U.S. SBA-Office of Advocacy--Do Business Definition ... · Do Business Definition Decisions Distort Small Business Research Results? A Working Paper by Brian Headd and Radwan Saade

Do Business Definition Decisions Distort

Small Business Research Results?

A Working Paper

by

Brian Headd and Radwan Saade Office of Advocacy

U.S. Small Business Administration

for

Release Date: August 2008

The statements, findings, conclusions, and recommendations found in this study are those of the authors and do not necessarily reflect the views of the Office of Advocacy, the United States Small

Business Administration, or the United States government.

ABSTRACT

The choice of business definition at the outset of research can drive results. Pooling different kinds

of businesses allows nonemployer businesses (which are numerous and small) to overwhelm

employer businesses (whose numbers are far fewer, but whose business activity is many times more

significant). A scan of special tabulations from the U.S. Census Bureau’s 2002 Survey of Business

Owners shows that nonemployer and employer businesses differ qualitatively, as do employer firms

and businesses of differing sizes.

We investigate how nonemployers and employers differ in number, receipts, industry, business

turnover, survival, and ownership characteristics. Cross-tabulations are presented for such business

characteristics as number of employees, receipt size, business age, veteran ownership, home-based,

franchise status, family-owned status, legal form of organization, geography, industry, and

financing.

1. Introduction and Literature Review

Business research generally uses “a business” as its unit of analysis. What constitutes a business,

however, is not an agreed-upon notion. A sole proprietor, a corporation, a publicly traded company, a

self-employed person, a business location, a parent company including its branch locations—all

deserve the title “business.” Of concern is the possibility that the definition could be driving results,

leading us to investigate a little deeper. Using the U.S. Census Bureau’s Survey of Business Owners,

2002, we illustrate the differences between two distinct types of businesses: businesses with employees

(employers) and businesses without employees (nonemployers).

Businesses and business dynamics are central to the economy and the study of economics in general.

Introductory economics dictates that three main sectors constitute the market: the government,

consumers, and businesses. While creating a simplistic “theory of the firm” is necessary in explaining

many aspects of the production process (Tirole, 1997), grouping all businesses together under a similar

production process conceals many fascinating aspects. Increasing the granularity of the analysis

uncovers additional facts and relationships. More advanced economic theory does focus on the

competition of incumbent and entrenched firms, but it treats their business characteristics

homogeneously.

In a study of the steel industry as a microcosm of the U.S. economy, Acs (1984) recognized that mini-

mills were not large mills on a small scale, but unique entities with distinct characteristics and

production processes. Not unexpectedly, there are even different types of mini-mills. Grouping

businesses together without accounting for their inherent characteristics can yield results that are not

applicable to other groups of businesses or businesses as a whole, hampering the ability to make

meaningful inferences.

A basic example is David Leonhardt’s 2000 article on entrepreneurship trends. Using the Bureau of

Labor Statistics’ (BLS) published self-employment figures, he found that “entrepreneurship” stagnated

during the 1990s. However, if he had used sole proprietorship tax returns as the basis of his research,

he would have found large increases during the 1990s. Published BLS self-employment figures

contain only a select group of business owners: individuals whose primary occupation is self-

employment and whose legal form of organization is unincorporated. Complicating things further, the

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BLS figures track the number of owners, not the number of business ventures or their economic

impact. U.S. Census figures on the number of business ventures, employers, and nonemployers also

reported a much higher increase during the 1990s than BLS’s self-employment numbers. Defining

entrepreneurship as self-employment created an incomplete picture.

The problem of defining a business is not unlike that of defining the subset of business owners referred

to as “entrepreneurs.” Although the definition of “entrepreneur” has not been established, it is not for

lack of trying (see Shane and Venkataraman, 2000 and, Brockhaus, 1980). But in the absence of an

agreed-upon definition, an accepted definition of “business” or “entrepreneur” remains elusive. The

availability of data has typically been the driver in coming up with standards, and the U.S. Census

Bureau’s relatively new annual employer and nonemployer business data are likely to become the de

facto definitions.1

The contrast between employers and nonemployers demonstrates the problems of business definition.

Employers and nonemployers inherently differ by business size. Nonemployers outnumber employers

by about 3 to 1. Most nonemployers are part-time operations, and they are a much simpler form of

organization. For a business to go from zero employees to one employee is often a significant leap in

organizational development, requiring a steady revenue stream, payroll accounting and more complex

tax requirements. In terms of economic impact, employer firms dominate; their total receipts are over

20 times the size of nonemployers’ receipts. In 2002, U.S. Census Bureau data counted 5.7 million

employers with $22 trillion in annual receipts and 17.6 million nonemployers with $770 billion in

receipts.

Generally held perceptions of nonemployers and employers differ as well. Thinking of a nonemployer

conjures up visions of spouses working from home, retirees enjoying a hobby, free agent consultants,

and nascent entrepreneurs tinkering in the garage. Thinking of a small employer conjures up visions of

mom-and-pop stores, restaurants, small construction companies, and small manufacturers. While these

stereotypes have kernels of truths, generalizing across millions of nonemployers and employers is

wrought with peril. What is clear however is that the trade associations representing nonemployers

and the trade associations representing employers differ in their focus. For instance, employer

1 With a few exceptions, “nonemployers” include all business tax returns that have $1,000 or more of receipts and no payroll; “employers” include all businesses that had payroll during the year. (For details see www.census.gov/epcd/nonemployer/view/covmeth.htm, and www.census.gov/epcd/susb/introusb.htm.)

