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Study Finds Number Of New Small Businesses Is Constant Over Time

Written by Ken Gaebler
Published: 1/14/2010

New research from the Kauffman Foundation suggests the number of new firms in the U.S. remains constant year to year.

In the midst of recession, small businesses are expected to drive the economy toward recovery. Yet, there has not been a dramatic increase in the number of small businesses in the U.S. in the past couple of years. A new survey from the Kauffman Foundation may provide some useful news for entrepreneurs about the factors that contribute to firm formation.

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The study found that small business formation in America has been relatively constant over time, with the number of startup companies varying little from year to year.

The authors of the study found that there is no major correlation between the economic climate and entrepreneurs' decisions to start new businesses. Recessions, expansions, tax changes, population growth, and technological advances all had a negligible influence on startup business rates.

Similarly, entrepreneurship education and venture capital did not have a noticeable effect on business startups. Instead, the study's authors speculate that the composition of the population of entrepreneurs remains relatively constant over time, which is why the number of startups has remained constant.

This information could be bad news for the country's universities; reportedly colleges nationwide invested heavily in strengthening their entrepreneurial preparation programs last year.

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