Entrepreneurship (New)

+4

In 2019, the number of business starts exceeded closures by 4%.

Favorable movement since the last available data

Benchmark: Maine’s ratio of business start-ups to closures will be positive and equal to or above the national average.

Overview Fig. A

Overview

The creation of new businesses is a vital economic activity. Entrepreneurship contributes to innovation, creates jobs, and builds wealth. In a vibrant economy, people have the skills to identify and respond to business opportunities, access to capital, supports for starting and scaling businesses, and connections to human capital.

This entrepreneurship metric, simpler and more focused than in prior years, compares the number of business establishments that are started in Maine each year with the number that close. It includes any establishment with employees covered by unemployment insurance.

Business closures are a part of the “creative destruction” inherent to free market economies and sometimes reflect the personal choices of business owners who retire or move. Business start-ups offset closures and are critical for economic growth. A start-up-to-closure ratio greater than 1 means more businesses are being created than closed each year.

In 2019, Maine’s ratio of start-ups to closures was 1.04, meaning 4% more businesses were create (12,831) than closed (12,548). The U.S. ratio was 1.12.

Fig. A

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Ratio of Business Start-ups to Closures

U.S. Bureau of Labor Statistics