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associations tend to focus on workplace regulations and minimum wage issues while nonemployer

associations tend to focus on tax simplification.

To investigate the differences among employer and nonemployer firms, we use special tabulations

provided courtesy of the U.S. Census Bureau, with partial funding by the Office of Advocacy, U.S.

Small Business Administration.2 Thirteen tables are presented in the Appendix in three groupings: size

categories, business characteristics, and owner characteristics.

The remainder of the paper is organized as follows: Section 2 provides a brief history of the

availability of business data; Section 3 attempts to further delineate “business status”; Section 4

provides summaries of the tables based on the three groupings (size, business characteristics, and

owner characteristics); and Section 5 concludes. The Appendix contains the detailed tables.

2. History of Number of Businesses and Business Characteristics

There is no consensus on what constitutes a business, and by extension, on the number of businesses in

the United States. Surveying the general public, businesspersons, and policymakers on the number of

firms in the U.S. economy would produce interesting results. The differing answers would most likely

result from their differing opinions of what constitutes a business (e.g., a minimum amount of hours

worked by the owner, having employees, etc.) and a patchwork of data sources over the years.

Researchers have used differing definitions of businesses and entrepreneurs over the years. Recently,

Fairlie (2007) defined an entrepreneur as a newly self-employed person, for whom self-employment

was the primary occupation, incorporated or unincorporated, with 15 or more hours worked during the

week. Bates (1990) defined an entrepreneur as a non-minority male filing a business tax return

(excluding C-corporations), with $5,000 or more in annual sales, with capital invested in the business,

and a business age of less than six years. The seemingly idiosyncratic selection of criteria results from

the limits imposed by reliance on available data. For instance, even though entrepreneurs are of every

race, gender, and ethnic makeup, useful data series on all of these groups do not necessarily exist, so

research constructs may appear artificial or constrained. Fairlie and Bates produced solid research

2 The U.S. Census Bureau previously published a few publicly available reports from the Survey of Business Owners (U.S. Census Bureau, 2006a, 2006b) detailing owner and business characteristics.

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results, but readers need to be cognizant of their definitions of business and/or entrepreneur when

comparing their results to those of similar studies.

The oldest data source on the number of businesses that we are aware of is Dun & Bradstreet’s (D&B)

“Total Concerns in Business.” The publication dates back to 1857, and these statistics have been kept

on an annual basis since 1870. While the publication is impressive, it contains unavoidable gaps. It is

very difficult for a private company such as D&B to find new firms, one-person firms, and firms that

do not seek credit in the commercial market, and to determine when firms close. It is generally

believed that the D&B series captured most of the employer businesses and a fraction of the non-

employer businesses. The data series was discontinued in 1998.

Another data source is the number of self-employed made available by the Bureau of Labor Statistics.

On its website, BLS lists the number of individuals whose primary occupation is unincorporated self-

employment going back to 1948. (These numbers are available including or excluding agriculture.)

Earlier data is available in other media, though not online. This data source represents the number of

owners, not the number of businesses. Many businesses have only one owner, but some businesses are

owned by or employ groups of self-employed persons. Medical and legal practices may be organized

in such a way.

The Census Bureau’s efforts to track the number of firms in subsets of industries began with their 1954

Enterprise Statistics program, which was based on Economic Census data. Over time, industries were

added, making historical comparisons virtually impossible. The program was discontinued after the

1992 release. The Economic Census continued, however, and it sporadically generated demographic

information on owners and businesses beginning in 1972. Once again, changes in definitions and

methodology have complicated historical comparisons. More recently, the Census Bureau’s Statistics

of U.S. Businesses Program has produced annual numbers of employer firms since 1988 and

nonemployer firms since 1997.3 (Comparable nonemployer figures for 1992 also exist). Most

nonemployers are sole proprietors, and these numbers track (or have similar levels and trends as) the

total number of sole proprietor tax returns submitted to the Internal Revenue Service.

3 Nonemployers are defined as businesses that do not have payroll and thus no employees.

5

For several decades, the Economic Census focused on owner and business demographics in two

publications: the Survey of Women and Minority-Owned Businesses and the Characteristics of

Business Owners. These publications evolved over the years, and they are now published as the

Survey of Business Owners (SBO). The SBO contains information on owner demographics, home-

based businesses, franchises, exporting status, and veteran-ownership. No other data set tracks these

characteristics.

The data used to compare employers and nonemployers in this paper is from special tabulations of

SBO records.4 The SBO’s counts and definitions of employers and nonemployers are similar to the

Census Bureau’s more dedicated annual programs of business counts: the Statistics of U.S. Businesses

(SUSB) for employers and Nonemployer statistics.5 In these series, employers are defined as having

some annual payroll; nonemployers have no annual payroll. Both have $1,000 or more of annual sales.

The basic unit is the firm (i.e., the entire business), not the establishment (or business location).

