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How Important Are Small Businesses in America Today?

SMALL BUSINESSES are critical to our standard of living!  Without small businesses, most Americans wouldn't even have a job, and for those lucky enough to have a job, there wouldn't be near as many products and services to choose from as we have today.

LocalBenefits is dedicated to help support small businesses and the brave entrepreneurs who start them. There's over 25 million small businesses in America and by working together as a group, we can reach more people.
 
How important are small businesses to the U.S. economy?
Small firms:
  • Represent more than 99.7 percent of all employers.
  • Employ more than half of all private sector employees
  • Pay 44.5 percent of total U.S. private payroll.
  • Generate 60 to 80 percent of net new jobs annually.
  • Create more than 50 percent of nonfarm private gross domestic product (GDP).
  • Supplied 22.8 percent of the total value of federal prime contracts (about $50 billion) in FY 2001.
  • Produce 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.
  • Are employers of 39 percent of high tech workers (such as scientists, engineers, and computer workers ) .
  • Are 53 percent home-based and 3 percent franchises.
  • Made up 97 percent of all identified exporters and produced 29 percent of the known export value in FY 2001.

    Sources: U.S. Bureau of the Census; Advocacy-funded research by Joel Popkin and Company (Research Summary #211); Federal Procurement Data System; Advocacy-funded research by CHI Research, Inc. (Research Summary #225); Bureau of Labor Statistics, Current Population Survey; U.S. Department of Commerce, International Trade Administration.
How many small businesses are there?

In 2002, there were approximately 22.9 million businesses in the United States, according to Office of Advocacy estimates. The Internal Revenue Service (IRS) estimates there were 26.4 million business tax returns in 2002; however, this number may overestimate the number of firms, as one business can operate more than one taxable entity.

How many small businesses open and close each year?

Estimates for businesses with employees indicate there were 550,100 new firms and 584,500 closures (both about 20 percent of the total) in 2002. 

Sources: U.S. Bureau of the Census; Administrative Office of the U.S. Courts; U.S. Department of Labor, Employment and Training Administration.
 

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