Facts About Small Business
General
There are about 15 million small
businesses in the (n ited States,
by size standards set by the I'.S .
Small Business Administration.
About half of small businesses
operatr full time, the rest part
time.
The number of small businesses
has increased steadily during the
past 30 sears. In 19X5, new
business incorporations (one
measure of nes» businesses* total­
ed about 66X.904, a ness record.
The presious record of 6.M.99I
ness business incorporations ssas
set in 19X4.
Fiscal \e a r 19X5 ssas a good sear
for small business. Small business
income, as measured by sole pro­
prietorship and partnership in­
come, increased 12.3 percent
during the first six months of the
year compared ssith the similar
19X4 period.
Small businesses employ about
half of the prisate work force,
contribute 42 percent of all sales
in the country and are responsi­
ble for 3X percent of the gross
national product.
One out of every two new small
businesses will fail within the
first four sears of operation,
studies show. Overall, a firm ’s
chances of survival increase with
size; firms with 20 or more
workers have a 20 percent
greater chance of survival than
firms with fewer than 20
workers.
Employment
I hiring 19X1-X2, 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
cutting their employment by 1.7
million. Thus all the 9X4,000 new
jobs generated in I9XI-K2 came
from small firms.
Innovation
Studies show that the incidence
of innovation among small
business workers is significantlv
higher than among workers in
large businesses. Small firms pro­
duce 2-*/> times as many innova
tions as large firms relative to
the number of persons emploved
Innovation coming from small hi
tech firms is expected to increase
Small firms also have led employ­ in the coming years as a result of
the Small Business Innovation
ment gains during the economic
recovery and expansion. From
Research Act. I nder the Act,
signed by IVesidenl Reagan in
October 19X4 through September
19X5, employment in industries
19X2, 12 federal agencies with
dominated by small businesses
large research and development
budgets must direct an increasing
(industries in which firms with
amount of R A D contracts to
fewer than 500 employees ac­
small firms - the source of m«»sl
count for 60 percent or more of
innovations and new technologies.
sales or employment) rose 5.9
During the first three years of
percent; employment in in­
the Act, small firms received
dustries dominated by large
businesses rose six-tenths of one
$400 million in R A D contracts;
small firms are expected to
percent.
receive another $400 million in
Jobs generated by small firms
Fiscal 19X6.
are more likely Io be filled by
vounger workers, older workers
Small businesses have been
responsible for more than half of
and women. Many of these
the new product and services in
workers prefer or are only able
to work on a part-time basis, and novations developed since World
thus can be more easily accom­
W ar II.
modated by small employers.
Almost every energy-related in
novation of the past century has
Small businesses create two out
come from small business - for
of every three jobs, and thus are
example, the air conditioner, the
responsible for the major cost in
initial on the-job training in basic gasoline engine, the electric light,
the electric auto, and petroleum
skilLs.
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