However, the timing of their data production differs, resulting in differing figures. SBO found 5.52

million employers and 17.45 million nonemployers in 2002, while SUSB found 5.7 million and 17.65

million, respectively.6

The continuing data sources on businesses, such as the number of nonemployers, employer firms and

self-employed, differ in their definition of a business operation and thus differ in trend.7 Table 1

shows that nonemployers experienced high growth rates over the period analyzed, 1992 to 2005, while

employers and the self-employed grew at much lower rates. The trend differences below make clear

that aggregating businesses regardless of size introduces a bias and has the potential to skew the results

of analyses based on such data. For example, when employers and nonemployers are taken as a group

(Table 1) their growth trend corresponds to that of nonemployers, as they overwhelm employers in

number (by a 3-to-1 margin).

Using average sales per venture also corroborates the point that combining nonemployers and

employers can lead to misleading results. Table 2 shows the stark difference in the average sales of

nonemployers and employers. In 2002, nonemployers averaged $47,400 in annual sales, while 4 Figures were adjusted for nonresponse. 5 SUSB and Nonemployer data can be found at www.sba.gov/advo/research/data.html. 6 The authors would like to recognize the efforts of Valerie C. Strang of the U.S. Census Bureau for producing the special tabulations. 7 See U.S. Small Business Administration (2005), Chapter 1, for a comparison of nonemployers and the self-employed.

6

employers averaged $4.2 million. However, their trends were similar with both having larger increases

from 1992 to 1997 than 1997 to 2002. Viewing the combined or total percent change of average

receipts indicates an opposite trend, a decline from 1997 to 2002. This is because the number of

nonemployers grew faster than the number employers from 1997 to 2002.

Table 1: Number of Firms, 1992 to 2005 (millions; percent)

Year 1992 1997 2002 2003 2004 2005 Percent Change

1992-2002 2002-2005 Employers plus Nonemployers 19.43 20.98 23.35 24.42 25.41 26.38 20.2 13.0 Employer Firms 5.10 5.54 5.70 5.77 5.89 5.98 11.8 4.9Nonemployers 14.33 15.44 17.65 18.65 19.52 20.39 23.2 15.5 Self-Employed Persons 8.58 9.06 8.92 9.34 9.47 9.51 4.0 6.6Business Tax Returns 20.85 23.65 26.43 27.49 28.7 29.51 26.8 11.7 Non-farm figures. Sources: U.S. Department of Commerce, Bureau of the Census (SUSB and Nonemployers), U.S. Department of Labor, Bureau of Labor Statistics, and U.S. Department of the Treasury, Internal Revenue Service.

Table 2: Average Receipts of Nonemployers, Employers, and Combined Groups, 1992 – 2005 ($000, 2005 dollars; percent)

Year 1992 1997 2002 2005 Percent Change

1992-1997 1997-2002 2002-2005 Total 999.9 1,092.0 1,061.8 NA 9.2 –2.8 NA

Nonemployers 43.4 46.2 47.4 46.6 6.4 2.5 –1.5

Employers 3,720.6 4,005.5 4,203.6 NA 7.7 4.9 NASource: U.S. Department of Commerce, Bureau of the Census, Statistics of U.S. Businesses, Nonemployer Statistics, Survey of Minority-Owned Business Enterprises Summary, 1992 C-Corporation figures.

3. Business Size Caveat

Business size is not static. Some nonemployers grow to become employers, and some employers

shrink into nonemployers. Firm evolution is a tricky issue for researchers trying to pinpoint a

business’s start year and for census takers trying to get an accurate count of new businesses.

Determining firms’ start years has been problematic in data sources. There is significant potential for

mislabeling an entity as a new firm when in fact it is not. A so-called “new employer firm” may be the

reincarnation of an existing firm, a firm that has been on hiatus for a time, or a nonemployer that has

expanded. This issue is borne out in the comparison of differing data sources.

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Table 3: Firm Counts for Select Types of Businesses, 2002 Employer firms Amount Percent

Nonemployer firms Amount Percent

Total 5,524,784 100.0 17,449,871 100.0 Home-based 1,259,088 22.8 10,645,910 61.0 Franchises 208,975 3.8 252,197 1.4 Exporters 104,680 1.9 249,010 1.4 New (started in 2002) 275,583 5.0 2,689,812 15.4 Sole proprietors 1,093,907 19.8 15,094,138 86.5 Note: Percentages may total more than 100 because businesses may belong to more than one category. Source: U.S. Department of Commerce, Bureau of the Census, Survey of Business Owners, special tabulations.

The U.S. Census Bureau’s SUSB shows that 11 percent of employer firms were new in 2002, but in

the SBO the figure is 5 percent. (For the SBO, owners of employer firms are asked what year the firm

started.) A similar discrepancy exists among nonemployers. The Census Bureau’s nonemployer

statistics report that 34.8 percent of businesses were new in 2002 (special tabulations from the U.S.

Census Bureau), while the SBO data in Table 6e shows 15.4 percent of business were new (2.69

million divided by 17.45 million).

The employer result is not surprising. Davis et. al. (2007), in undertaking a huge effort to link internal

U.S. Census microdatabases, show the prevalence of new employer firms starting as nonemployer

firms. But the nonemployer discrepancy above gives one the impression that nonemployers tend to go

on hiatus and are classified as new firms after waking from hibernation.

4. Firm Differences

To indicate that employers and nonemployers represent different types of businesses, Tables 3 and 4

show business and owner characteristics for the two groups.8 (These tables summarize the detailed

tables in the Appendix.)

