How many small businesses are there in the U.S.A?

June 6, 2001

Free Market Foundation

Small businesses are often touted as embodying the spirit of entrepreneurship in America. And they are hailed for creating new jobs and employing the majority of American workers. But exactly how many small businesses are there in the United States? And how many people do they employ?

It depends on your definition of “small” and of “business,” says Inc. magazine. Government agencies define those two terms in differing ways, and thus government statistics aren’t consistent. In fact, the categories overlap:

In 1999, there were an estimated 5.7 million companies with fewer than 100 employees counting non-farm companies with at least one employee in addition to the owner.

There were 12.8 million self-employed individuals in 2000, according to Census Bureau and Labour Department data, some of whom employ others as well so this category overlaps with that of non-farm companies above.

There were 24.8 million business tax returns for 1999 but this included people with part-time businesses.

The last category included people who had home businesses who may have been self-employed part-time or full time.

According to the research firm Cyber Dialogue, there were 21.4 million self-employed home workers in 1999.

The number of income generating home offices including full- and part-time self-employed workers, was 18.8 million, according to a September 2000 report by IDG.

But the number of self-employed people who were working at home full- or part-time in 1997 was only 4.1 million, according to the Bureau of Labour Statistics.

Because of all the possible ways of counting them, the number of small businesses can only be estimated. The best estimate, according to former Small Business Administration Research Director Bruce D. Phillips, is that there are 15 million to 17 million small businesses in America.

Source: John Case, Counting Companies, State of Small Business 2001, Inc. magazine, May 15, 2001.

For text http://www.inc.com/articles/details/0,3532,CID22603_REG3,00.html

For more on Entrepreneurs http://www.ncpa.org/pd/economy/econ5.html