Small Business Frequently Asked Questions – FAQ
Small Business Frequently Asked Questions is designed to answer questions about U.S. small businesses. Other sources for similar information can be found at SBA or Score’s websites. Preparing quality financials is a great way to limit your chances of failure. Click here for more information on custom built financial statements.
Small Business Frequently Asked Questions
What is a small business
A small business is an independent business having fewer than 500 employees.
Small businesses – U.S. economy facts
- Account for 99.7% of all firms
- Employ about half of all private sector employees
- Pay nearly 45% of total U.S. private payroll
- Have generated 60-80% of new jobs annually over the last decade
- Create more than half of non-farm private gross domestic product (GDP)
- Hire 40% of high tech workers
- Are 52% home-based and 2% franchises
- Made up 97.3% of all exporters and produced 28.9% of the export value in 2006
- Produce 13x more patents per employee than large patenting firms
New jobs created by small firms
In 2005, small businesses created 979,102 new jobs, or 78.9%.
How much of the total employment do small firms represent?
Small businesses employ about half of U.S. workers. Firms with fewer than 20 employees employed 21.3 million.
How many businesses open and close each year?
The number of firms with zero employees has risen steadily, from 16.5 million in 2000 to about 21.1 million in 2007. About 637,100 new employer firms began operations in 2007 and 560,300 firms closed that year. 87.9% closed their doors in 2007.
What is the survival rate for new firms?
- 2/3 of new firms survive at least 2 years
- 44% survive at least 4 years
- 31% survive at least 7 years
How are small businesses financed?
Commercial banks and other depository institutions accounted for almost 65%