Prepared For

Ewing Marion Kauffman Foundation

The stability and evolution of the American economy depends on entrepreneurship that drives the creation of new businesses, jobs, and innovations. Yet launching and running a business can involve many challenges, and many efforts fail in their early years. These barriers to success are likely to lessen our nation's long-term prosperity in an increasingly competitive global economy.

The Kauffman Firm Survey aimed to help new business owners overcome start-up challenges and build innovative, growing companies. Mathematica conducted the study, sponsored by the Ewing Marion Kauffman Foundation, to help the foundation with its mission to promote new business development. The study sampled businesses from the Dun & Bradstreet Corporation database that started operations in 2004. Mathematica surveyed the principals of 4,928 businesses starting in 2004 and then recontacted them annually from 2006 to 2008. The survey used a multi-mode design, including a web survey and computer-assisted telephone interviewing follow-up.

Mathematica achieved a 43 percent response rate in the baseline survey, and the response rates to the seven follow-up surveys were all well above 80 percent. Results from the Kauffman Firm Survey from 2004 through 2008 found that young businesses saw major impacts from the economic crisis and relied more on external debt markets as the single largest source of financing. Firms surviving through 2008 were much more likely than firms that exited during the period to have primary owners older than age 45 and increase the number of employees. Compared to previous years, a larger percentage of surviving firms had assets of more than $25,000. In addition, more surviving firms made investments in intangible assets. Although the high-tech sector comprised only a small percentage of the firms, these firms were more likely than nontech firms to have employees and were larger in sales and assets.


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