Why This Publication Speaks in Cohorts

A shock doesn’t just damage the SMB market. It repopulates it.

Tens of millions of small businesses exist in the United States at any moment, and unlike enterprise, consumer or government, this market’s population turns over. When a shock hits — a financial collapse, a pandemic, a wave of AI displacement — it pushes a large group of people into founding at the same moment, with the same tools available and the same constraints. They share more than an origin story. They share risk tolerance, capital structure and buying behavior, because all three were set by the conditions they started in. And those choices stick.

Which is why early beats late. A cohort picks its vendors, its advisors and its platforms once, while it is forming. Arrive after that and you are not selling to a cohort. You are trying to take it from someone who already owns it.

You already know how this works. You know it by another name.

Baby Boomer. Gen X. Millennial. Gen Z. The reason these are useful isn’t the birth years — it’s the claim underneath them: people formed under the same conditions behave alike, and they do it consistently over decades. Marketers believe it. Bankers believe it. Journalists write about it every week.

Now count the clocks.

Generations sort people by when they were born. Cohorts sort businesses by when they were founded. Both clocks run. They measure different things.

The owner's birth year tells you when the business has to change hands. That is The Silver Tsunami, and it is not a small thing — a 72-year-old owner and a 58-year-old owner are running different countdowns, and the older one has fewer moves left.

The founding year tells you what is changing hands. A business's tools, capital structure, risk posture and vendor relationships were set in the conditions it was born into, and they are stubbornly durable. Two owners the same age, one who founded in 1994 and one who founded in 2009, are not selling the same business.

Which is why a Boomer and a Millennial who both founded in 2009 look more alike, as customers, than two Boomers who founded 30 years apart.

If you sell to, lend to, advise or acquire small businesses — or you are getting ready to sell one — you are reading both clocks whether you know it or not. Miss the first and you miss the timing. Miss the second and you misprice the business.

Generations explain people. Cohorts explain companies.

One caution, because the parallel only goes so far. Baby Boomers are a population within The Accidental Entrepreneur. They are not its equivalent. The two systems cross; they do not nest — which is why The Silver Tsunami is an event and The Accidental Entrepreneur is a cohort. One is timed by the owner. The other is defined by the founding. Borrow the mechanism, never map the members.

In May 2023, Pew Research Center announced it would stop automatically using standard generational labels. A generation spans 15 to 18 years, they noted, and there is great diversity of thought, experience and behavior inside one. What looks generational often turns out to be something else.

Then came the sentence that matters. Going forward, Pew said, they may group people instead by key historical events or technological innovations.

In January 2009, in the middle of a financial crisis, I defined a cohort of American business owners by the event that created them — and named them for what the event did to them. The Accidental Entrepreneur. They did not set out to start anything; the recession made founders of them. I have been grouping this market by events and by technology ever since. Not by when people were born. By what happened to them, and when.

So when the organization that defined the generational boundaries American journalism uses says it may start grouping people by events instead, that is not a threat to this framework. It is corroboration, and it arrived from the last place you would expect it.

Welcome, Pew Research. Seriously.

The Story Has Always Been Incomplete—By Design

Have you ever studied one of the Small Business Profiles published by the US Small Business Administration’s Office of Advocacy?

Here’s the 2025 Small Business Profile released on June 30, 2025¹:

Click on the image above to download from the SBA Office of Advocacy.

A report released in June can't report on the full year — of course it can't. What should surprise you is how far back it actually reaches. The most current information in the 2025 report runs March 2023 to March 2024. The counting stats — small business count by size and industry — are from 2022.

So the number at the top of that report, the one that went out in press releases and news stories all summer, is 36.2 million small businesses in America.¹ That data is at least 24 months old.

It's not just the flagship Profile. Nonemployer Statistics², Business Dynamics Statistics³, the Annual Business Survey⁴, Statistics of US Businesses⁵—every major Census small-business series runs 12 to 24 months behind. Even the quarterly Business Employment Dynamics data⁶ is old news by the time it prints. None of that is anyone's fault; these are herculean projects and the people who build them are doing careful work.

One Census publication is close to real-time: the monthly Business Formation Statistics⁷, out just 11-12 days after month’s end. It reports business applications and projects how many will become real companies within a year. As Census put it in the June 2026 BFS: “it does not provide an estimate of the total number of business startups that appeared within a specific month.”⁷ It’s a projection. What happens when the projection is off?

America has no real-time system to count companies hard at work. Being born.  Dying. Adding their first full-time employee.  Adding a 20^th and graduating out of 1-19. All of it, across tens of millions of companies, in normal times.

