New businesses bring industry diversity and job growth to a region and are a major engine for economic growth. Research has shown a positive relationship between levels of entrepreneurial activity and economic growth across countries.i
The Missouri Economic Research and Information Center (MERIC) monitors new business formations through the use of its business indicator. The indicator measures unemployment insurance accounts established in the state. This allows MERIC to gauge the number of new Missouri businesses by industry as well as by county.
In 2007, Missouri had 14,842 new business formations, an increase from the 2006 total of 14,513.
Every county in Missouri had new business formations in 2007. The five counties with the highest number were St. Louis County, Jackson, St. Louis, St. Charles, St. Louis City, and Greene. Counties encompassing the metro areas of Kansas City, St. Louis, Joplin, Columbia, and Springfield also had high new business formation counts.
Total New Businesses in Missouri, 2007
Every county in Missouri had new business formations in 2006. The five counties with the highest number were St. Louis County, Jackson, St. Charles, Greene, and Boone. Counties encompassing the metro areas of Kansas City, St. Louis, Joplin, Columbia, and Springfield also had high new business formation counts.
Total business formation tends to be highest in urban areas that have high population density. The map below shows new business starts per 1,000 people for each county in Missouri. This map is useful because it allows business growth to be standardized by population, making it possible to identify rural counties with high business growth.ii
New Businesses in Missouri Counties per 1,000 Population, 2007
Missouri’s new business growth was concentrated in Private Household Employers (14.5%), Professional and Technical Services (11.6%), Administrative and Support Services (8.3%), Specialty Trade Contractors (7.6%), and Food Services and Drinking Places (6.3%). These industries and their definitions are listed below.
- Private Households: Private households engage in employing workers in activities concerned with the operation of households. This includes households that employ cooks, butlers, nannies, housekeepers, and gardeners.
- Professional and Technical Services: Businesses highly dependent on technical skills. Examples include law firms, accounting firms, architectural and engineering firms, and business consulting.
- Administrative and Support Services: Establishments engaged in activities that support the day-to-day operations of other organizations such as cleaning services, general management, and personnel administration.
- Specialty Trade Contractors: Establishments whose primary activity is performing specific activities (e.g., pouring concrete, site preparation, plumbing, painting, and electrical work) involved in building construction.
- Food Services and Drinking Places: Establishments whose activity includes preparing meals, snacks, and beverages to customer order for immediate on-premises and off-premises consumption.
New Businesses in Missouri by Major Economic Sector 2007
i Reynolds, Paul D., Hay, Michael, Bygrave, William D., Camp, S. Michael, and Autio, Erkko. Global Entrepreneurship Monitor(GEM)2000 Executive Report.(Ewing Marion Kauffman Foundation, 2000). http://www.esbri.se/gem-rapport.pdf
ii Population data for calculating per 1,000 population figures uses 2006 population estimates from U.S. Census Bureau.