Starting your own business may seem like a dream come true and be incredibly daunting at the same time. When deciding to form a legal business entity, timing can be everything. According to a recent article in the Birmingham Business Journal, many entrepreneurs have decided that now is the time. The article notes that mid-market companies are on the rise in Alabama.
Middle Market Businesses In Alabama
What is a ‘middle market business’? A middle market business is generally defined as a company with between $10 million and one billion dollars in annual revenues. The Birmingham Business Journal points to a study conducted by American Express, which indicates that middle market businesses in Alabama grew 80 percent between 2011 and 2016. Our state is now home to an estimated 2,500 middle market businesses.
Nationally, middle market firms are very important for job creation. The American Express study found that middle market companies are responsible for a whopping 53 percent of job growth across the nation since 2011. Additionally, mid-market companies employ approximately 25 percent of the American workforce. Although Alabama’s middle market saw huge growth from 2011 to 2016, other states saw even greater growth and therefore Alabama’s growth is ranked 31st nationwide.
New Business Creation Across The Country
Milwaukee’s Journal Sentinel recently reported that new business growth in the United States is very imbalanced geographically. Statistics in support of this statement indicate that between 2010 and 2014 only 2 percent the nation’s counties saw 50 percent of the nation’s total job growth. Additionally, out of the approximately 3,000 counties in the United States, 50 percent of the new businesses started during this time period were clustered in only 20 counties. The article notes that counties with the highest rates of new business formation and job growth included Chicago, Dallas, Houston, Los Angeles, Miami, Minneapolis, San Francisco, and Seattle.
Why are the majority of new businesses and new jobs clustered geographically in such a limited number of counties? While there are undoubtedly many factors that have contributed this the phenomenon, a study from the Economic Innovation Group notes that access to capital is at least partially to blame. Currently, prosperity geographically correlates strongly with the location of venture capitalist investment firms in ‘knowledge economy cities’. Venture capitalists have the ability to fund companies that would not otherwise have the resources necessary to get off the ground. Additionally, venture capitalists are particularly important today because many entrepreneurs are not financially able to secure a business loan from a bank. Many potential business owners lack the capital to fund their own businesses because they lost home equity when the housing market bubble burst and/or because young Americans owe billions of dollars in student debt.
How Can We Help?
If you are interested in starting your own business it is a good idea to consult with a competent attorney who can lead you through the business entity formation process from start to finish. The experienced corporate lawyers at Cloud Willis & Ellis, LLC have offices in Birmingham (205-322-6060) and Mobile (251-545-4844) and are happy to assist you.