What is a small business?
The Office of Advocacy defines a small business for research purposes as an independent business having fewer than 500 employees. Firms wishing to be designated small businesses for government programs such as contracting must meet size standards specified by the U.S. Small Business Administration (SBA) Office of Size Standards. These standards vary by industry; for size requirements related to a specific industry, see: http://www.sba.gov/size.
How important is small business to the U.S. economy?
- Small business represents 99.7 percent of all employer firms.
- Small business employs half of all private sector employees.
- Small business pays more than 45 percent of total U.S. private payroll.
- Small business Has generated 60 to 80 percent of net new jobs annually over the last decade.
- Small business creates more than 50 percent of non farm private gross domestic product (GDP).
- Small business supplied more than 23 percent of the total value of federal prime contracts in FY 2005.
- Small business produces 13 to 14 times more patents per employee than large patenting firms. These patents are twice as likely as large firm patents to be among the one percent most cited.
- Small business employs 41 percent of high tech workers (such as scientists, engineers, and computer workers).
- Small business is 53 percent home-based and 3 percent franchises.
- Small business Makes up 97 percent of all identified exporters and produced 28.6 percent of the known export value in FY 2004.
Sources: U.S. Bureau of the Census; Advocacy-funded research by Joel Popkin and Company, Jan. 2003. International Small Business Trade.
How many small businesses are there?
In 2005, there were approximately 25.8 million small business units in the United States, according to Office of Advocacy estimates. Census data show that there were 5.8 million firms with employees and 18.6 million without employees in 2003, the most recent year with data.
How many new jobs do small businesses create?
Over the past decade, small business net job creation fluctuated between 60 and 80 percent. In the most recent year with data (2003), employer firms with fewer than 500 employees created 1,990,326 net new jobs, whereas large firms with 500 or more employees. Small business figures are difficult to ascertain due to informal small business operations that are not registered.
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