Facts About Small Business
General
There are about IS million small
businesses in the United States,
by size standards set by the U.S.
Small Business Administration.
About half 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) total
ed about 668,904, a new record.
The previous record of 634,991
new business incorporations was
set in 1984.
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
cutting their employment by 1.7
million. Thus all the 984,000 new
jobs generated in 1981-82 came
from small firms.
Innovation
Studies show that the incidence
of innovation among small
business workers is significantly
higher than among workers in
large businesses. Small firms pro
duce 2-*/4 times as many innova
tions as large firms relative to
the number of persons employed.
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
ment gains during the economic
the Small Business Innovation
recovery and expansion. From
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 firms with
budgets mast direct an increasing
amount of R & D contracts to
Fiscal Year 1985 was a good year fewer than 500 employees ac
small firms — the source of most
for small business. Small business count for 60 percent or more of
innovations and new technologies.
income, as measured by sole pro sales or employment) rose 5.9
percent; employment in in
During thv first three years of
prietorship and partnership in
dustries dominated by large
come, increased 12.3 percent
the Act, small firms received
businesses
rose
six-tenths
of
one
$400 million in R & D contracts;
during the first six months of the
percent.
year compared with the similar
small firms are expected to
receive another $400 million in
1984 period.
Jobs generated by small firms
Fiscal 1986.
Small businesses employ about
are more likely to be filled by
half of the private work force,
Small businesses have been
younger workers, older workers
contribute 42 percent of all sales and women. Many of these
responsible for more than half of
in the country and are responsi
the new product and services in
workers prefer or are only able
ble for 38 percent of the gross
to work on a part-time basis, and novations developed since World
national product.
W ar II.
thus can be more easily accom
modated by small employers.
One out of every two new small
Almost every energy-related in
businesses will fail within the
novation of the past century has
Small businesses create two out
first four years of operation,
of every three jobs, and thus are come from small business — for
studies show. Overall, a firm's
responsible for the major cost in example, the air conditioner, the
chances of survival increase with initial on-the-job training in basic gasoline engine, the electric light,
size; firms with 20 or more
the electric auto, and petroleum
skills.
workers have a 20 percent
cracking.
greater chance of survival than
firms with fewer than 20
workers.
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