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Small Business Goes Big

By Erinn Morgan

In a world that seems dominated by big business, how does the little guy stack up? The statistics the health and wealth of small business might just surprise you.

In 2006, there were approximately 26.8 million businesses in the U. S. of which 99.9 percent were small businesses, according to Office Advocacy estimates.

Small businesses are defined those independent firms having fewer than 500 employees. As such, with an abundance of independent ECPs in the ranks, an overwhelming percentage of eyecare professionals fall into the small business category.

SMALL PACKAGE, BIG POWER

Overall, this powerful group packs a business punch. Small businesses employ about half of all private sector employees and create more than half of non-farm private gross domestic product.

They also create a large percentage of new jobs each year. Firms with fewer than 500 employees had a gain of 1.86 million new jobs in Those with 500 or more employees actually lost more jobs than they created—with cuts of 181,122.

The small business arena can also be a volatile sector. Estimates indicate there were 649,000 new firms in 2006. There were also, however, about 564,900 closures and 19,000 bankruptcies.

SURVIVORS' TRAITS

These numbers paint a picture of a low survival rate for businesses. About two-thirds of new employer establishments survive at least two years, and 44 percent make it at least four years, says a recent study entitled "Survival and Longevity in the Business Employment Dynamics Database."

Other research shows that a company's survivability depends primarily on it being large enough to have employees, the owner's education level, the owner's reason for starting the firm in the first place (e.g., freedom for family life or wanting to be one's own boss), and an ample supply of working capital.

Women and minorities also have a role on the small business stage. Of the 23 million non-farm businesses in 2002, women owned 6.5 million, generating $940.8 billion in revenues and employing 7.1 million workers with $173.7 billion in payroll.

In 2002, minorities owned 4.1 million firms, of which 6.6 percent were owned by Hispanic Americans, 5 percent by African Americans, and 4.6 percent by Asian Americans. These businesses generated $694 billion in revenues and employed 4.8 million people.

Visit www.sba.gov/advo for more information on small businesses.