Now go back to 2009.  The Great Recession has a hammerlock on the US. Companies that were fine a year ago are auctioning off their office furniture.  Laid-off white collar professionals have worked out there are no jobs in their function or industry, and have turned to entrepreneurship. Best case for those of us who cared about SMB and relied on government data?  Hard data by summer of 2012.

But it’s worse than that. The Accidental Entrepreneur didn’t form the way a textbook downturn cohort is supposed to — a few percentage points at a time, spread evenly across a slow-motion decade, showing up in next month’s applications data like clockwork.  It formed inside a 2-to-3 year trapdoor, with employer establishments dying at a rate this country hadn’t seen in a generation. And laid-off professionals, who’d just lost a corporate job, were discovering that starting something of their own was, improbably, more available than finding a replacement.

In the next three Tuesdays, you’ll get:

·      Issue 004 – the peer-reviewed academic paper that finally explains why recession-born cohorts persistently outperformed baseline.  Spoiler:  it’s not what everyone thinks.  In fact, it’s not what I thought in 2009.  It even shocked me.

·      Issue 005 – the bridge to the parallel weekly braid you’ll get from Issue 006 onward describing the present-day implications of The Accidental Entrepreneur and what I expect, and will be discovering in real-time, about The Artificial Entrepreneur.

·      Issue 006 – the first issue dedicated to The Silver Tsunami—the business transition where trillions of dollars of enterprise value hangs in the balance.  The companies founded and led by the “Boomerpreneurs”, the engine of the Accidental Entrepreneur cohort, need to plan their eventual exit.  How can we help them?

But in order to go forward, we have to go back.

Confirm or Kill

As I began this project, I decided to either confirm or kill something that had been bothering me since 2011. Using hindsight and data that simply didn’t exist during The Great Recession, I found answers that I’m excited to share with you.

In 2012, I created a slide I called The SMB Forest Fire, built on non-Census data I settled on after months of weighing and discarding third-party sources for business births and deaths.  I felt a little desperate—the Census wasn’t reporting quickly enough.

My well-respected source had reported that a large number of companies had died in 2008 and 2009 which I believed to be true.  I also believed a large number of new companies were being born during those years which their data suggested as well.  From this dataset, I built a hypothesis that more than half of the non-home-based businesses in America might be less than 4 years old as of the end of 2010. 

This was a provocative theory with meaningful implications.

I’m sharing an original hypothetical version of this slide because I refuse to identify the source.  They deserve no blame for my mistake. I knew full well their dataset’s constant cleansing and updating could create integrity problems; they were honest with me about the risk.  If I’m being honest with myself now, their data didn’t pass the smell test.  But I had found evidence that confirmed what I already believed, and that overrode whatever caution I should have exhibited.  I ran with it.  I have to live with that.

Luckily, it didn’t lead to any bad decisions—the outcomes I predicted happened, but not for the reasons I had asserted.  No historical data backs up my hypothesis of mass deaths and mass births. But I still couldn’t shake my in-the-moment sense that Census was undercounting the cohort.  Then I saw my error: I had been looking for an increase in the number of companies rather than in their impact.

My revised hypothesis is that times of crisis or opportunity create a swarm of new companies with similar attributes. What I felt was needed was a tool that indexes and tracks the formation of emerging cohorts. The data sources aren’t changing any time soon, so I built something that works with what we actually have.

Allow me to introduce you to The SMB Cohort Formation Index

This Index combines five independently published data series into a single equal-weighted composite (20% each), indexed to 2006 = 100:  Census Business Formation Statistics⁷, BLS Business Employment Dynamics Establishment Births⁶, Census Nonemployer Statistics², the Kauffman Rate of New Entrepreneurs⁸ and a Growth Index built from BLS cohort-survival data (Business Employment Dynamics, Table 7⁹).

No single government series can see a cohort forming. Business applications miss many solo founders. Employer births miss the ones who haven’t hired yet. The Index reads five series together, so a cohort shows up even when any one of them misses it.

Some observations:

·      While Business Applications and Establishment Births both fell meaningfully in 2008-2009, the consistent rise of Nonemployers (NES) from 2008-2014² and the above index performance of the Kauffman rate of new entrepreneurs (population survey # of entrepreneurs per 100,000 adults per month) from 2008-2010⁸ is the inspiration for the phrase The Great Undercount.

·      The nonemployer dip in 2008 is the only year-over-year decline in NES series history² (began in 1997 and most recent data from 2023).

·      The damage is real, and it is not in the composite. On calendar-year sums of the quarterly series, establishment deaths exceeded births in 2008 (−74,000), 2009 (−138,000) and 2010 (−9,000) — the only three years the US establishment population shrank in the 31 years BLS has published it.⁶ The pandemic never did this: 2020 closed net positive.

