Where new businesses are starting in Kentucky

More than 46,000 new businesses were started in Kentucky last year based on new data from the U.S. Census Bureau. While the distribution of new business formations was primarily concentrated in the state’s urban areas, several rural and suburban counties also saw significant amounts of new business activity.

Census publishes annual data on business applications for states and counties, using Employer Identification Number (EIN) applications. Census excludes certain types of EINs, such as estates and some financial filings, to approximate new business formations. Not all these businesses succeed or grow. Business formation activity reflects entrepreneurialism and economic confidence among the individuals starting these new firms. Because Census tracks this information at the county level, we can also see where new business formation activities and entrepreneurialism in Kentucky are most concentrated – and where they are most limited. 

In Kentucky, the top counties based on the quantity of applications filed include the state’s urban and most heavily-populated areas: Jefferson (12,082), Fayette (4,412), Warren (1,658), Kenton (1,416), and Boone (1,258). When controlled for population, however, other counties move higher up the list. Cumberland County, for example, saw 12.95 applications per 1,000 residents, the 3rd highest rate in the state following Jefferson (15.6) and Fayette (13.7). Christian County had 11.6 applications per 1,000. Garrard had 10.8 per 1,000.  

The statewide rate was 10.3 applications per 1,000 residents. A total of 16 counties in Kentucky surpassed this rate, including Jefferson, Fayette, Cumberland, Madison, Warren, Christian, Jessamine, Woodford, Shelby, Oldham, Bourbon, Garrard, Hardin, Mercer, McCracken, and Scott. The nationwide rate in 2022 was 15.1 per 1,000 residents.  

A total of seven counties in Kentucky had application rates below 5 per 1,000 residents. These include Robertson, Harlan, Lewis, Martin, Bell, Elliott, and Leslie. 

Access 2022 business formation data for all Kentucky counties here

A new report from the Kentucky Chamber outlining a long-term economic vision for the state stresses the importance of economic development in Kentucky’s rural areas. Fostering entrepreneurship in economically-distressed areas experiencing low levels of business formation should be top priorities for business leaders and policymakers to ensure Kentucky’s economic success. “While Kentucky’s population as a whole has grown (slowly), this growth has been uneven and often concentrated in urban areas,” the report says. “Many of Kentucky’s rural areas have seen both jobs and people leave. Unless successful strategies are developed to bring jobs and population to rural Kentucky, these trends are expected to continue.” Read Kentucky’s Winning Strategy here

Looking beyond Kentucky, counties in the western mountain states and the southeast saw the highest concentrations of business formation activity in 2022, based on analysis by the news outlet Axios. Miami-Dade County in Florida had 47.8 applications per 1,000 residents. Natrona County in Wyoming had 74 applications per 1,000 residents. Conversely, states on the west coast, midwest, and northeast saw comparatively lower concentrations of business formation activity.

About the Author

Charles Aull
Senior Policy Analyst at the Kentucky Chamber of Commerce

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