Missouri Sees Sustained New Business Formation

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 sustained business formation. The 2004 numbers show a total of 14,906 new businesses in the state compared to a total of 14,930 in 2003.

New Business in Missouri, 2004

Every county in the state of Missouri saw new business starts in 2004. 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 Business in Missouri Counties per 1,000 Population, 2004

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 and Sullivan and Chariton counties are also experiencing high business formation compared to the average new business formation rate for Missouri which was 2.66 new businesses per 1,000 population in 2004.

Missouri's new business growth was concentrated in Private Household Employers, Professional and Technical Services, Specialty Trade Contractors, Food and Drinking Services and Administrative and Support as defined by the North American Industry Classification System. These industries and their definitions are listed below. A complete list by detailed industry sector is included in Appendix II.

        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: these businesses are highly dependent on technical skills. Examples include law firms, accounting firms, architectural and engineering firms, and business consulting.

        Specialty Trades 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.

Appendix I

Appendix II

New Business in Missouri by Detailed Industry Classification
2004

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). http://www.entreworld.org/Bookstore/PDFs/RE-027.pdf.