"Inadequate capitalization and access to capital... put Kansas City small business at a huge risk of failure," said Carmen DeHart, the director of the Missouri Small Business and Technology Development Center at the University of Missouri at Kansas City. While the area's economy was once reliant on manufacturing, it's now heavily dependent on the service sector, which left it especially vulnerable to the economic downturn as consumers chose to do-it-themselves or simply go without.
The region lost 661, or 33 per 100,000 people.
DeHart estimated that Kansas City will continue to be a "trouble spot" for entrepreneurs as long as access to capital remains an issue. Another facet of the city, which some view as inhospitable to business is the one percent earnings tax the city collects on businesses' net profits and individuals' earnings. Earlier this year, voters approved its continuation by a wide margin.
Still, Stein's outlook is somewhat sunnier. He noted that the fluctuations in the local economy mirror what's happening nationally. "I think we'll see some stabilization," he said.
A low loan failure rate is a vote of confidence both for the franchise business model -- or concept -- and for the people involved. The following franchises all had relatively low loan failure rates.
