Entrepreneurs’ Economic Confidence Slipping While Older Entrepreneurs Maintain Optimism, Says Kauffman/LegalZoom
Optimism for the economy exists between older entrepreneurs and those between 18 and 40 years of age.
By Angie Chang (Co-Founder & Editor-in-Chief, Women 2.0)
According to the third-quarter Kauffman/LegalZoom Startup Confidence Index released last month, expectations for the U.S. economy declined overall while significant optimism emerged between older entrepreneurs and those between the ages of 18 and 40.
The study found that almost 40% of startup founders believe the economy will deteriorate over the next year, an increase from 36% in the second-quarter survey and 31% in the first-quarter survey. Entrepreneurs who were somewhat confident in future profitability fell from 43% in second quarter to 40% in the third-quarter survey, and those who lacked confidence in improved profitability edged up from 18% to 21%.
The silver lining lives in the 98% of the 18- to 30-year-olds and 83% of the 31- to 40-year-olds who are confident or very confident that their businesses will realize greater profitability in the next year.
“Entrepreneurs require persistence and fortitude,” said John Suh, CEO of LegalZoom. “It is encouraging to see that nearly 100% of younger entrepreneurs are confident in their future profitability, and this conviction has not been affected by the current economic climate.”
“While overall confidence has fallen, it is encouraging that these businesses have decided to start up in the first place even amid continuing uncertainty over the macro-economy,” said Dane Stangler, director of research and policy at the Kauffman Foundation.
39% of entrepreneurs reported being very confident in future profitability, which stayed constant from the second quarter.
Entrepreneurs are also becoming increasingly pessimistic about consumer demand. In the most recent survey, one-third said they expect moderate to significant deterioration in consumer demand in the next 12 months – 6% more than in the second-quarter survey and 8% more than in the first-quarter survey.
30% of startup owners said they plan to hire additional staff in 2012, a slight decrease from 33% in the March survey.
The Kauffman Foundation sponsored the survey in conjunction with LegalZoom, the nation’s leading provider of online legal document services and legal plans to young companies. The findings are based on 698 responses to a nationwide, June 2012 survey distributed via email to LegalZoom customers who formed their entities within the last 12 months. The Startup Confidence Index is conducted quarterly to gauge entrepreneurial confidence. The next survey will be conducted in October 2012.
Women 2.0 is hosting a conference on the new entrepreneur economy on November 14, 2012 in New York City – get your early bird ticket by August 31, 2012 to hear women entrepreneurs and investors talk about how they are taking advantage of our current economic recession to grow their businesses.
Angie Chang co-founded Women 2.0 in 2006. She currently serves as Editor-In-Chief of Women 2.0 and works to mainstream women in high-growth, high-tech entrepreneurship. Previously, Angie held roles in product management and web UI design at various Silicon Valley startups. In 2008, Angie launched Bay Area Girl Geek Dinners, asking that guys come as the “+1” for once. Angie holds a B.A. in English and Social Welfare from UC Berkeley. Follow her on Twitter at @thisgirlangie.