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Facts About Small B usiness
General
I here are about 15 million small
businesses in (hr I nitrd Stairs,
by size standards set by the I ,S.
Small business Administration.
About half of small businesses
operate full time, the rest part
time
I he number of small businesses
has increased steadily during the
past .Ml sears. In 19X5, new
business incorporations (one
measure of new businesses) total
ed alHHit 66X.904. a new record.
I he previous record of 654,991
new business incorporations was
set in 19X4.
f is c a l Near I w a s a good scar
for small business. Small business
income, as measured hy sole pro
prietorship and partnership in
come, increased 12.A percent
during the first sis months of the
sear compared with the similar
Fmplnsment
During 19X1-X2, small business
employment prosed a moderating
force in the recession. During
these sears, small businesses pro
duced a total of 2.65 million new
jobs, while large businesses were
cutting their employment by 1.7
million. Thus all the 9X4,000 new
jobs generated in I9X1-X2 came
from small firms.
Small firms also have led employ
ment gains during the economic
recovery and expansion, f rom
October 19X4 through September
19X5, employ men! in industries
dominated by small businesses
(industries in which firms with
fewrr than 500 employees ac
count for 60 percent or more of
sales or employment) rose 5.9
percent; employment in in
dustries dominated by large
businesses rose six-tenths of one
percent.
19X4 period.
Small businesses employ about
h alf of the prisate work force,
contribute 42 percent of all sales
in the country and are responsi
ble for 'X percent of the gross
national product
One out of esrrs two new small
businesses will fail within the
first four sears of operation,
studies show. O verall, a firm 's
chances of survival increase with
size, firms with 20 or more
workers base a 20 percent
greater chance of survival than
firms with fewer than 20
workers
Jobs generated by small firms
are more likely to be filled by
younger workers, older workers
and women. Many of these
workers prefer or arr only able
to work on a part-time basis, and
thus can be more easily accom
modated by small employers.
Small businesses create two out
of every three jobs, and thus are
responsible for thr major cost in
initial on-the-job training in basic-
skills.
Innovation
Studies show that thr incidence
of innovation among small
business workers is sigmfic antis
higher than among workers in
large businesses Small firms pro
duce 2-*A limes as mans innos a
lions as large firm s relative to
the number of persons emplosrd.
Innovation coming from small hi
tech firms is expected to increase
in the coming years as a result of
thr Small business Innovation
Research Act. I nder the Act.
signed by President Reagan in
19X2, 12 federal agencies with
large research and development
budgets must direct an increasing
amount of R & D contracts to
small firms - the source of m ost
innovations and new te chn olo gies
During the first three sears of
the Act. small firm s received
$4iM) million in R A D contracts;
small firms a rr expected Io
receive another $44 Ml m illio n in
l-iscal 19X6
Small businesses have been
responsible for more than half of
th r new product and services in
novations developed since V\ or Id
War ii
Almost every energy related in
novation of thr past crnturs has
come from small business
for
example, the air conditioner, the
gasoline engine, (hr electric light,
the electric auto, and prlroleuin
cracking