Submitted by the Kauffman Foundation
(KANSAS CITY, MO.) April 3, 2012 — Despite remaining generally confident about the prognosis for their own businesses, startup company owners sent mixed signals about their overall economic outlook for the next 12 months, according to the 2012 second quarter Kauffman/LegalZoom Startup Confidence Index released today by the Ewing Marion Kauffman Foundation and LegalZoom.
One-third of the respondents said they plan to hire additional staff in 2012 – a healthy 5 percent increase over the previous survey conducted in January – but the number of respondents who expect deteriorating consumer demand rose by 2 percent (from 25 percent to 27 percent). Those who believe the economy will improve or stay the same (63 percent) dropped by 3 percent, but the expectation that it will “improve significantly” climbed by 2 percent.
Eighty-two percent are confident or very confident that their businesses will be more profitable in the next 12 months than they are today, a minor 1 percent increase from the 81 percent confidence expressed in January’s survey.
The Kauffman Foundation sponsored the survey in conjunction with LegalZoom, the nation’s leading provider of online legal document services and legal plans to small businesses. The findings are based on 876 responses to a nationwide survey in March 2012 distributed via email to LegalZoom customers who formed their entities within the last 12 months. The Startup Confidence Index is conducted quarterly to gauge entrepreneurial confidence. The next survey will be conducted in July 2012.
“Although the survey involves self-responses and may not be scientific, it nonetheless has important implications,” said Robert Litan, vice president of research and policy at the Kauffman Foundation.
“These mixed signals – particularly the decrease in the expectation of consumer demand – likely are attributable to escalating gas prices,” Litan said. “It seems clear that entrepreneurs, who remain confident about their companies’ abilities to achieve profitability, are counting on themselves first and foremost to push the economy back to health.”
The survey also showed a 6 percent drop in number of business owners operating out of a home office. “This can be a sign of increased entrepreneurial confidence, the expansion of startups into larger, more established businesses and other factors that represent small business growth,” said John Suh, CEO of LegalZoom.
In addition, the number of new business owners who applied for loans or lines of credit in the last year dropped from 20 percent in the first quarter survey to 16 percent in the most recent survey, potentially representing “a combination of trust and optimism that is leading entrepreneurs to invest more of their own money into the economy,” Suh said.
An infograph featuring the complete findings is 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. 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. In addition, the Foundation focuses on initiatives in the Kansas City region to advance students’ math and science skills, and improve the educational achievement of urban students, including the Ewing Marion Kauffman School, a college preparatory charter school for middle and high school students set to open in 2011. 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’s leading provider of online legal document services and legal plans to families and small businesses. The company was founded by top talents in law and technology to make the benefits and protections of the law accessible and affordable. LegalZoom is not a law firm. 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/.