Amid the disruption of 2020, some saw opportunity.
Earlier this year, the Kauffman Foundation assessed the state of early-stage entrepreneurship in the United States in 2020. The non-profit foundation, founded in 1966 and based in Kansas City, Mo., is a nationally recognized leader as the study and development of entrepreneurship.
Their study, released in the first quarter of 2021, shows that Wisconsin is behind the national averages in the overall creation of new businesses, but businesses that do start here have a better than average chance of success.
The report revealed that, on average, every month in Wisconsin during 2020, 220 out of 100,000 people started a new business (.22%). The national average for new business creation was .38%, a difference of 160 new businesses per month. Floridians led the entrepreneurial pack, with 530 of every 100,000 residents starting a new business (.53%), while Rhode Islanders trailed the nation at just .16%.
The study looked at the Wisconsinites starting businesses in 2020 and discovered that 83.35% of the new businesses launched were created out of opportunity — meaning the business was not created out of a necessity, such as unemployment of the entrepreneur. That number is slightly higher than the national average of 81.4%.
When looking at the impact these new businesses had on the economy, the Kauffman Foundation discovered that nationally, the average number of new jobs that were created by the newly founded businesses were 4.5 jobs for every 1,000 residents in the state. In the Badger State, that number was 3.57 jobs per 1,000 Wisconsinites. Washington, D.C. was the national standout in startup job creation, adding 7.8 jobs per 1,000 residents into the economy.
There are several factors that determine if a company can survive through its first year. In Wisconsin, 78.89% of new businesses open after their one-year anniversary, which is slightly better than the national average of 77.9%.
Examination of the empirical data reveals the state of entrepreneurship in Wisconsin and show that fewer Wisconsinites open businesses than others in the nation, but when they do, that business has a better than average chance of remaining open for longer than a year.
The challenge remains to increase the number of businesses that open in the state and aid those businesses in growth to increase the number of jobs created by new, Wisconsin-based companies. Accelerators, incubators and programs just like this are working to improve those numbers and create new Wisconsin success stories.
As the financial engine of the state, the Milwaukee Region is ready to rise to the challenge.