Facts About Small Business
(General
There are about 15 million small
busiacaa« in the l/n lted States,
by size standards set by the U.S.
Small Business Adm inistration.
About h alf of small businesses
operate full time, the rest part
time.
The number of small businesses
has increased steadily during the
past 30 years. In 1985, new
business incorporations (one
measure of new businesses) to tal­
ed about 668,904, a new record.
The previous record o f 6.M .99I
new business incorporations was
set in 1984.
Fiscal Year 1985 was a good year
for small business. Small business
income, as measured by sole pr<v
prietorship and partnership in­
come. increased 12.3 percent
during the first sit months of the
year compared with the similar
1984 period.
Employment
During 1981-82, small business
employment proved a moderating
force in the recession. During
these years, small businesses pro­
duced a total of 2.65 million new
jobs, while large businesses were
rutting their employment by 1.7
m illion. Thus all the 984.000 new
jobs generated in 1981-82 came
from small firm s.
business workers Ls significantly
higher than among workers in
large businesses. Small firms pro­
duce 2-*A times as many innova­
tions as large firms relative to
the num ber of persons employed.
Innovation coming from small hi-
tech firms Ls expected to increase
Small firm s also have led employ­ in the coming years as a result of
ment gains during the economic
the small Business Innovation
recovery and expansion. Em m
Research Act. Under the Act,
October 1984 through .September
signed by President Reagan In
1985, employment in industries
1982, 12 federal agencies with
dominated by small businesses
large research and development
(industries in which firm s with
budgets must direct an increasing
fewer than 500 employees ac­
amount of R & D contracts to
count for 60 prrcent or more of
small firms - (he source of most
sales or employment) rose 5.9
innovations and new technologies
percent; employ men! in in ­
During the first three years of
dustries dominated by large
the Act, small firm s received
businesses rose six-tenths of one
$400 million in R A D contracts;
percent.
small firms are expected to
Jobs generated by small firms
Small businesses employ about
h alf of the private work force,
contribute 42 percent of all sales
in the country and are responsi
hie for 38 percent of the gross
national product.
Innovation
Studies show (hat (he incidence
of innovation among sm tll
receive another $400 million in
Fiscal 1986.
are more likely to be filled by
younger workers, older workers
and women. M any of these
workers prefer or are only able
to work on a part-tim e basis, and
thus ran be more easily accom­
Small businesses have been
responsible for more than h alf of
the new product and services in ­
novations developed since W orld
W a r I I.
modated by small employers.
One out o f every two new small
businesses will fail within the
first four years of operation,
studies show. O verall, a firm 's
chances of survival Increase with
size; firms with 20 or more
workers have a 20 percent
Almost every energy related In ­
Small businesses create two out
of every three jobs, and thus are
responsible for the m ajor cost in
initial on-the-job training in basic
skills.
greater chance of survival than
firm s with fewer than 20
workers.
e
-f
novation of the past century has
come from small business - for
example, the air conditioner, the
gasoline engine, the electric light,
the electric auto, and petroleum
cracking.