As drivers of innovation, entrepreneurs are key to a thriving economy. Yet the startup ecosystem lacked a timely measure of its relative health and a way to gauge its directional trends. Enter the Inc. Entrepreneurship Index, a new economic indicator that monitors the condition of the U.S. startup economy in a data-rich analysis expressed in a quarterly score.
The latest reading of the Index, clocking in at 85 for 2018's second quarter out of a total score of 100, shows U.S. entrepreneurial activity staying fairly steady. The number represents an ebbing from a score of 87 in the first quarter, continuing an easing from its 2014 high. This metric reflects the persisting challenges that small-business owners face in the tight hiring market, even as access to capital opens up for them, as Inc. data scientist Arnobio Morelix, explains in his column.
How do we take the pulse of the startup economy? The enterprises are, by their nature, modest in scale, large in number, widely dispersed, and independent, hammering out each day unfettered by a stock ticker. Even so, small businesses quietly account for 99.7 percent of U.S. employer firms, create two of every three new jobs, and bring in about half the U.S. nonfarm gross domestic product.
The Inc. Entrepreneurship Index tracks three main factors: the business-ownership rate, access to capital, and small-business job growth. Inc.'s data partners include payroll services company Paychex and business lending platform Biz2Credit.
The Index score is tabulated by analyzing government data covering 60,000 households and 180,000 people, payroll records in aggregate for more than 350,000 businesses, and aggregate financial records covering thousands of companies. The over one million quarterly data points are distilled into a single score. Read more about how the Inc. Entrepreneurship Index is calculated: The Methodology and Data Driving the Inc. Entrepreneurship Index.