Small Biz, Small Growth

Small businesses will survive the economic downturn, according to research from In-Stat/MDR that predicts the market to slightly swell from 2.2 million small firms in 2001 to 2.3 million by the end of 2002, representing more than one-fifth of U.S. businesses.

In-Stat forecasts a small but steady increase in the number of organizations with 5 to 99 employees for the next few years, growing as high as 2.7 million by 2006, and employing approximately 42 million workers – up from roughly 38 million this year.

“Certainly, 2001 was a difficult year across the board, but the impact of a sluggish economic environment has been particularly pronounced in the small business market,” says Kneko Burney, director, Business Infrastructure and Services at In-Stat/MDR. But despite economic challenges, the U.S. Small Business Association (SBA) measured proprietors’ income, which is only a portion of small business income, to total $745.1 billion in 2001 – a 4 percent increase over 2000.

In-Stat also found that the services vertical is the largest in the small business market, in terms of the number of firms, followed by retail trade. Comparing the small business market to other segments, the percentage of retail trade firms is highest in this market, comprising 16 percent of firms.

Within the small business market, construction and the services vertical make up a larger percentage of firms in the segments with fewer than 20 employees. Construction makes up only 9 percent of firms with 50 to 99 employees, but 12 percent of firms with 5 to 9 workers. The trend is even more pronounced in the services vertical, which has 33 percent of the 50 to 99 sub-segment, and 40 percent of firms with 5 to 9 employees.

The SBA estimates that organizations with fewer than 500 employees accounted for $8.3 trillion of the corporate wealth in 2000, representing 42.8 percent of the total business wealth of $19.4 trillion.