakota, Montana, Wyoming and Iowa have the highest rates of young adult business ownership.

According to the Kauffman foundation, main street entrepreneurship activity is at higher levels than those recorded before the onset of the Great Recession.

This increase was primarily driven by a jump in the business survival rates, which reached a three-decade high of 48.7 percent. This means almost half of new businesses are making it to their fifth year of operation.

About the Kauffman Index of Entrepreneurship Series

The Kauffman Index of Entrepreneurship series is an umbrella of annual reports that measure U.S. entrepreneurship across national, state, and metro levels. Rather than focusing on inputs, the Kauffman Index focuses primarily on entrepreneurial outputs—the actual results of entrepreneurial activity, such as new companies, business density, and growth rates.

Read the Main Street Index report here.