Useful Stats: State Business Churning Rankings, 2000-2006

Using data from the Small Business Administration's Office of Advocacy, SSTI has prepared a table showing how each state (and the District of Columbia) has ranked in business churning over the past seven years. Business churning is a measure of the creation of new companies and the death of existing companies as a share of total firms (small businesses with employees). Churning increases as the number of new start-ups and existing business failures per year increase. A high level of business churning can be a major driver of innovation and growth, since it can indicate the presence of entrepreneurial activity and the transition to new industries.

 

Over this period, Nevada, Utah and Washington have consistently occupied the top three spots, though they have traded places. Colorado and Arkansas have shown the most relative improvement, with Arkansas rising from 50th in 2000 to 16th in 2006. Maryland, Idaho and Tennessee were also consistent top performers.

 

South Dakota, Ohio, Connecticut and Wisconsin, on the other hand, continue to occupy the bottom tier. California fell from fifth place to 32nd over this same period.

 

Arizona's rank for 2006 is not reported in the table, due to data issues. The SBA data pointed to an unusually high number of business deaths that, according to the Office of Advocacy, may have been caused by reporting errors.

 

SSTI's table is available at: http://www.ssti.org/Digest/Tables/013008t.htm

 

Additional SSTI tables showing state business churning statistics are available for 1998-2001, 2002-2003 and 2004.