Eight out of 10 startups foresee pickup in profits: Kauffman survey


KANSAS CITY, Mo.  Feb. 15, 2011 ” Owners of startup companies are surprisingly optimistic about 2012, according to the first Kauffman/LegalZoom Startup Confidence Index released today by the Ewing Marion Kauffman Foundation and LegalZoom. More than one-fourth of the respondents said they plan to hire additional staff in 2012, and twice as many of them expect the economy to improve or stay the same (68 percent) as those who expect it to deteriorate (31 percent).

Three out of four business owners think consumer demand either will stay the same or increase, a perspective that likely is informing their positive feelings about the economy. Eighty-one percent are confident or very confident that their businesses will be more profitable in the next 12 months than they are today.

The Kauffman Foundation sponsored the survey in conjunction with LegalZoom, the nation leading provider of online legal document services and legal plans to young companies. The findings are based on 800 responses to a nationwide survey in January 2012 distributed via email to LegalZoom clients who formed their entities within the past  12 months. The Startup Confidence Index is the first in a series of quarterly surveys to gauge entrepreneurial confidence. The next survey will be conducted in April 2012.

Robert Litan, vice president of research and policy at the Kauffman Foundation, stressed that while the survey involved self-responses and may not be scientific, it nonetheless has important implications. Despite the recent downward trends in business starts and startup hiring, these data suggest new business owners have adopted the optimistic entrepreneurial spirit as they anticipate what lies ahead for their businesses in 2012, Litan said. Entrepreneurs drive the economy and, while this survey is one monitor on one group of entrepreneurs who matter, it may be a leading indicator that the trends are turning around.

“High confidence in increased profitability is a great sign of things to come, said John Suh, CEO of LegalZoom. Given that small businesses are the engine of job growth, it will be interesting to see how quickly this optimism translates into new hiring. We will be monitoring how plans to hire additional staff in the upcoming year (i.e., 25 percent of those surveyed) change over time.”

Consistent with other recent Kauffman Foundation research, the majority of the survey respondents “ 69 percent “ are over age 40. Forty-three percent of them are 50 or older. Nearly 60 percent of respondents indicated that they operate their businesses from their homes. The complete findings are available at www.kauffman.org/confidenceindex.

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. Founded by late entrepreneur and philanthropist Ewing Marion Kauffman, the foundation is based in Kansas City, Mo. and has approximately $2 billion in assets. For more information, visit www.kauffman.org, and follow the foundation on www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.

About LegalZoom

LegalZoom is the nation leading provider of online legal document services and legal plans to families and small businesses. LegalZoom provides self-help services and a legal plan where customers have access to attorneys at a fixed monthly fee. The company is headquartered in Glendale, California, with regional headquarters in Austin, Texas. For more information, visit http://www.legalzoom.com/.