8 While the tables were based on a survey of 1.86 million responding firms and the survey had a response rate of 81 percent, caution should be used when considering some of the smaller figures and the precision of the figures in the tables. See www.census.gov/econ/census02/text/sbo/sbomethodology.htm for details of the data methodology and limitations.

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Table 4: Percent of Owners in Select Demographic Categories, 2002 Employer firms Nonemployer firms Total Veteran Disabled Veteran Younger (under 35) Older (65 and over) Women Asian American Indian /Alaska Native Black or African American Hispanic

100.0 15.1

0.7 8.3

10.5 27.0

5.7 0.5 1.5

3.8

100.0 14.7

1.1 16.3 11.4 38.7

4.21.0 4.2 5.9

Note: Percentages may total more than 100 because businesses may belong to more than one category. Figures adjusted for non-response; figures include non-majority interest owners. Source: U.S. Department of Commerce, Bureau of the Census, Survey of Business Owners.

a. Business Characteristics

Employers are significantly larger than nonemployers. Employers’ median annual receipts were just

over $250,000 in 2002, while nonemployers’ were just over $10,000. Two out of every thousand

nonemployers had receipts of $1 million or more in 2002, while 21 percent of employers had more

than $1 million in receipts. Employers and nonemployers also differ in how they operate. Consistent

with popular belief, most nonemployers are sole proprietors (87 percent) and most employers are

corporations (66 percent) (Table 5a).9

On the whole, employers and nonemployers provide a differing mix of goods and services. Industries

have differing economies of scale, and this in turn affects their respective shares of employers and

nonemployers. For example, manufacturing, mining and utilities had an employer ratio of 46.7 percent

while the real estate, rental and leasing industry employer ratio was 12.4 percent (Table 5c). 10 In

addition, employers tend to have a dedicated business location while nonemployers tend to work from

home. Nonemployers are home-based 61 percent of the time versus 23 percent for employers (Table

9 Sole proprietors employ a small but not inconsequential part of the labor force. For 2002, sole proprietors employed 3.88 million people; partnerships, 9.75 million; corporations, 92.93 million; and other legal forms of organization such as non-profits, 4.21 million. 10 The “employer ratio” is the percent of employers as a share of employers and nonemployers combined.

9

6a). Being home-based seems very much a function of industry as some industries need a storefront

while others do not.

Employers and nonemployers do have a few things in common. Both groups have a low percentage of

exporters (firms that make 10 percent or more of sales abroad). Only 1.9 percent of employers and 1.4

percent of nonemployers were exporters. Franchises also tended to be a small percentage of both

employers (4 percent) and nonemployers (1 percent).

Interestingly, with regard to the year that employer and non-employer franchises combined were

acquired, they were 2 percent of all firms in each of the “year acquired” categories (Table 6a).

Franchises having the same age distribution as firms on the whole gives the impression that franchises

have survival rates similar to non-franchises. This has been a contentious issue for the past few

decades. There is a temptation to analyze employer and nonemployer categories separately for age

distributions, but the “business size” caveat mentioned above could cause issues. That is, some firms

might start as nonemployers and expand to become employers while some firms might start as

employers and shrink to become nonemployers. This is a good example of where definitions could

drive results.

Focusing on geography, the ratio of employer and nonemployer firms was similar across states.

Delaware had the highest employer ratio at 30.8 percent and Texas had the lowest, at 20.9 percent.

The most populous states tended to have lower employer ratios (i.e., a relatively large proportion of

nonemployers); the less populous states tended to have higher employer ratios (Table 5b).11

b. Owner Characteristics

The single characteristic that most differentiates nonemployers and employers is the solo versus team

aspect of the venture. Employers were single owners 38.5 percent of the time, while nonemployers

were single owners 59.5 percent of the time. For firms with multiple owners, the bulk of both

employer and nonemployer owners considered their firms to be family businesses (64.4 percent and

78.6 percent, respectively). A surprising relationship emerged with regard to multiple owners, owner

11 This is most likely the result of multi-state employer firms being a larger share of employers in smaller states. The “employer ratio” is the percent of employers as a share of employers and nonemployers combined.

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age and employer/nonemployer status. For employers, younger owners (under age 35) represented a

below average share of single owners (34 percent versus 38.5 percent), while older owners (65 or over)

were much higher (59.6 percent). For nonemployers, the opposite was true. Younger nonemployers

were single owners 68.8 percent of the time, older nonemployers 52.2 percent, and nonemployers in

general were 59.5 percent. Most younger owners, 54 percent, started their employer firm in the last

four years, while only 7 percent of older owners did. This held up for nonemployers also (Table 7a).

Veteran owners’ firm size distribution was similar to that of the United States as a whole. They

virtually matched the universe in size, state, and industry distributions. Disabled veterans tended to

have similar industry and state distributions as the universe, but they tended to own smaller ventures.

Women, Hispanics, black/African American, and American Indian/Alaska Native business owners had

higher shares of nonemployer firms than the U.S. as a whole. Asians had a larger share of employer

firm owners than the overall distribution. (These observations are based on previously published

Census Bureau data: www.census.gov/csd/sbo/charcbotable_a.xls).

c. Financing

Given their different business characteristics (size and industry mix) and owner characteristics (age

distributions), it is not surprising that employers and nonemployers have differing financing needs.

But similarities certainly exist also.

