Launch Magazine - Fall 2007 - (Page 22) By Colin Kelly Jr. LOOK BEFORE YOU LEAP Why Does Utah Have a High Business Turnover Rate? In its “2007 State New Economy Index,” the Kauffman Foundation ranked Utah No. 12 overall in the nation and the No. 1 state in its economic dynamism category. One of the six factors relating to Kauffman’s economic dynamism rating is the degree of “churn” in the state’s economy. Kauffman defines churn as, “A product of new business startups and existing business failures.” Churn can be a good or bad thing depending on how you look at it. Obviously, if you’re one of the business failures contributing to the churn, you don’t think churn is a good thing. However, an active churn rate means a vibrant economy (as long as the churn is associated with positive job growth). Luckily for us all, Utah is currently in the middle of an economic boom. At the time of the writing of this article (August 2007), Utah has the fastest job growth (4.5 percent) and lowest unemployment rate (2.6 percent) in the nation. Utah also has the second highest growth rate in the nation (7.6 percent) for self-employed individuals. The latest data (2005 numbers) places the number of selfemployed Utahns at 175,121. “You have to look at the picture on the whole,” says Jason P. Perry, executive director of Utah’s Governor’s Office of Economic Development (GOED) and former deputy director of the Utah Department of Commerce. “As long as you have high job growth with lots of opportunities, there is churn. If at some point you have low job growth and lots of churn, then it becomes negative and a reason for concern.” Richard Nelson, president and CEO of the Utah Technology Council, agrees. “Technology and life science companies in Utah are being created at the rate of 10 percent more per year right now,” Nelson says. “While it causes pain for the people who go out of business, right 22 launch fall
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