Kansas City’s slow, steady entrepreneurial growth nabs No. 23 ranking

For the second year in a row, Kansas City maintained its rank as No. 23 out of 40 metros in entrepreneurial activity, according to the Ewing Marion Kauffman Foundation’s 2016 Main Street Entrepreneurship report.

The annual report covers the rate of business owners, established small business density, survival rate and more. These metrics are calculated to encompass business activity in all industries and is based on both a nationally representative sample size of roughly 900,000 responses and a dataset covering approximately five million businesses.

While Kansas City didn’t experience a large change in any metric this year, the report offers a compelling view into the area entrepreneurial community.

Rate of business owners

In Kansas City, the number of business owners remained relatively steady — increasing slightly from 6.08 percent to 6.18 percent. In other words, 6 out of every 100 adult Kansas Citians are business owners.

Surprisingly, the rate of Kansas City business ownership is higher than the city that is ranked No. 1 for entrepreneurial activity — Pittsburgh, Pa. — which reported 5.25 percent. Ranked No. 32 overall, St. Louis reported a 5.19 percent rate of business ownership.

In separate analysis by Startland, Latino business ownership considerably increased in the Kansas City metro. Check out more Kansas City demographical information here.  

Established small business density

While there were fewer in 2016, small firms remained a strong majority among the Kansas City business community, according to the report. Small business density in Kansas City decreased from 623 firms in 2015 to 615 firms in 2016.

Small business density measures the number of established small businesses per 1,000 firms. An established small business is defined as at least 5-years-old and with less than 50 employees.

Although St. Louis, Mo. beat out Kansas City on this metric with a small business density of 624.37. Dubbed by the report as the most entrepreneurial metro area, Pittsburgh, Pa. had a density of 694 in 2016.

Survival rate

Kansas City firms are enduring longer, according to Kauffman’s report. The metro area’s survival rate — or firms that have survived their first 5 years of business — grew from 45.1 percent in 2015 to 47.4 percent in 2016.

Despite the growth, Kansas City is still lagging behind Pittsburg, Pa. with a survival rate of 53.78 percent, but is ahead of St. Louis, Mo. at 46.90 percent.

On the national level

With an increase in entrepreneurial activity in 47 out of 50 states and 38 out of 40 metros, this  report indicates the biggest improvement the U.S. has seen since the Great Recession.

Senior research analyst at the Kauffman Foundation Arnobio Morelix said the report provides evidence of America’s rebound in small business activity and shows that it continues to strengthen.

“More new businesses are making it through their first five years of operation,” Morelix said in a release. “While this could indicate that a lack of dynamism is allowing less productive firms to hang on longer, overall the entrepreneurial increases bode well for the established, small businesses that underpin much of our economy.”

For more on the report click here.