Table 6d covers the spectrum of possibilities. While the bulk of new firms used start-up financing, for

most, little of it was from outside sources. For nonemployers, 54 percent used personal and/or family

savings, while 34 percent did not use start-up capital. For employers, the figures were 67 percent and

12 percent, respectively. The share of employers who relied on start-up capital in 2002 is similar for

all firms and new firms, creating the impression that using start-up capital is not a significant factor in

distinguishing between the categories. There was a similar finding for nonemployers.

After start-up, some firms used expansion financing, but the bulk of employers and nonemployers did

not seek expansion capital (54 and 63 percent respectively).

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The source of funds differed for employers and nonemployers. Employers were much more likely than

nonemployers to rely on bank business loans for both start-up capital and expansion capital. Contrary

to conventional wisdom, outside investors were used more for start-up than expansion, and credit cards

were used more for expansion. This held up for both employers and nonemployers.

Franchises and home-based businesses’ financing needs are somewhat different from other businesses.

Franchises can rely upon their franchisor for financing. Home-based firms may not need as much

financing as other firms.

For expansion financing, franchises had a similar financing pattern as the universe of firms. However

at start-up, franchises were more likely to use a bank loan (38 percent for franchises versus 23 percent

for all businesses). Franchise employers and nonemployers had similar financing patterns except for

nonemployers’ lower rates of using any financing and using bank loans.

Home-based and non-home-based nonemployers had similar financing patterns, except non-home-

based employers were more likely to use bank loans. Other than being more likely to use financing,

exporting and non-exporting nonemployers showed reasonably similar financing patterns as the

universe of businesses. This finding also held for employers.

Veteran-owned businesses had similar financing patterns as non-veteran-owned businesses. Businesses

owned by service-disabled veterans tended to favor credit cards for start-up and expansion financing.

Credit card usage differed by age of owner. For employer and nonemployer firms’ start-up and

expansion financing, younger owners had higher credit card usage than the total, while older owners

had lower credit card usage.

5. Conclusion

From a data perspective, the cross-tabulations presented in the Appendix and discussed in the paper

add considerable value to the existing body of data on small business. The information they provide

on home-based businesses is particularly important since the latest installment of such data prior to the

2002 Survey of Business Owners was the 1992 Characteristics of Business Owners. In addition, the

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new questions that were added to the 2002 Survey of Business Owners have allowed us to document

businesses owned by veterans and service-disabled veterans.

While it is difficult to aggregate businesses across all industries, the special tabulations from the U.S.

Census Bureau of the Survey of Business Owners show that a typical nonemployer differs from a

typical employer business. As one would imagine, many of the differences seemed to be from the

tendency for employers to be bigger entities than nonemployers. Employers had higher average sales,

shares of corporations, higher incidences of multiple owners and more reliance on financing than

nonemployers.

The number of businesses based on different definitions (e.g. total businesses, employers,

nonemployers, or self-employed) has had different levels and trends over the past decade. In addition,

the types of businesses that make up the bulk of employers and nonemployers differ not only in size,

but also in who they are, and how they operate.

Researchers need to make clear which group of business they are studying when conducting small

business research, as the results may not be applicable to other subgroups of small businesses or to the

whole. The discussion in this paper establishes this notion and further validates the conclusion that

whether it be for the characterization of small businesses in general or for the evaluation of regulatory

impact on small business, a clear choice has to be made as to the realm of small businesses under

consideration.

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References

Acs, Zoltan, 1984. The Changing Structure of the U.S. Economy: Lessons from the Steel Industry, Praeger Publishers, New York. Bates, Timothy, 1990. “Entrepreneur Human Capital Inputs and Small Business Longevity,” The Review of Economics and Statistics, vol. 72, no. 4, pp. 551-559. Brockhaus, Robert H. Sr., 1980. “Risk Taking Propensity of Entrepreneurs,” The Academy of Management Journal, vol. 23, no. 3, pp. 509-520. Davis, Stephen, John Haltiwanger, Ron S. Jarmin, C.J. Krizan, Javier Miranda, Alfred Nucci and Kristin Sandusky, 2007. Measuring the Dynamics of Young and Small Businesses: Integrating the Employer and Nonemployer Universes, NBER working paper 13226, July 2007. Fairlie, Robert, 2007. Entrepreneurship in Silicon Valley During the Boom and Bust, Office of Advocacy, U.S. Small Business Administration (www.sba.gov/advo/research/rs296.pdf). Leonhardt, David, 2000. “Entrepreneurs’ ‘Golden Age’ Is Fading in Economic Boom,” New York Times, December 1. Shane, Scott and S. Venkataraman, 2000. “The Promise of Enterpreneurship as a Field of Research,” The Academy of Management Review, vol. 25, no. 1, pp. 217-226. Tirole, Jean, 1997. The Theory of Industrial Organization, The MIT Press, Cambridge, Massachusetts. U.S. Department of Commerce, Bureau of the Census, 2006a. Characteristics of Businesses: 2002, (www.census.gov/prod/ec02/sb0200cscb.pdf). U.S. Department of Commerce, Bureau of the Census, 2006b. Characteristics of Business Owners: 2002, (www.census.gov/prod/ec02/sb0200cscbo.pdf). U.S. Small Business Administration, Office of Advocacy, 2005. The Small Business Economy, 2005: A Report to the President, (www.sba.gov/advo/research/sbe.html).

