This summary concentrates only on business starts.  In the next few weeks, one on business “stops” will be published.  While this study is fairly old, most of the information is in percentages instead of hard numbers, and is still meaningful.  This information is far superior to the other data I’ve found on this subject.    

“BUSINESS STARTS AND STOPS”, William J. Dennis, Jr., November 1999

This study, and the surveys it is based upon, were sponsored by the NFIB Education Foundation and Wells Fargo Bank.  This particular study concentrates on the year 1998.  The surveys, done over four years, were done by the Gallup organization, and included 3,000 households per month.  In the interviews, Gallup asked about household business start/stop activity within the past six months, and if any was reported, posed additional questions.

• Americans formed 3.06 million businesses in 1998.  76.3% were started from scratch.  22.1% were purchased.  The remainder consisted of inheritances and other.   

• The number of active owners per business was 1.5.  69.9% percent were started by one active owner without partners, 15.3% by two, 5.6% by three, 8.6% by four or more. 

(The following statistics are for people who started or purchased businesses.) 

• 64.3% were aged 25-44.  64.1% were males. 

• Highest level of education achieved:  6.3% did not have a high school diploma, 22.0% had a high school diploma, 29.8% had some college, 5.4% attended trade or vocational school, 23.9% had a college degree, and 11.6% had a post-graduate degree. 

• Only 19.2% of startups and 37.4% of purchased businesses began as “employer firms”, with an employee other than the owners.  (Overall – 23.1%.) 

• 71.2% of startups and 50.3% of purchased businesses began as home-based.  (Overall – 66.8%.)

• 34% were part-time (no breakdown of startups vs. purchased).  

• The median capital (“owner equity”, “net worth”) for startups was $4,250, purchased $950, overall $3,900.  Definition of “median” -- half started with less and half with more. 

• The average capital (“owner equity”, “net worth”) for startups was $18,582, purchased $16,505, overall $18,113.    

• 12% started with the active involvement of a family member, most often spouses and siblings.  Of those 12%, Spouses were 29.9%, siblings 20.0%, parent 14.5%, child 11.2%, in-law 7.8%, other blood relative 10.2%.  

• 84% were started by people who had not started a business before. 

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Kenneth Daniel ( This email address is being protected from spam bots, you need Javascript enabled to view it ) is a Topeka small business owner and free-lance writer.  He is publisher of www.kssmallbiz.com, a website dedicated to Kansas small business.

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