ENTREPRENEURSHIP IN MONTANA: Montana Leads the Country in Business Ownership.

• Author: Bridge, Brandon
• Position: TRENDING

Montana has a strong entrepreneurial spirit. The state has more entrepreneurs per capita than any other state and a business survival rate (businesses that survive their first five years) that ranks in the top 10. Some 3,400 Montanans start a new business each month, and more than half of those startups are still open five years later. To put it simply, Montana is among the nation's leaders in entrepreneurship.

For several years, the state has ranked at or near the top of the Kauffman Index of Entrepreneurship, which is a leading indicator of new business creation. But Montana's entrepreneurial culture is waning--a trend that's consistent nationally. The share of Montanans who own a business as their main job has fallen nearly 50 percent since 1998. Similarly, the share of Montanans who work for young businesses has fallen from roughly 20 percent in the 1990s to 12 percent in recent years.

Entrepreneurs are a necessary part of the economy. As industries wax and wane, it's entrepreneurs who fill the gap --they see a downturn and some capacity that's going unutilized and figure out how to use it. And because entrepreneurs tend to run small businesses, they are able to quickly adjust to inevitable changes.

But a big difference between Montana's entrepreneurs and those in other parts of the country is that startups in Montana tend to stay small and are less likely to scale up. The average size of a new firm is the lowest in the country, with an average of three employees compared to six nationwide.

A recent study on entrepreneurship by the Bureau of Business and Economic Research at the University of Montana found some positive signs of success, as well as some weaknesses in what would seem to be a robust entrepreneurial ecosystem.

Indicators of Success

1. Montana has more entrepreneurs.

   The share of Montana's population that owns a business is the highest in the country. In 2015, more than 10 percent of Montanans owned a business as their main job (Figure l). Nationally, only 6 percent of Americans owned a business as their main occupation, and the rate of business ownership in Montana was more than double the rate found in 11 states.

2. Montana creates more entrepreneurs.

   Consistent with its high rate of business ownership, Montanans become entrepreneurs at a higher rate. 3,400 Montanans start a business each month, ranking the state 4th in 2016 and 1st from 2013 to 2015.

3. New Montana firms survive.

   The five-year survival rate for new Montana...