In the US in 2009, 558,000 new businesses were started per month by new and repeat entrepreneurs, representing the highest year on record. This rate has been relatively stable in the past, so the growth is notable. Here at Hannah Grimes, 2009 brought an 800% increase in program attendance, with an additional 80% growth in attendance on tap for 2010.
From 1980 to 2001, all of the net U.S. job growth came from firms less than five years old, while older firms, net, actually lost jobs.
In the five years from 2003 to 2007, New Hampshire saw just 1% in growth in the number of Employer Firms, companies with payroll, while Nonemployer Firms grew 4.7% during that same period.
In a 2008 Kauffman Foundation study about young businesses, the authors note that one-third of job creation is due to the entry of new establishments. Furthermore, beyond initial entry, surviving new businesses have very high employment growth rates in their early years. New businesses also have a high exit rate, but job losses by younger firms peak at two years then decline after that.
These “young survivors” also have higher productivity levels than more mature establishments, and those productivity levels continue to grow during the next five years. Research shows that the entry of these new firms result in a more productive economy overall.
The study notes that 75% of all businesses in the US are Nonemployer Firms and that these businesses are the seeds of about 25% of new Employer Firms. The research also shows that these businesses have particularly high output growth the year before transitioning to having employees and in the year of transition status.
Looking to grow the NH economy? Look no further. Let’s get behind our small businesses and assist them in the growth they are striving for. Let’s help them build skills and problem solve through their first high risk years so that we can benefit from the jobs and productivity that they create.
Keep up the good work,
Mary Ann Kristiansen
Hannah Grimes Center Executive Director