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Silicon Valley small business activity not keeping up - Kauffman Foundation Report

Updated: Nov 7, 2023

The San Francisco Bay Area (and Silicon Valley in particular) is known worldwide as a hotbed of entrepreneurship and small businesses. However, some recent data suggests that small businesses here may not be keeping up with small businesses in other regions in the U.S.

While it’s hard for small businesses to survive anywhere, it seems to be a bit more difficult in Silicon Valley. According to a new report from the Kauffman Foundation, the small business survival rate (i.e., the percentage of small businesses making it to their fifth year of operation) for the San Jose metro area (including Santa Clara and San Benito counties) is only 47.5 percent versus the national average of 48.7 percent.

This same survival rate for small businesses for the combined San Francisco / San Mateo County / East Bay is a much higher 50 percent.

A related statistic tracks the rate of small business ownership among adults. In San Jose, 5.9 percent of adults own a business, which is down from 6.3 percent previously. This statistic is much higher also for the San Francisco / San Mateo County / East Bay metro area with 7.5 percent of adults owning a business.

Similarly, in terms of small business density, only 59.3 of all business in the San Jose area are small businesses. In the San Francisco / San Mateo County / East Bay metro area, 62.5 percent of all businesses are small businesses.

It appears that challenges and competition continue to increase for small businesses locally. More than ever, it's important for small business owners and CEOs to adapt to changing conditions. Your friendly neighborhood CFO is crucial to helping you navigate these treacherous waters.

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