Fewer entrepreneurs took the plunge and started new businesses across America in 2012, according to statistics from a Kauffman Index of Entrepreneurial Activity report released in April.
Despite the drop nationwide, Montana rose to the top of the list as the No. 1 state for entrepreneurial activity in 2012. Kauffman data show Montana has an entrepreneurial index of 53 percent, meaning 530 out of 100,000 adults here created a new businesses each month during 2012.
Entrepreneurs in western Montana see the top ranking as a sign that mobilization to connect entrepreneurs as well as the continued emergence of tools and technology to help good ideas grow into good businesses are working.
“The Kauffman report shows there is a lot of neat stuff going on here, it shows that there are some creative, cool people doing some neat things here,” said Cameron Lawrence, who oversees the Montana Academy of Distinguished Entrepreneurs program at the University of Montana’s School of Business Administration.
To help showcase the activity, Lawrence helped found Montana Uses This (mtusesthis.com), a website that features Montana entrepreneurs and their successes.
The site shares stories of Montana entrepreneurs and includes examples of how technology is used to help jump-start an entrepreneur’s ideas and turn them into a business.
Lawrence shares the stories with his business students to help them see who, how and what can help.
“A lot of kids ask, what can I do? What’s going on around me? (Montana Uses This) can be a trigger for them to reimagine new possibilities,” Lawrence said.
According to Kauffman data, Montana percentages for entrepreneurial activity have hovered in the high 40s for the past several years.
The other top states with top entrepreneurial activity in 2012 are Vermont (520 per 100,000 adults), New Mexico (520 per 100,000 adults), Alaska (430 per 100,000 adults) and Mississippi (430 per 100,000 adults).
The state with the lowest ranking was Minnesota, with 150 out of 100,000 creating new businesses.
The Kauffman Index measures the monthly business-creation rate at the individual owner level, reporting the percentage of non-business-owning adults who start businesses with more than 15 hours worked per week. It uses data from the Current Population Survey produced by the U.S. Bureau of the Census.
Nationwide, entrepreneurship rates declined .04 percent among men and fell for all race and ethnicity categories, the report said.
The overall drop in entrepreneurial activity was likely caused by improving labor market putting less pressure on individuals to start businesses to make their own way. The 2012 level was on par with pre-recession levels, Dan Stangler said in a news release. Stangler is the director of research at the Ewin Marion Kauffman Foundation.
Dawn McGee, an entrepreneur who helps fund startups through Goodworks Ventures LLC, hopes Montana’s No. 1 ranking helps highlight for the rest of the country that good things are happening around Montana.
McGee pointed the work from organizations like Missoula Economic Partnership’s Innovation Initiative, the work of Montana Community Development Corp. and the popularity of events like StartUp Missoula, a weekend where entrepreneurs pitch, refine and work in teams on business ideas, as important factors in helping spur entrepreneurial activity in Montana.
“I think it is a collaboration,” McGee said.
McGee and fellow entrepreneur Paul Gladen started Hellgate Venture Network in 2009 to help entrepreneurs network. Their monthly meetings are attended by upward of 70 people, McGee said.
Starting conversations between people with good ideas is crucial to helping them solve problems and get businesses off the ground, Gladen said.
“When people think about startup or entrepreneurial activity, they think about Silicon Valley and places like that. What makes those places work is they’ve got a high concentration of like-minded people who can connect. We need to do as much as we can to facility those connections” in a state like Montana with a widely dispersed population, Gladen said.
Gladen moved from New York to start his research and consulting firm Muzeview in Missoula in 2008. Muzeview helps “professional services” companies, like law or accounting firms, use marketplace data to improve their business plans.
The Internet and other technologies allow Muzeview to operate from Montana even when all its clients are out of state.
The Kauffman study “gives me the sense people are feeling they can start an entrepreneurial venture here,” Gladen said. “They don’t have to leave to start a company.”