Report says Montana friendly to entrepreneurs

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Montana is one of the better places to be an entrepreneur, a new report reveals.

The Montana Chamber Foundation released its State of Entrepreneurship report last week during the 13th annual Economic Update Series at the Hilton Garden Inn in Kalispell.

Bryce Ward, founder of ABMJ Consulting, presented on the report during the conference. Patrick Barkey, Director of the Bureau of Business and Economic Research at the University of Montana, also gave a talk on the current economic outlook for the United States and Montana.

During his presentation, Ward noted Montana has a high rate of entrepreneurs compared to other states. As of 2015, 10.2 percent of Montanans owned a business as their main job, compared to 6 percent nationwide.

“The good news about the entrepreneurial emphasis in Montana is this — we produce a ton of entrepreneurs, and the entrepreneurs that we produce are more likely to succeed,” he said.

Likewise, in 2016 51.8 percent of Montana firms formed five years prior were still in operation. Montana ranked ninth in the nation in that metric.

Montana is also a fruitful place when starting out, he said.

“On average, about 4,000 Montanans become entrepreneurs each month,” Ward said. “Put it all together and it’s pretty good. We create a lot of seeds, those seeds germinate and tend to survive.”

However, the state of entrepreneurship in Montana isn’t all good news.

The average new employer business, meaning a firm less than one year old with employees, in Montana has just 3.9 employees, the smallest among all state.

And 20 years ago, one in five Montanans worked for a firm that was less than five years old while one in seven owned their own business as a main job. Those numbers have dropped to one in eight working at young businesses and one in 10 owning businesses, 42 and 28 percent declines.

“Our firms are small, they’re less likely to scale up to anything big, they don’t have a lot of high growth and they tend to be very local,” Ward said.

During the Economic Update Series, Barkey gave his thoughts on how Montana is doing economically in comparison to the rest of the nation, which is looking solid after strong second-quarter growth numbers.

Barkey said 2018 has been a break from how he’s presented on the economy in the past.

“One of the things we should be paying attention to, I think, is that very quietly and very importantly the story of U.S. economic growth is changing before our eyes,” he said.

Barkey noted how the idea of waiting for better growth “next year” has been replaced by second quarter growth numbers over 4 percent. While in the past labor shortages have plagued the economy, now the labor force is registering meaningful growth. And the old seller’s market of real estate is changing as housing inventories creep upward, he said.

In Montana, it’s a tale of east versus west.

“We have all this strong job growth, we obviously have tight labor markets, and we have — at least in western Montana — this notion that construction trades are everywhere, and yet if you look at the entire state, the eastern third of the state is very quietly suffering,” he said. “It’s been a very hard time for agriculture producers, as we know.”

Flathead County is a bright spot on the statewide map.

The county posted a 3.6 percent real payroll wages increase, second to Gallatin’s 5.1 percent, between the first quarter of 2017 and 2018.

The Flathead is also the second-best county as far as job growth in 2017 and thus far in 2018.

As far as state general fund revenue collections, 2018 has had a 9.5 percent increase over 2017’s $2.1 billion to about $2.3 billion.

The increase is good, Barkey notes, but not great.

“The story for state revenue has been kind of a gloomy one up until this year. A year ago we were looking at stagnation. General fund revenues for three straight years stuck at $2.1 billion. That’s a really remarkable bad piece of information for economy,” he said. “To me, it’s like coming home to your parents and saying, ‘Hey, I raised my grade in math two full letter grades, and now I’m at a C.’ It’s a little bit of that, but we’ll take it.”

The full State of Entrepreneurship report below are available at

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