·      The 2008 cohort’s first-year survival rate of 75.2% is the worst in the 20-year published series — a real shakeout at the trough, not resilience. The Growth Multiple tells the other half: 2.08–2.10x for the 2006–2007 pre-recession vintages, stepping to 2.14–2.31x through the recession, and holding 2.30–2.34x for every vintage since. Survival was the casualty. Scale was the signal.⁹

The complete workbook carries far more across all five series, but the toplines are clear enough. Companies born of The Great Recession were not more likely to survive their first year — they were less likely. The ones that made it scaled harder than any vintage before them, and every vintage since has held that higher level.

The academic record goes further, and it answers the obvious objection — that recessions simply kill weak entrants early and flatter the survivors. Bias and Ljungqvist correct for exactly that, and — looking at innovative startups seven years out rather than all establishments at one year — still find recession-born firms 27 percentage points ahead on survival and 64 points ahead on employment growth¹⁰. The first year was the shakeout. What came after was the cohort.

Next week I’ll show you the mechanism, and it is not the one you’d guess.

The Forest Fire was like an actual forest fire.  Old growth trees burned and died.  The disappearance of their leaf canopies allowed the sunlight to reach the saplings on the forest floor and they flourished as a result.

Did This Strike A Chord?  What Do You Like?  What’s Missing?

What’s the 2026 version of my 2012 mistake—a number you want to believe so much you haven’t stress-tested it yet?  Do you have a story about settling for imperfect data that either derailed you or almost derailed you?  Hit reply and tell me.

Were you a Profit Machine who started a company during The Great Recession?  Did you know/do you know any?  How did you/they fare?

I’d like to meet you/them and hear your/their story.  With your/their permission, I want to share as much real-world experience from those who lived it and I may use anecdotes or case studies in future issues.  Introduce us please.

I can deliver a better quality, reader-centric production if you are willing to provide me with real-world examples and logical, empirically supported feedback.  Have some data that conflicts with my market assessment?  Share it and I’ll respond and learn from you.  Disagree with one of my conclusions?  Tell me and we will have a civil discussion.  Maybe you will convince me and I will share with the group.  Leave me feedback by replying to this newsletter or emailing [email protected].

History Doesn’t Repeat Itself, But It Rhymes

Today, another cohort is being born under conditions that rhyme with 2008 – but the disruption isn’t an Econoquake this time.  It’s Artificial Intelligence.  And the professionals AI is displacing are often young, technical and armed with the very tool that’s disrupting their traditional path.

I got the fire wrong once because I couldn’t wait for verifiable data, so I chose “best available” data.  I’m not making that mistake twice.  This time, I’m building the Index myself, sourcing every input, and calling the Artificial Entrepreneur cohort in public, before it’s obvious, with a paper trail you can check against me.

In the next three Tuesdays, you’ll get:

·      Issue 004 – the peer-reviewed academic paper that finally explains why recession-born cohorts persistently outperformed baseline.  Spoiler:  it’s not what everyone thinks.  In fact, it’s not what I thought in 2009.  It even shocked me.

·      Issue 005 – the bridge to the parallel weekly braid you’ll get from Issue 006 onward describing the present-day implications of The Accidental Entrepreneur and what I expect, and will be discovering in real-time, about The Artificial Entrepreneur.

·      Issue 006 – the first issue dedicated to The Silver Tsunami—the business transition where trillions of dollars of enterprise value hangs in the balance. The companies founded and led by the “Boomerpreneurs”, the engine of the Accidental Entrepreneur cohort, need to plan their eventual exit. How can we help them?

See you next Tuesday.

Know Someone Who Should Read This?

If today’s issue was useful, pay it forward.  If you know a marketing leader, PE investor, CEPA, fractional CFO, search fund operator, boomer business owner or SMB analyst or journalist who’d benefit from being early to this, click the button below to open your default email tool where a proposed subject line and email is already provided. Edit anything you want to word differently and enter one or several emails in the To line to send to others.  Every new reader helps me sharpen the work.

After the Foundation, the two parallel weekly threads run in alternating fashion, with crossovers.

The SMB Cohort is independent research and commentary. Analysis draws on primary research, public and licensed data sources, and the author’s professional experience and judgment; while rigorously developed, it can be wrong. Nothing published here is investment, financial, legal, tax, or other professional advice, and nothing should be acted on without independent verification from other sources. Brian D. Burch and The SMB Cohort accept no liability for outcomes resulting from reliance on this content.