Jessica Kane

Montana Leads the Nation in New Venture Start Ups

Silicon Valley and other heavily populated locales in the United States garner a great deal of attention as being places where a considerable number of new businesses launch. Recognizing this reality, research by the esteemed Kauffman Foundation tells a different story. The Kaufmann Foundation provides a yearly analysis and associated ranking of new venture start up activity in every state.

According to the research and analysis of start up trends in the United States undertaken by the Kaufmann Foundation, the true hotbed of business creation is Montana.

The Start Up Rate in Montana

A key factor taken utilized by the Kaufmann Foundation in considering which parts of the country lead the way when it comes to new ventures is the number of businesses started by adults each month. The business start up rate in Montana is through the roof.

Each month, an average of 540 people, per every 100,000 residences of the state of Montana, start new businesses. This is almost twice the national average, according to the Kaufmann Foundation.

Underlying Causes for High New Venture Rate in Montana

Montana joins Wyoming and North Dakota in having above average start up rates than the national average. Montana does outpace these other two states, however.

Researchers associated with the Kaufmann Foundation believe that the oil boom in the trio of states just mentioned contributes significantly to high rate of new businesses starting up. These three states are all associated with what is known as the Bakken Region. Oil drilling in in the Bakken Region has been undertaken at a frenetic pace. The rush of development in Montana associated with the oil boom is attracting a considerable number of new residents and workers to the state.

Beyond expanding the work force in Montana, the intense activity in the oil industry in the state has spawned the launch of a significant number of new businesses. There are some segments of the marketplace when new business launches have been particularly intense. These market sectors include:

  • restaurants
  • clothing stores
  • day care centers
  • equipment manufacturers
  • transportation companies
  • other types of retail outlets
  • breweries

About the Kaufmann Foundation

In order to understand the reliability of the results of the research undertaken by the Kaufmann Foundation, an understanding of the organization is helpful. The Kaufmann Foundation is a not-for-profit organization headquartered in Kansas City, Missouri.

The Kaufmann Foundation was established in the 1960s by entrepreneur Ewing Kaufmann. Kaufmann himself founded pharmaceutical giant Marion Laboratories with $5,000. Marion Laboratories ultimately merged with Merrell Dow Pharmaceuticals, forming Marion Merrell Dow. Kaufmann was the owner of the Kansas City Royals Major League franchise.

The mission of the Kaufmann Foundation includes advancing entrepreneurship. As part of that effort, the Foundation has been calculating what has become known as the Kauffman Index annually. The Kaufmann Index ranks state and local start-up activity. The Kaufmann Index has been in use for over a decade.

Entrepreneurship in Montana

One of Montana's better known entrepreneurs is Greg Gianforte. He is the founder of RightNow Technologies. His company is considered one of the earliest pioneers in cloud-based enterprise software applications. The company ultimately was sold to Oracle for about $1.5 billion.

In talking about why Montana is appealing to entrepreneurs, Gianforte explained that the work ethic found throughout the state plays an important role. He notes that many Montanans grew up on farms or ranches and began working at these operations at early ages.

In addition to the work ethic exhibited by residents of Montana, Gianforte also notes that the employment scene overall in the state has caused people to be innovative. The job market, even with the oil boom, historically has been rather tight in Montana. This has inspired more than a few people to embark on starting their own business ventures.

The Future of Entrepreneurship in Montana

At least to some degree, the growth in entrepreneurship in Montana is tied in with the oil boom. Petroleum industry experts do believe that the aggressive drilling which is being seen in the state will continue into the near future.

Despite being tied in to some degree with the oil boom, as new business launch, and succeed, in the state, these enterprises themselves provide an additional foundation beyond the oil industry upon which entrepreneurial expansion can be founded. As a basic example, with the growth in the number entrepreneurs starting retail enterprises, an array of associated and complimentary businesses start up as well. These new enterprises are more closely connected to a broader market expansion than merely the petroleum industry.

Jessica Kane is a professional blogger who writes for Faxage a leading company that provides Internet fax service for individuals and businesses.