Young Businesses That Survive Grow Faster Than Older Businesses, According to Kauffman Foundation-Funded U.S. Census

KANSAS CITY, MO, Apr 07 (MARKET WIRE) --
Business startups that survive grow faster than more-established
companies, according to newly released Business Dynamics Statistics-U.S.
Census Bureau data funded by the Ewing Marion Kauffman Foundation.
However, because entrepreneurial ventures also have higher mortality
rates than older companies, they also have higher rates of job loss
reflecting an "up or out" pattern.

The report, titled "High Growth and Failure of Young Firms," highlights a
single dimension of the Census Bureau's new Business Dynamics Statistics
(BDS). The BDS provide researchers with comprehensive data, broken out by
firm age, that are necessary to understanding startup firms' role in job
creation.

The High Growth and Failure data show that very young firms (one year old)
have a net employment growth rate of about 15 percent, if they survive,
but about 20 percent of jobs at startups are lost due to business
establishment closings in the first year. Older firms (age 29 and older),
on the other hand, create jobs at a rate of about 4 percent, conditional
on survival, and have a similar rate of job loss due to business
establishment closings. Among surviving firms, average employment growth
rates decline with the age of the firm.

"Because entrepreneurial companies generally are taking greater risks and
have the potential for job creation that corresponds to fast growth, the
data underscore the need to ensure an environment which allows
entrepreneurs access to financing, mentoring and other resources that will
help them to survive and thrive," said Robert E. Litan, vice president of
Research and Policy at the Kauffman Foundation.

In terms of growth and survival, young firms are doing both better and
worse than more mature firms. This "up and out" pattern highlights the
trial and error nature of young firms that is an inherent feature of U.S.
business dynamics.

This report is the fourth in a series of briefings to highlight some key
features of the BDS data. BDS includes measures of business startups,
establishment openings and closings, and establishment expansions and
contractions in both the number of establishments and the number of jobs.
The BDS data provide these new, annual statistics for 1977-2005, with
classifications for the total U.S. private sector by broad industrial
sector, firm size, firm age and state. Further information about the BDS
can be found at http://www.ces.census.gov/index.php/bds/bds_home.

About the Kauffman Foundation

The Ewing Marion Kauffman Foundation is a private nonpartisan foundation
that works to harness the power of entrepreneurship and innovation to grow
economies and improve human welfare. Through its research and other
initiatives, the Kauffman Foundation aims to open young people's eyes to
the possibility of entrepreneurship, promote entrepreneurship education,
raise awareness of entrepreneurship-friendly policies, and find
alternative pathways for the commercialization of new knowledge and
technologies. It also works to prepare students to be innovators,
entrepreneurs and skilled workers in the 21st century economy through
initiatives designed to improve learning in math, engineering, science and
technology. Founded by late entrepreneur and philanthropist Ewing Marion
Kauffman, the Foundation is based in Kansas City, Mo. and has
approximately $2 billion in assets.

Contact:
Rossana Weitekamp
516-792-1462
Email Contact

Lacey Graverson
816-932-1116
Email Contact
Kauffman Foundation

Copyright 2009, Market Wire, All rights reserved.

-0-