It’s often been said that small businesses are the backbone of America – as these businesses often provide well needed services and present innovations that help our regional and national economy thrive. At Imperial Advance, we are focused on offering working capital loans and other financing alternatives to small businesses. Here are a few facts from the Small Business Administration (SBA) that will help explain how important small businesses are to our economy:
1. What is a small business? According to the SBA, the Office of Advocacy defines a small business as a company with less than 500 people. That said, different industries have various definitions of what makes up a small business, but most use the SBA numbers.
2. Small Businesses Create LOTS of Jobs: Funny enough and you wouldn’t necessarily think it, but the SBA says that small businesses accounted for 63% of net new jobs created between 1993 and mid-2013 (or as the SBA says 14.3 million of the 22.9 net new jobs).
3. Are All Small Businesses Employers? According to the SBA, in 2011 there were over 28.2 million businesses and 17,700 firms with 500 employees or more. On the other end of the spectrum, over three quarters of small businesses are “non-employers” – businesses that do not run without paid employees.
4. Small Business Opening and Closings: Each year about 10 to 12-percent of small business firms with employees open each year, but the same amount close. That said, about half of all new businesses survive five years or more – and the good news is that one-third survive about 10 years or more.
5. So who is the Boss – Start-ups or Existing Small Businesses? Well, despite the Silicon Valley’s run of innovation and the precedent it set for the amount of start-ups that have recently begun in the Bay Area, Brooklyn, Boston, Santa Monica and Austin (and some of which have blossomed fairly quickly into the enterprise level) – it is existing businesses that account for more of the employment than the trendy new start-ups.
6. Women–Owned Businesses: The SBA says that firms owned by women have increased over the years – especially as the share of total businesses have grown. That said, women are still behind – at around 8 million small business firms versus 27.1 of male-owned businesses (but the SBA warns that data is seven years old and the numbers now might be higher).
7. Veteran–Owned Businesses: The number of veternan-owned businesses have increased over the years. Given the hardships many veterans have had to endure coming back from tours of duty in Iraq, Afghanistan and other places of grave conflict, the numbers of these businesses are pretty impressive – netting nearly 4 million businesses in the U.S. according to the SBA.
8. Small Business Demographics: Small business owners are like America itself – they are owned by many different cultures. For instance, the SBA offers these numbers from 2007:
- African-American – 1.9 small business owners
- Asian – 1.6 million
- Hispanic 2.3 million
- Native American/Pacific Islander – 0.3 million
9. Small Business Types: So what percentage of businesses are home-based? Franchise? Sole proprietor? Here are some interesting facts from the U.S Census Bureau. As you will note, many of the non-employer and home-based businesses take up a larger percentage than employer small businesses or franchises. Could this be part of the trend that these days, most people can do their jobs with an internet connection and a phone…?
- Home Based Businesses – 52-percent share of all small businesses.
- Franchise – 2.0-percent (share of businesses)
- Sole Proprietor – 72.1-percent (share of businesses)
- Employer Business – 20.1-percent (share of businesses)
- Non-Employer Business – 79.9-percent (share of businesses)
10. Age of small business owners – Thanks to recent movies and media that illustrated how college-aged entrepreneurs can make it big, one might think that youth entrepreneurship is on the rise. According to the SBA, that is not really fact. Numbers show that self-employment among younger age groups has been dropping. According to the SBA: “From 2002 to 2012, self-employment among individuals age 25 and under decreased…in contrast self-employment for those over 65 have increased.” In other words, do not count out those baby boomers yet!