Each year, we commission a third-party report tracking the economic impact of the companies supported by JumpStart and its many partners— including the Northeast Ohio Startup Network.
This year’s report, which looks back at 2018, shows these companies generated more than $1 billion of economic output (total value of goods and services produced) across Ohio and New York, with $953 million in economic output for Ohio alone.
Combined with data from previous years, these companies have now reached $6.6 billion in cumulative economic output since 2010.
These are some big numbers! But how do we come up with these figures, and what do they actually mean? To help answer these questions, we’ve compiled a list of things you should know before diving deeper into the report.
1. It Uses a Respected Statistical Model
This report begins with data we gather from companies through surveys, then uses the data to calculate their economic impact—directly and through various ripple effects.
These ripple effects—officially known as “indirect and induced impact”—are calculated using the IMPLAN model. This model is employed by more than 1,000 other private and public research institutions (including the Cleveland Clinic and The NASA Glenn Research Center) to estimate the economic impact of their work.
Without diving completely into the weeds, the IMPLAN model takes the survey data (revenue, payroll, tax bills etc.) we gather from companies and extrapolates it out to estimate how the impact of one dollar or one job ripples through the economy. Here’s a great example, pulled right from the text of the report:
- “Imagine an entrepreneur owns a fitness studio. She joins JumpStart’s Core City: Cleveland Impact program and works with JumpStart mentors to develop her business plan and rebrand her business. The fitness studio subsequently experiences a 50% increase in sales and hires new employees. Those are direct impacts. If the fitness studio purchases new exercise bikes, the jobs and revenue associated with the purchased bikes are indirect impacts of the company supported by JumpStart’s services. When the employees of both the fitness studio and the bike manufacturer use their paychecks to buy groceries, this household spending is part of the induced impacts from the JumpStart-serviced company.”
2. It Tracks More Than One Type of Economic Impact
We use “Annual Economic Output” as our top-line statistic because it represents the total value of goods and services produced in an economy—making it a good tool for macroeconomic analysis of an economy over time. But the report also tracks other kinds of impact, including:
- The number of jobs currently supported by these companies (more than 8,000).
- The Federal, State and local tax revenue these companies generated in 2018 ($104 million in federal taxes and another $50 million in Ohio state & local taxes).
- How much of the yearly economic output is attributable to companies led by women ($530 million) and people of color ($160 million).
3. It Tracks More Than Just Tech Companies
When we first launched, JumpStart only helped tech-focused startups. So, the studies naturally focused only on the impact of these tech companies. Over time, we’ve expanded our mission and we now help many non-tech businesses as well. This year we’ve been able to expand this report to include many of these non-tech small businesses who receive assistance through initiatives such as Core City: Cleveland and the KeyBank Business Boost & Build program.
4. But It Doesn’t Track Every Company We Help
No survey has a 100 percent response rate, so no study can ever capture every last drop of economic impact being generated. Plus, some companies like CoverMyMeds or Wireless Environment become so successful they get acquired by large public companies, which eventually means they no longer participate in our surveys.
Bottom line, we know there is impact out there we can’t track, but we do our best to track everything we can—and what we can track shows the companies we support are making a significant impact.
5. It Lets Us Get Very Granular When Necessary
We try to keep things simple by leading with our overall numbers, but our partners and funders often want to dig deeper. So, we also break the raw data down into dozens of smaller slices based on where companies are located, whether they are tech or non-tech businesses, which specific program they are part of, whether they received assistance directly from us or via one of our partners, etc.
To keep the report manageable, many of these slices reside in a series of appendices, but we have the data. It’s also important to note each of these smaller “slices” are independent economic models designed to be evaluated on their own. They aren’t meant to be added up or combined with other slices. That’s why there is a separate model specifically designed to create overall numbers.
Knowing these five things will help you get the most out of our 2018 economic impact report. Click here to read the report »
A special thank you to Silverlode Consulting for preparing JumpStart’s 2018 Economic Impact Report. Our work has expanded significantly over the last three years and their insights helped create a report which accurately reflects this expanded work. You can learn more about Silverlode at www.silverlodeconsulting.com