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May 9, 201710:53 AMInside Wisconsin

with Tom Still

Wisconsin entrepreneurs succeed by surviving in a competitive world

(page 1 of 2)

Depending on what’s measured, Wisconsin can rank as one of the nation’s worst states for entrepreneurial activity — or one of the best.

Sometimes, those extremes show up in the same national report.

Such is the case with the latest Ewing Marion Kauffman Foundation report on entrepreneurship in the United States, which once again ranked Wisconsin 25th among the nation’s 25 largest states for startup activity but second best in “Main Street” entrepreneurship.

How can that contrast be explained, some may ask?

One ranking measures the number of people who decide to become entrepreneurs within a given period (the startup rate), while the other measures the percentage of the adult population that owns a business as their main job (the Main Street rate).

Still confused? So are many observers, myself included, who struggle to understand how a low startup rate by Kauffman methodology translates into a relatively high percentage of business ownership. The answer may lie in one word: survivability.

As noted in the 2016 “Kauffman Index,” 6.46% of adults in Wisconsin own a business, roughly one in 16 adults. The percentage of firms that remained in operation through their first five years is also high at 50.77%, based on the latest reporting year.

Minnesota, a neighboring state to which Wisconsin is often compared, showed up with similar rankings in the Kauffman Index. It ranked 21st in startup activity and 1st in “Main Street” ownership, with 7.75% of Gopher state adults owning a business. The five-year survival rate is shockingly similar to the rate in Wisconsin: 50.76%.

Other large Midwest states studied by Kauffman included Illinois (19th in startups and 10th in Main Street ownership), Michigan (11th and 13th), and Indiana (22nd and 11th). Each state has a strong five-year business survival rate.

Conversely, some states with higher startup rates also lose more companies after five years. Texas, Florida, and California are ranked first, second, and third in startups but statistically lose more of them over time.

Is it Midwestern stubbornness that keep the survival rate high in Wisconsin? A stronger work ethic?

Perhaps each trait deserves some credit, but it may also be argued that startups in Wisconsin and surrounding states are doing a better job of reaching out for advice and resources that can keep them in business. The support system is strong and getting stronger by the year.


May 9, 2017 04:41 pm
 Posted by  Anonymous

An analysis looking at location of the main street businesses might shed some light on the differences between start ups and main street ownership.
From my experience rural areas are not real attractive to many national chains and thus the start ups if solid survive longer. But the smaller markets can't handle as many start ups thus the difference.

State statistics and rankings often are pretty useless- state rankings with a rural and urban breakdown (and maybe a size range) might be far more useful.

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Tom Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal.



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