I tend to rant and rave about things like the Kelo Decision and Regulatory Flexibility for a reason. Both are important policy issues related to small business. And small business matters.
We have over three million new small businesses started in the US every year, ranging from the newly self-employed to new small businesses formed as S-corps and LLCs to emerging high potential businesses backed by angels or VCs.
A new study released by the Office of Advocacy of the SBA sheds light on how important small business is in our economy. Here are some facts from this new study:
- Small businesses represent 99.7 percent of all firms. In 2004, there were an estimated 23,974,500 businesses in the U.S. Of the 5,683,700 firms with employees, 5,666,600 were small businesses (fewer than 500 employees). The latest data also show that in 2002 women owned 6,492,795 firms; Blacks owned 1,197,988 firms; Hispanics owned 1,574,159 firms; Asians owned 1,105,329 firms; and American Indians and Alaskan Natives owned 206,125 firms.
- Small business drives the U.S. economy by providing jobs for over half of the private workforce.
- Small businesses create 60 to 80 percent of the net new jobs.
- Small business with fewer than 20 employees increased employment by 853,074 during 2001-2002. That's right, the smallest businesses in America creates almost a half a million new jobs each year!
- Small businesses create more than half of the private non-farm gross domestic product.
- The future looks good, as small businesses are growing. In 2004, there was strong growth of 7.3 percent in proprietor's income. Business bankruptcies decreased by 2.1 percent and self-employment increased by 2.2 percent.
"Small business drives the American economy," said Dr. Chad Moutray, Chief Economist for the Office of Advocacy. "Main Street provides the jobs and spurs our economic growth. American entrepreneurs are creative and productive, and these numbers prove it."
This and other data for each state and territory are available in individual economic profiles on the Office of Advocacy website.
