Micro Firms and Start-Ups Essential to Economy

February 17, 2009 | Startups

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I found some interesting data that finally supports what many of us have been thinking: that solopreneurs and very small businesses are accounting for much of the job creation in the U.S.

According to new data from the Kauffman Foundation and the US Census Bureau, as highlighted in Inc. Magazine, firms with one to four employees have accounted for an average of 20 percent of new jobs each year from 1980-2005. During that time, start-ups accounted for 3% of total employment. While that doesn’t seem like much, the average annual net employment growth over the same period was 1.8 percent, meaning that job creation would be contracting during those 25 years rather than expanding without these micro firms.

Over the timeframe of the study, it was found that “while startups do tend to decline slightly during downturns, they remained fairly robust in even the most severe of the sample period’s recessions.” And according to Robert E. Litan, vice president of Research and Policy at Kauffman, people appear to be continuing to start businesseses in the current recession. However, they may be starting with fewer employees than had they started at a different time.

So I reiterate my cheerleading routine: Go out there and start a business. And please take the time, effort and a bit of money to build a solid business and branding plan before you get started.

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