MERIC NEWS LETTER

Missouri New Business Formations Increase in 2005

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.1

The Missouri Economic Research and Information Center (MERIC) monitors business formations through the use of its new 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.

Year-end statistics on new businesses in Missouri show increased new business formation in the state during 2005. In 2005 there were a total of 15,995 new businesses formed in the state, up from 14,906 in 2004.

Total New Business in Missouri, 2005

Every county in Missouri had new business starts in 2005. The five counties with the highest number of new businesses were St. Louis County, Jackson, St. Charles, Greene, and St. Louis City. The counties encompassing the metro areas of Kansas City, St. Louis, Joplin, Columbia, and Springfield also had a high number of new businesses.

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.

New Businesses in Missouri Counties per 1,000 Population, 2005

The map shows that traditional tourist areas such as Taney County (Branson) and Camden County (Lake of the Ozarks) are experiencing high business growth relative to the population in the area. The southeast region of the state is also experiencing high business formation compared to the average new business formation rate for Missouri of 2.77 new businesses per 1,000 population in 2005.

Missouri's new business growth was concentrated in Private Household Employers (16.0%), Professional and Technical Services (11.0%), Specialty Trade Contractors (8.8%), Administrative and Support Services (6.7%) and Food Services and Drinking Places (6.5%). 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.

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.

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.

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.

See a complete list of new business formations by industry.

1Zacharakis, Andrew L., William D. Bygrave, and Dean A. Shepard. Global Entrepreneurship Monitor (GEM) 2000 Executive Report (Kansas City, MO: Ewing Marion Kauffman Foundation, 2000).                                         

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