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Appendix Tables

Employers and Nonemployers:

Table 5a: Employers and Nonemployers by Firm Size, 2002 .............................................................. 17

Table 5b: Employers and Nonemployers by State, 2002 ..................................................................... 18

Table 5c: Employers and Nonemployers by Major Industry, 2002...................................................... 19

Table 5d: Cross-Tabulation of Employment Size of Firm and Receipt Size of Firm, 2002 ................ 20

Number of Businesses:

Table 6a: Number of Businesses by Business Characteristics and Firm-Size

Related Variables, 2002 ....................................................................................................... 21

Table 6b: Number of Businesses by Business Characteristics and Geographic Area, 2002................ 22

Table 6c: Number of Businesses by Business Characteristics, Major Industry and Customer, 2002.. 24

Table 6d: Number of Businesses by Business Characteristics and Finance Type, 2002 ..................... 25

Table 6e: Cross-Tabulation of Number of Businesses by Firm-Size Related Variables, 2002............ 26

Owner Characteristics:

Table 7a: Owner Characteristics by Firm-Size Related Variables, 2002 ............................................. 27

Table 7b: Owner Characteristics by Geographic Area, 2002 ............................................................... 28

Table 7c: Owner Characteristics by Major Industry, 2002................................................................... 30

Table 7d: Owner Characteristics by Finance Type, 2002..................................................................... 31

15

Table 5a: Employers and Nonemployers by Firm Size, 2002

Employer firms Nonemployer firms Employer Ratio

Total

Employment size of firmNonemployers0 *1-45-910-1920-99100-249250+

Receipt size of firm< $10,000 $10,000 to $49,999 $50,000 to $99,999 $100,000 to $249,999 $250,000 to $999,999 $1 million to $4.9 million $5 million +

Legal form of organizationCorporations (including tax-exempt corp.)PartnershipsSole proprietorsOther

5,524,784

0810,950

2,600,314948,715581,596484,857

60,77337,579

121,053534,004627,518

1,283,7401,798,618

872,916286,935

3,646,357453,032

1,093,907331,487

17,449,871

17,449,8710000000

7,574,3106,373,6061,759,9311,199,885

515,48026,659

0 **

1,064,4421,081,892

15,094,138191,949

24.0

0.0100.0100.0100.0100.0100.0100.0100.0

1.67.7

26.351.777.797.0

100.0

77.429.5

6.863.3

* Firms with annual payroll but no employees on March 12, 2002.** Nonemployers with receipts in this size class were believed to be misclassified and therefore were notclassified as nonemployers.Note: The employer ratio is the percentage of employers as a share of employers and nonemployers combined.

Source: Office of Advocacy, U.S. Small Business Administration, from special tabulations of U.S. Census Bureau, Survey of Business Owner data.

17

Table 5b: Employers and Nonemployers by State, 2002


Total 5,524,784 17,449,871 24.0

Alabama 74,827 234,717 24.2Alaska 15,548 46,597 25.0Arizona 94,613 286,567 24.8Arkansas 49,988 159,022 23.9California 673,401 2,235,357 23.2Colorado 117,062 347,920 25.2Connecticut 75,328 226,243 25.0Delaware 19,589 43,981 30.8District of Columbia 13,515 33,657 28.7Florida 360,179 1,179,028 23.4Georgia 158,665 515,856 23.5Hawaii 23,517 75,707 23.7Idaho 33,106 88,454 27.2Illinois 244,352 713,768 25.5Indiana 109,771 324,136 25.3Iowa 62,314 174,201 26.3Kansas 58,804 160,574 26.8Kentucky 68,736 231,949 22.9Louisiana 78,420 250,336 23.9Maine 33,676 101,734 24.9Maryland 104,106 339,434 23.5Massachusetts 142,507 421,032 25.3Michigan 185,739 549,792 25.3Minnesota 113,797 330,030 25.6Mississippi 45,630 141,972 24.3Missouri 115,163 324,322 26.2Montana 28,248 72,154 28.1Nebraska 40,224 105,156 27.7Nevada 42,176 127,329 24.9New Hampshire 31,760 93,628 25.3New Jersey 199,426 509,411 28.1New Mexico 34,500 102,211 25.2New York 414,480 1,292,688 24.3North Carolina 157,986 484,611 24.6North Dakota 16,645 40,136 29.3Ohio 201,515 616,178 24.6Oklahoma 67,427 224,183 23.1Oregon 83,217 216,288 27.8Pennsylvania 226,585 647,670 25.9Rhode Island 24,780 62,666 28.3South Carolina 75,352 217,632 25.7South Dakota 20,158 49,378 29.0Tennessee 96,113 358,253 21.2Texas 363,331 1,371,178 20.9Utah 49,192 143,811 25.5Vermont 18,485 53,836 25.6Virginia 136,042 393,478 25.7Washington 135,590 331,700 29.0West Virginia 30,787 82,300 27.2Wisconsin 112,589 280,652 28.6Wyoming 16,145 36,958 30.4

Note: The employer ratio is the percentage of employers as a share of employers and nonemployers combined.


