Nearly one out of every 10 adults owns a business in South Florida — the highest rate among metro areas in the United States. But just 45 percent of the region’s small businesses survive at least five years.
Because of those findings and others, the Miami-Fort Lauderdale metropolitan area ranked 10th in the nation for small business activity in a report released Thursday by the Kauffman Foundation.
Nationally, small business activity is on the rise in 47 of 50 states, including Florida, and in 38 of the top 40 largest metropolitan areas this year, according to the 2016 Kauffman Index: Main Street Entrepreneurship. The Kauffman Foundation, a national nonprofit, researches and supports entrepreneurship.
In South Florida, small businesses make up roughly 90 percent of the economy by many measures. The Main Street Entrepreneurship Index is an indicator of small business activity, focusing on established small businesses and trends in ownership rates. The Index measures the rate of business owners in the economy, as defined by the percentage of adults owning a business in a given month, the rate of business survival, or the percentage of firms in operation throughout their first five years, and established small business density, as defined by the ratio of established small employer businesses compared to the population, all based on the prior year’s data.
The top five metropolitan areas for small business activity as measured by the index were Pittsburgh, Boston, Portland, Oregon, San Francisco and Washington, D.C.
The Miami area ranked No. 10, up seven spots since 2015 (note: the rate of business survival was added to the index in 2016 so the 2015 index data was re-ranked with the new data), and it ranked high in several measures, including No. 1 in the rate of business owners, with 94 business owners for every 1,000 adults. By contrast, the lowest rate was 39 business owners in the Virginia Beach metropolitan area. For the business survival metric, Miami ranked among the bottom five at 45 percent surviving past five years. Orlando ranked the lowest with a 39 percent rate.
The report also showed owner demographic trends in states and metro areas, broken out by gender, age, nativity, race and education. Miami came up in the top five of two lists: Metro areas with the highest rates of older adult business owners (ages 55-64), where it was No. 4; and the areas with the highest rates of young adult business owners (ages 20-34), where Miami was No.1. Miami was No. 3 for the number of female business owners. In the Miami metro area, there are more immigrant-run businesses than ones run by the native born (12 percent vs 8 percent), and Hispanics had the highest level of entrepreneurship among ethnic groups.
Among states, Florida ranked 19th, up two places since 2015’s revamped ranking and brought up by Miami’s strong showing (Tampa-St Petersburg was 28th, Orlando was 37th and Jacksonville was 39th in the index).
The Kauffman Index: Main Street Entrepreneurship is part of a series on entrepreneurship reports; the first report was the Kauffman Index: Startup Activity, in which Miami ranked No. 2 in the nation for 2016 and 2015. In the Entrepreneurship Growth Index for 2016, Miami ranked 39 out of 40. The Main Street report is available at www.kauffmanindex.org.
Nancy Dahlberg; 305-376-3595; @ndahlberg