Startup Boom Continues, in Lane County and Beyond

October 10, 2024

Many trends emerging from the 2020 recession took people by surprise, but one of the most unexpected was an increase in new business formation. In a time of great economic uncertainty, few people were expecting to see a generational increase in business startups.

But that’s precisely what happened. After several decades of historically low startup rates, the last four years have seen a general and widespread increase in new business applications. That trend hasn’t shown much evidence of slowing down: according to the U.S. Census Bureau’s Business Formation Statistics, 2023 was another high water mark for new business formations in the U.S. and Oregon.

Data on new business startups is available on an annual basis down to the county level across the United States. The Census Bureau estimates that there were 4,076 applications for new businesses in Lane County in 2023, a 90% increase from the level seen in 2005. That far exceeds our population growth during that period.

While the growth has been substantial, it’s not unique to Lane County – Oregon saw nearly the same percentage growth. Like the state, Lane saw a significant increase in applications in 2021, and has sustained that higher level of business formation in the years since.

The Business Formation Statistics data are drawn from IRS forms signaling new business incorporation, and there are a number of statistics and visualizations available from the Census Bureau to answer all kinds of questions. For example, national data show that the industries with the strongest growth rates, particularly in recent years, have been retail, accommodation and food services, transportation and warehousing, and professional services, with new business formation growing 60% in each of these sectors from just 2019 to 2023. The growth is widespread, however -no industry saw fewer applications during that time.

The characteristics of these new businesses are also somewhat different than 20 years ago. The number of “high-propensity” applications, which are those most likely to translate into payroll employment, has stayed relatively static. Their portion of the total is now less than a third of applications in Oregon, compared with 55% in the mid-2000s. Two key reasons for that finding are that fewer applications are started by corporations, and fewer have planned wages included in their application.

Whether the lack of growth in high-propensity businesses is bad news is somewhat a matter of perspective. Taken together, the industry and propensity data, as well as the fact that the growth is widespread, indicate a general turning point in entrepreneurship growth. That’s likely to be positive news in almost any scenario, since new business formation tends to be among the most consistent sources of job creation.

Starting a business is almost always a risky venture, with lots of personal, human, and financial capital invested. Let’s hope the new businesses we see forming now in Lane County and beyond continue to thrive and expand as they move from startup to established business.