Oregon Sees Surge in New Businesses, Signaling Economic Renewal
State economists view the significant increase in new businesses as a positive sign for Oregon’s economy.
In a promising development for Oregon’s economy, the number of new businesses in the state has surged by over 30% compared to pre-pandemic levels, according to recent federal data. State economists consider this increase to be a sign of renewal and innovation. The rise in new businesses not only offsets the economic challenges posed by slow population growth but also injects vitality and dynamism into the local economy. This article delves into the reasons behind this surge, explores the potential benefits of new business growth, and examines the factors contributing to their success.
The Rise of New Businesses:
Oregonians started a remarkable 14,000 new businesses in 2022, a significant jump from the annual average of 10,600 between 2017 and 2019. Josh Lehner, from the Oregon Office of Economic Analysis, asserts that this surge in new businesses is a positive long-term driver of innovation. Lehner emphasized this point during a recent meeting with state lawmakers, highlighting the importance of new businesses in fostering economic growth and job creation.
The Benefits of New Businesses:
Lehner explains that new businesses are often more innovative and agile compared to established ones, as they are less burdened by bureaucratic inertia. Additionally, the growth in new businesses increases the likelihood of some of them evolving into major employers and economic powerhouses. Lehner uses the analogy of “ping-pong balls in the hopper,” suggesting that the more new businesses emerge, the greater the chance of significant economic growth and development.
Survival Rates and Demographics:
While business bankruptcy filings are at an all-time low, the number of businesses that survive their first year has recently declined both in Oregon and across the country. However, the growth in new businesses is outpacing the rate of business failures, resulting in a net increase in successful new businesses. Lehner attributes this growth to the entrepreneurial spirit of individuals in their 30s and 40s, noting that as the millennial generation ages into this demographic category, it makes sense for new business formation to rise.
Funding and Venture Capital:
Surprisingly, the surge in new businesses comes amid a steep decline in venture capital, which has halved in the past two years. Venture capital is often crucial for ambitious entrepreneurs seeking to rapidly transform their startups into significant enterprises. However, Lehner points out that most new business owners do not rely on venture capital. Instead, they fund their ideas through personal savings or credit card debt. Rising incomes and home values have made it possible for many aspiring small business owners to self-fund their ventures.
Conclusion:
The surge in new businesses in Oregon is a positive sign for the state’s economy, indicating a renewed sense of innovation and entrepreneurial spirit. Despite a decline in venture capital, individuals are taking the initiative to start their own businesses, driving economic growth and job creation. State economists believe that the increase in new businesses will contribute to the state’s long-term economic development and foster innovation in various sectors. As Oregon continues to navigate the post-pandemic landscape, the rise of these new businesses offers hope and resilience for the future.