The Story Has Always Been Incomplete—By Design

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

For those might not be familiar with this publication, 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.

It’s just common sense that a publication released in June cannot represent the full data of the year of its release, so of course it doesn’t do that.  But it might surprise you that the most current information presented in this report and the data tables online for 2025 is from March 2023 to March 2024.  It might really surprise you that the “counting stats” of small business count (remember that small business is any company under 500 employees except for some industries) by size and industry is from 2022!

So, the reported number of small businesses at the top of this 2025 report—the number that was publicized in press releases and resulting news stories in the summer of 2025—is that there are 36.2 million small businesses in America¹.  But 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 U.S. 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.

It is the fault of no one that these herculean projects take so long to assemble, validate and publish.  I am certainly not criticizing the hardworking and capable employees in the Census Bureau who collect, analyze and report this data.

To be fair, 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, the “high-propensity” subset flagged as likely to hire, and a projection of how many will become real companies within a year. As the Census Bureau put it in the BFS for June 2026: “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?

This monthly, quarterly, annual story is incomplete…and frankly, it is inaccurate by its design.  America has no real-time or near real-time system to count companies hard at work.  Being born.  Dying.  Adding their first full-time employee.  Adding their 20^th employee and graduating out of 1-19.  Downsizing from 560 (out of scope) to 430 (in scope) employees and thereby showing up in a future Small Business report.

Just think about the dynamism inherent in tens of millions of companies in America during “normal times”.

Now imagine we are back in 2009.  The Great Recession has a hammerlock on the U.S.  Previously successful companies have hit the wall and are auctioning off their office equipment through liquidation firms.  Laid-off white collar professionals have realized there are no jobs to be had in their function or industry and have turned to entrepreneurship.  The best case for those of us who cared about SMB and relied on government data to understand what was going on?  Hard data by summer of 2012.  But it’s worse than that.  Why?  Because the Accidental Entrepreneur cohort is different in a way no government survey was ever built to catch.

The Accidental Entrepreneur didn’t form the way a textbook economic downturn cohort is supposed to form—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 two-to-three-year trapdoor, while employer establishments were dying at a rate this country hadn’t seen in a generation, and while the very same laid-off professionals who’d just lost a corporate job discovered that starting something of their own was, improbably, more available than finding a replacement job.

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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—understanding the scope of the opportunity, the Boomerpreneurs who were the engine of the Accidental Entrepreneur cohort and what they need to do next.

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

Confirm or Kill

So I went back and tested it—not to defend the version of the Great Recession start-up boom I’ve built hundreds of slides describing, but to check it, using seventeen years of hindsight and data that simply didn’t exist in 2009-2012.  I wanted to either confirm or kill something that had bothered me since 2011.

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.

But it was wrong.  I was wrong.

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’m blaming me and only me.  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 and hold myself to a higher standard.

Luckily, it didn’t lead to any bad decisions—the outcomes I predicted happened, but not for the reasons I had asserted.  There is no historical data to back up my hypothesis of a large number of deaths and a large number of births, but I still couldn’t shake my “in the moment” sense during the Great Recession that the Census data was undercounting the Accidental Entrepreneur cohort.  Then I realized that I was looking for an increase in the number of companies rather than in the impact of them.  Over the next several issues of this publication, I intend to make a case that SMB is a cohort-driven market (hence the naming choice).  My revised hypothesis is that times of crisis or opportunity create a swarm of new companies with similar attributes.  So, the tool I believe we all could use is something that indexes and tracks the formation of these very cohorts.  Since the data sources available to us aren’t changing any time soon,  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).

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 2008-2010⁹ 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 Growth Index—which measures how much surviving establishments scaled their headcount by year 8 relative to their birth size⁸ adds an intensity measure.

·      The 2008 cohort’s first year survival rate of 75.2% is the worst on record, but its growth multiples in hiring rose steadily from 2008 – 2011 (as did 2009-2011 cohorts as well)⁸.

The complete workbook includes a great deal of additional commentary across all five data series—but even from these toplines, the evidence is quite clear: in spite of being launched during the most uncertain business climate since WWII, companies born of The Great Recession proved to be more resilient, more aggressive, and faster growing than their predecessors.

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

Fourteen years later, 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 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—understanding the scope of the opportunity, the Boomerpreneurs who were the engine of the Accidental Entrepreneur cohort and what they need to do next.

See you next Tuesday.

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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.