Startup Business Characteristics and Dynamics: A Data Analysis of the Kauffman Firm Survey

Abstract

The purpose of this report is to contribute to a better understanding of American business startups and their dynamics. The report includes sample data analysis based on the Kauffman Firm Survey (KFS), a panel study created using a stratified random sample of all startups in 2004 from the Dun & Bradstreet database with follow-up surveys on these firms for 2005 and 2006. The results of this report are not meant to be extrapolated to the national startup population. The major finding of the report is that startup businesses in the KFS sample created an average of 5.5 jobs per firm in 2004; this includes not only 4.1 paid employee positions, but also 1.4 entrepreneurial positions. Given that at least a half million firms start in business every year in the United States, this is a massive injection of productive human capital into the economy. These operational business owners proactively create or reinvent new ventures that utilize their own and their employees' talents, infusing capital and new ideas to create opportunities for them all, and provide products or services to the economy. In addition to job-creation, these entrepreneurs serve as engines for innovation and economic growth. The report also provides analysis of characteristics and dynamics of KFS businesses.

Keywords: Startups, Entrepreneurship, Firm, Job Creation

JEL Classification: L26, M21