18

Table 5c: Employers and Nonemployers by Major Industry, 2002


Total 5,524,784

Forestry, fish. and hunt. & ag. support srvs. 29,250Mining 19,324Utilities 6,223Construction 729,842Manufacturing 310,821Wholesale trade 347,319Retail trade 745,872Transportation and warehousing 167,865Information 76,443Finance and insurance 241,120Real estate and rental and leasing 266,161Professional, scientific, and technical srvcs. 727,893Management of companies and enterprises 28,351Admin. & support & waste mngt. & rem. srvs. 305,462Educational services 65,251Health care and social assistance 564,299Arts, entertainment, and recreation 103,824Accommodation and food services 434,441Other services (except public administration) 392,656Industries not classified 29,593

Note: The employer ratio is the percentage of employers as a share

Source: Office of Advocacy, U.S. Small Business Administration, froBureau, Survey of Business Owner data.

19

17,449,871

220,04082,70512,673

2,050,481290,360363,764

1,838,817808,961232,674660,248

1,879,9932,552,734

01,262,583

344,4731,456,816

865,917241,675

2,284,9570

of employers and nonemployers combined.

m special tabulations of

24.0

11.718.932.926.351.748.828.917.224.726.812.422.2

100.019.515.927.910.764.314.7

100.0

U.S. Census

Table 5d: Cross Tabulation of Employment Size of Firm and Receipt Size of Firm, 2002

Receipt size class Total NonemployersEmployer firm size (by number of employees)

0 * 1-4 5-9 10-19 20-99 100-249 250+

FirmsAll firms< than $10,000$10,000 to $49,999$50,000 to $99,999$100,000 to $249,999$250,000 to $999,999$1 million to $4.9 million$5 million+

EmployeesAll firms< than $10,000$10,000 to $49,999$50,000 to $99,999$100,000 to $249,999$250,000 to $999,999$1 million to $4.9 million$5 million+

Receipts (millions)All firms< than $10,000$10,000 to $49,999$50,000 to $99,999$100,000 to $249,999$250,000 to $999,999$1 million to $4.9 million$5 million+

22,974,655 7,695,363 6,907,610 2,387,449 2,483,625 2,314,098 901,208 285,302

110,766,605 412,822 481,419 940,236 3,305,077 11,363,215 16,794,069 77,469,767

22,603,658.9 31,697.9 162,275.1 169,602.9 394,039.6 1,149,322.6 1,871,028.7 18,825,692.2

17,449,871 7,574,310 6,373,606 1,759,931 1,199,885

515,480 25,920

739

- - - - - - - -

767,409.6 31,090.2

146,597.4 123,231.5 180,945.1 234,215.3

40,186.6 11,143.4

810,950 85,363

233,062 163,265 191,148 113,222

22,158 2,732

- - - - - - - -

207,263.0 422.9

6,375.1 11,797.8 30,068.4 51,369.2 41,439.1 65,790.5

2,600,314 32,780

292,234 434,148 905,936 802,554 123,072

9,590

5,445,812 40,683

410,332 722,580

1,846,630 2,063,207

335,952 26,428

880,089.4 180.0

9,004.6 32,243.7

149,271.7 360,625.0 220,344.9 108,419.5

948,715 1,082 7,581

25,879 149,899 555,774 193,643

14,857

6,224,596 7,046

45,290 157,078 931,021

3,628,966 1,351,618

103,577

856,365.2 2.6

260.8 1,999.0

26,899.4 301,187.3 349,042.4 176,973.7

581,596 601 914 3,787 32,431 245,246 267,880 30,737

7,795,685 7,989 11,250 46,489 404,541 3,185,954 3,694,224 445,238

1,045,412.7 0.9 31.3 296.6 6,037.4 147,525.3 533,559.5 357,961.6

484,857 811 192 427 4,291 81,144 255,302 142,690

18,997,881 36,507 6,957 11,842 116,516 2,379,428 9,332,729 7,113,902

2,805,653.9 1.0 5.4 33.4 811.4 53,922.7 643,833.6 2,107,046.4

63,485 240 12 10 29 627 12,167 50,400

9,534,586 37,931

DD

4,133 84,733 1,658,435 7,746,270

1,532,212.9 0.1

DD

5.2 442.8 39,168.1 1,492,595.7

34,867 176 9 2 6 51 1,066 33,557

62,768,045 282,666

DD

2,236 20,927 421,111 62,034,352

14,509,252.2 0.1

DD

1.0 35.0 3,454.5 14,505,761.4


20

Table 6a: Number of Businesses by Business Characteristics and Firm Size Related Variables, 2002

AllEmployers Non-Employers

Home-based Franchise Exporters New All Home-based Franchise Exporters New

Total



Legal form of organizationCorporations (incl. tax-exempt corp.)PartnershipsSole proprietorsOther**

