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Importance of Small Business in Job Creation

As a part of their “The Startup Revolution” series, the Compass Blog published “The Rise of the Startup“. It makes for fascinating reading.In particular they point to a study by the Kauffman Foundation in 2010. That study revealed that: over the past 28 years – startups were responsible for all net new jobs in the United States. In 21 of those 28 years, the startup class was the only class of business to create net new jobs.

According to their blog there are 4 key reasons for the rise of the startup:

  1. startups can be built for thousands, rather than millions of dollars
  2. emergence of new types of investors:  angels, accelerators and micro-VCs
  3. entrepreneurship developing its own management science
  4. speed of consumer adoption of new technology

Of course the Kauffman study shows that startups have been important in job creation for at least 28 years. If that’s true then those 4 factors may not explain the rise of startups, but rather how our economy is adapting to their importance.

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