More Startups, But Fewer Breakthrough


I live in Salt Lake City and I am interested in the vibrancy of our local economy. So far, Utah seems to have weathered the downturn better than many places. In my search to find out what sets Utah apart, I’ve discovered some interesting facts. Utahns are great at starting companies. The number of companies in Utah with less than 5 employees has more than doubled since 1990 to 35,388 in 2006 (latest year data is available from the US Department of Commerce). This represents an annual growth rate of 4.8%, outpacing our population growth of 2.5% annually. Nationally, the annual growth rate in companies of less than five employees was 1.2% during the same period.

Job growth is not driven by startups in Utah. 47% of all new jobs created in Utah between 1990 and 2006 were created by businesses with less than 500 employees. However, almost all of this growth occurred in companies with between 10 and 500 employees (over 42% of all jobs created).

Fewer Utah startups are breaking through the 5 employee barrier. The ratio of companies with 5 to 9 employees to companies with less than five employees has dropped since 1990. In 1990, there was 1 company with 5 to 9 employees for every 2.9 companies with less than 5 employees. In 2006 this ratio had dropped to 1 for every 3.9 companies with less than 5 employees.

Almost all startups have difficulty growing to 5 employees and from 5 to 10 employees. Across the country and around the world, startups struggle to grow. Growth, especially early stage growth, is tough. You need great products, a great team, a great go-to-market approach and value proposition, and enough capital… you’ve got to get everything right, there is very little give.

There are plenty of solutions, but little action. If we all do a little, we can make a big difference. If you come across a small company in need, help them out and then tell them to pay it forward.

Action, PurposeBrett Pinegar