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Entrepreneurs Optimistic About 2012

Mark Marich

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While economics bloggers are apparently a consistently gloomy bunch, it seems to make sense that entrepreneurs are by nature a bit more optimistic—tackling risk head on in pursuit of their dreams and ideas. That was the gist of the first Startup Confidence Index released recently by the Ewing Marion Kauffman Foundation and LegalZoom.

Eighty-one percent of the startup owners expressed confidence that their business would be more profitable in the next 12 months than they are today and 28 percent even planned to hire additional staff in 2012.

When asked to consider the economy at large, twice as many expect it to improve or stay the same (68 percent) as those who expect it to deteriorate (31 percent). Similarly, three out of four respondents think consumer demand either will stay the same or increase, a perspective that likely is informing their positive feelings about the economy.

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."

The Kauffman Foundation sponsored the survey in conjunction with LegalZoom, the nation’s 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 last twelve months.

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.

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