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Increasing Expectations of an Improving Economy Keep Startup Business Owners’ Confidence High

With expectations of an improving economy steadily increasing, the nation’s newest business owners’ confidence remained high in first-quarter 2014, according to the Kauffman/LegalZoom Startup Confidence Index. The survey data, released today by the Ewing Marion Kauffman Foundation and LegalZoom, showed that 91 percent of these entrepreneurs were confident or very confident that their companies’ profitability would increase in the next 12 months. This result remains constant from the fourth-quarter 2013 survey, and thereby matches the highest level expressed in any of the previous surveys.

“While entrepreneurs in general are considered optimistic by nature, it’s encouraging to see founders of new startups have this level of high confidence for twelve months straight,” said Dane Stangler, vice president of Research and Policy at the Kauffman Foundation. “Perspective is everything. We need new firm creation to grow our economy, but people aren’t going to start companies if they don’t feel good about their business prospects.”

Leading the way were the youngest entrepreneurs. Eighteen- to 30-year-olds and 31- to 40-year-olds expressed 97 percent and 95 percent confidence levels, respectively. This is an increase of 3 percentage points from last quarter for the 18- to 30-year-olds and level for the 31- to 40-year-olds.

Startup owners showed increased confidence in the U.S. economy and a larger percentage said they planned to hire in the next 12 months. Eighty-two percent are confident the economy will improve or stay the same in the next 12 months, an increase of 3 percentage points over the fourth-quarter survey. Anticipation of growing consumer demand remained constant, with 55 percent of entrepreneurs saying they believe consumer demand will increase moderately or significantly in the next 12 months, which matches the highest number in any of the 2013 surveys. Plans to hire additional employees also rose, from 43 percent in the fourth quarter to 45 percent in the first-quarter 2014 survey.

“Since we began our survey, we’ve seen a fair amount of volatility quarter to quarter,” said John Suh, CEO of LegalZoom. “Over the last twelve months, confidence has stabilized at historic highs around anticipation of increased consumer demand and intent to hire.”

The Kauffman Foundation sponsors the Startup Confidence Index surveys in conjunction with LegalZoom, a leading national provider of online legal solutions and legal plans to young companies.

The first-quarter findings are based on 1,912 responses to a nationwide, April 2014 survey distributed via email to LegalZoom customers who formed their entities within the last six months. The Index is conducted quarterly to gauge entrepreneurial confidence.

View the Kauffman/LegalZoom Startup Confidence Index infographic. Follow the conversation online at #startupconfidence.

About the Kauffman Foundation

The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that aims to foster economic independence by advancing educational achievement and entrepreneurial success. Founded by late entrepreneur and philanthropist Ewing Marion Kauffman, the Foundation is based in Kansas City, Mo., and has approximately $2 billion in assets. For more information, visit www.kauffman.org, and follow the Foundation on www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.

About LegalZoom.com, Inc.

LegalZoom is the nation's leading provider of personalized, affordable online legal solutions for families and small businesses. Founded more than 12 years ago by attorneys with experience at some of the top law firms in the country, LegalZoom has helped over two million Americans become protected with binding legal documents. Although LegalZoom is not a law firm, it can help people access an attorney through its legal plans. The company has offices in Austin, Glendale, and Mountain View. For more information, visit www.legalzoom.com.

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