The Small Business Administration's (SBA) Office of Advocacy published in August their most recent research on key economic indicators for small businesses, which for research purposes they designate as independent businesses having fewer than 500 employees.
A little background: As part of their mandate to protect, strengthen, and effectively represent U.S. small businesses within the federal government, the SBA's Office of Advocacy conducts policy studies and economic research on issues of concern to small business and publishes data on small business characteristics.
Some key SBA Office of Advocacy findings to report here include (1) the number of small businesses in operation; (2) small business openings and closures; and (3) the number of new jobs generated by small firms:
(1) How Many Small Businesses are There? In 2006, there were 26.8 million businesses in the U.S., according to Office of Advocacy estimates. Census data show that there are 5.9 million firms with employees and 19.5 million without employees in 2004 (the most recent year with data). Applying the sole proprietorship growth rates to the nonemployer figures and similar Department of Labor growth rates produces the 26.8 million figure.
(2) How Many Businesses Open and Close Each Year? Estimates for businesses with employees indicate there were 649,700 new firms and 564,900 closures in 2006; in 2005 those numbers were 653,100 and 543,700, respectively.
(3) How Many New Jobs do Small Firms Create? Over the past decade, small businesses created 60-80 percent of the net new jobs. In the most recent year with data (2004), small firms accounted for all the net new jobs. Firms with fewer than 500 employees had a net gain of 1.86 million new jobs. Large firms with 500 or more employees lost more jobs than they created, for a net loss of 181,122 jobs.
Shivonne Byrne, Innuity CMO
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