UHY International Study Shows USA Trailing Behind in Global Growth League for New Business Start-Ups

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Number of new businesses up just 11% since 2010; falls behind other G7 economies in new business creation

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According to a recent study by UHY International, new business creation in the USA is trailing behind the global average, with the number of new businesses created up just 11% since 2010,* shows a new study by UHY, the international accounting and consultancy network.

The global average increase was 26%, between 2010 and 2014.

The research revealed that the number of new companies created in the USA increased from 505,473 in 2010 to 561,488 in 2012, the last year for which figures are available.

UHY says that this rate of acceleration is slower than in many of its G7 rivals.

China came top in the study, with start-up growth almost doubling (up 98%) in 2014 since 2010 despite its economic slowdown. The United Kingdom was ranked second, with a 51% increase in the number of start-ups, with India third (with a 46% increase).

The BRIC economies (Brazil, Russia, India, and China) averaged a 42% increase in the number of new businesses created over the same period, while the G7 averaged a 31% increase.

UHY’s study shows that Western European economies tended to see a bigger increase in the number of new business ‘births’ compared to other developed economies. The UK, Italy, Germany, and France all had increases in the number of new businesses higher than the G7 average.

By contrast the increase in new business creation over the period was 7%. Australia also beat the G7 average, with a 41% increase in the number of new businesses created.

UHY says that bureaucracy, regulatory hurdles, and restricted access to bank funding are behind the low rate of new business creation.

UHY adds that the US Government has, however, begun taking steps to alleviate the pressures facing new businesses and reduce business taxes. In June 2015, it launched the “Start Up in a Day” scheme designed to shorten the amount of time needed to start a business.

UHY says that policymakers in the USA could learn from steps taken by many European countries to encourage business creation after the financial crisis and recession. Common measures included changes designed to reduce the amount of tax due from start-ups and small companies, and to simplify the bureaucratic burden.

Many countries have also experienced an explosion of alternative finance providers, which has helped improve start-ups’ access to finance. It is estimated that non-bank funding now accounts for 30% of finance provided to companies across Europe.** An estimated €3 billion of European non-bank funding now takes the form of peer-to-peer lending, crowd-funding and other new models.

UHY points out that to sustain growth in the number of new businesses being created, as well as to manage the global impact of the slow-down in the Chinese economy, governments cannot afford to slow the introduction of more business-friendly policies.

Comments from UHY member firm UHY Advisors: “The next few years are not going to be without their own challenges, and governments both here and globally need to find ways to help these new start-ups to grow into successful businesses and even the next generation of multi-nationals.”

“In many Western economies there is still a long way to go in cutting down on bureaucracy. In the USA, for example there is a need to look at simplifying the occupational license system, so entrepreneurs and employees are not deterred by the potentially high costs of obtaining a license.”

“Significantly, the slower rate of acceleration in the USA also reflects the fact that the country has always been a free enterprise economy. In contrast, China is playing catch-up in business creation as the Government begins to open the market up.”

“Alternative finance has been a major bonus to start-ups. As it grows in importance and profile, regulators face the significant question of how to find a balance in their regulatory approach to the sector that gives confidence to potential investors, but does not stifle innovation.”

See attached chart for figures.

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UHY LLP, a licensed CPA firm, provides audit and other attest services to publicly traded, privately owned and nonprofit organizations in a number of industry sectors. UHY Advisors provides tax and advisory services to entrepreneurial and other organizations, principally those enterprises in the dynamic middle market.

UHY LLP, operating in an alternative practice structure with UHY Advisors, forms one of the largest professional services firms in the US. While that scale might provide confidence for some clients, others tell us our greatest value is the way we bring these resources to bear to help address today’s evolving business challenges. It’s a philosophy we call “The Next Level of Service”. To learn more visit http://www.uhy-us.com.

All of the above entities are members of UHY International (“UHYI”), a worldwide network of independent professional services firms that provide audit, tax and advisory services around the globe. UHYI is ranked among the top international accountancy networks and a proud member in good standing of the Forum of Firms. Collectively, our US operating entities (UHY LLP and UHY Advisors) are the largest independent members of UHYI with significant participation, bringing the power of our international network to serve the individualized needs of our clients.

UHY press contact: Dominique Maeremans on +44 20 7767 2621
Email: d.maeremans(at)uhy(dot)com - http://www.uhy.com

About UHY
Established in 1986 and based in London, UK, UHY is a network of independent audit, accounting, tax and consulting firms with offices in over 296 major business centres across more than 89 countries. Our staff members, over 7,660 strong, are proud to be part of the 16th largest international accounting and consultancy network. Each member of UHY is a legally separate and independent firm. For further information on UHY please go to http://www.uhy.com. UHY is a full member of the Forum of Firms, an association of international networks of accounting firms. For additional information on the Forum of Firms, visit http://www.forumoffirms.org.

UHY is an international association of independent accounting and consultancy firms, whose organising body is Urbach Hacker Young International Limited, a UK company. Each member of UHY is a separate and independent firm. Services to clients are provided by the UHY member firms and not by Urbach Hacker Young International Limited. Neither Urbach Hacker Young International Limited nor any member of UHY has any liability for services provided by other members.

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