The SBA's recent studies on entrepreneurial firms and small businesses discovered that these emerging companies represent over 50% of the GDP, creating 78% of all new jobs every single year for the past twenty years.
Offering insight into the role of growing entrepreneurial firms in the economy, the SBA has examined how firms started, grew, merged, declined, survived, and closed from 1992 to 2002. Using census and other public data, the study concluded:
- Four year survival rates for small businesses held steady at about 50% through the study time period and is consistent with most recent studies. This is a new twist on the widely held belief that most small businesses fail in their early years of business.
- Industries that grew in employment did not necessarily have higher rates of fast growers but industries
with high rates of fast growers tended to have high rates of decliners. 35% of small businesses had no employment change from one year to
the next, 11% closed each year, 25% shrank in employment each year, and 28% grew in employment each year. Clearly the small business economy represents an overall healthy balance.
- Most firms start with 1-4 employees and do not expand beyond that employee class size.
- Fast growing firms, those with a 50% or more increase in annual employment were only 3% of all firms. 55% of these fast-growing firms declined in employment.
- Most small businesses remain in one location, rather than expand in multiple locations.
Shivonne Byrne, Innuity CMO
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