Year business acquiredBefore 19801980 to 19891990 to 19981999200020012002

Owner statusOnly one ownerFamily-OwnedNot family-owned

5,524,784

--810,950

2,600,314948,715581,596484,85760,77337,579

121,053534,004627,518

1,283,7401,798,618

872,916286,935

3,646,357453,032

1,093,907331,487

1,043,2791,299,1771,909,397

314,952347,760334,637275,583

2,892,8541,593,9061,038,024

1,259,088

--309,736790,708109,54136,51412,591

00

47,845220,340241,745384,022298,40461,6955,036

791,96762,954

331,14073,027

163,079265,922487,76885,21396,96689,62070,521

765,696414,70078,693

208,975

--23,40554,75140,12335,52646,6016,0602,299

1,88110,03112,32934,06380,45546,81023,405

145,65525,49530,9286,687

28,72841,00773,21114,36416,68117,37617,376

84,27488,12439,357

104,680

--12,24845,43116,64412,45713,2942,7221,884

1,4666,7008,270

17,06329,52025,96115,702

83,3257,118

11,4102,931

19,24722,84838,3706,3336,9546,0854,719

45,24732,99528,266

275,583

--184,91656,77015,9849,3707,441

827276

15,70865,58950,43266,69155,11717,6374,409

169,48445,74746,29814,055

NANANANANANA

275,583

124,90990,46164,975

17,449,871

17,449,871--------------

7,574,3106,373,6061,759,9311,199,885

515,48026,659

--

1,064,4421,081,892

15,094,138191,949

1,898,6912,802,8295,560,4511,175,3801,537,0351,785,6732,689,812

12,292,9893,976,6101,180,272

10,645,910

10,645,910--------------

5,014,2243,832,5281,000,716

606,817180,98010,646

--

564,233436,482

9,645,1940

1,072,5361,655,1483,442,707

741,506966,606

1,125,5001,641,907

7,748,3342,554,160

343,416

252,197

252,197--------------

103,90581,20729,75922,44612,6102,018

--

21,68910,340

220,1680

22,00034,75375,56417,85523,59431,56546,869

141,81273,24438,700

249,010

249,010--------------

85,66087,40335,60825,89713,696

747--

27,64011,454

209,9160

29,76635,52777,45616,32325,92524,32539,688

155,53573,64721,373

2,689,812

2,689,812--------------

1,632,716809,633142,56075,31526,898

----

131,801129,111

2,428,9000

NANANANANANA

2,689,812

2,013,267485,585201,872

* Annual payroll but no employees on March 12, 2002**Contains nonprofits and some miscellaneous legal forms of organization.


21

Table 6b: Number of Businesses by Business Characteristics, Metropolitan Location and State, 2002



Total

Geographic concentrationNot within a metro/micro areaWithin a metro/micro area

StateAlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareDistrict of ColumbiaFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth Dakota

5,524,784

394,7695,149,141

74,82715,54894,61349,988

673,401117,06275,32819,58913,515

360,179158,66523,51733,106

244,352109,77162,31458,80468,73678,42033,676

104,106142,507185,739113,79745,630

115,16328,24840,22442,17631,760

199,42634,500

414,480157,98616,645

1,259,088

96,9501,162,139

11,3323,777

25,1828,814

127,16837,77315,1093,7771,259

81,84136,5143,777

10,07357,91827,70015,10913,85013,85012,59110,07328,95927,70044,06836,5146,295

27,7007,555

10,0737,5558,814

42,8097,555

69,25039,0323,777

208,975

17,554193,092

3,135209

3,5533,135

21,7334,5972,508

627209

9,6136,060

8361,2549,6135,2243,1352,7173,3442,7171,0453,3443,7627,3145,4332,0905,0151,2541,6721,463

8365,6421,4639,6136,2691,045

104,680

6,07199,341

942419

1,780628

19,5751,9891,780

419314

11,9342,826

628628

4,3971,6751,047

942837

1,256523

1,7803,4543,0361,989

4191,780

419733733733

4,397628

8,2702,303

209

22

275,583

19,015256,843

3,583551

5,5123,031

30,5907,4412,756

827276

19,2918,819

8271,929

11,0235,7873,0312,7563,0313,5831,6534,6855,7878,8196,6142,4806,3381,6531,9292,4802,2057,9921,653

15,7087,992

827

17,449,871

1,233,54416,216,327

234,71746,597

286,567159,022

2,235,357347,920226,24343,98133,657

1,179,028515,85675,70788,454

713,768324,136174,201160,574231,949250,336101,734339,434421,032549,792330,030141,972324,32272,154

105,156127,32993,628

509,411102,211

1,292,688484,61140,136

10,645,910

809,0899,836,821

127,75131,938

191,62695,813

1,288,155255,502149,04331,93821,292

617,463298,08553,23063,875

425,836223,564127,751117,105138,397127,75174,521

223,564266,148383,253255,50274,521

223,56453,23074,52163,87574,521

276,79463,875

628,109308,73131,938

252,197

13,871238,326

3,279252

4,5402,522

29,7594,5402,774

757252

16,6457,0621,0091,513

12,1055,5482,5222,0182,7743,5311,0095,0445,0448,3235,0442,0184,5401,2611,5132,0181,5138,3231,261

15,1327,818

504

249,010

20,419228,591

2,7391,7433,7351,992

42,5813,7352,490

747498

23,4075,9762,2411,2459,2133,4863,2371,9922,4903,9841,7433,9845,4786,2254,4821,4943,735

7471,4941,992

9967,7191,245

15,6884,980

747

2,689,812

180,2172,509,594

37,6575,380

48,41724,208

320,08861,86629,5885,3805,380

182,90791,45410,75916,139

110,28253,79626,89826,89837,65737,65713,44956,48661,86691,45459,17618,82956,48610,75916,13921,51813,44972,62516,139

164,07983,3845,380

Table 6b: Number of Businesses by Business Characteristics, Metropolitan Location and State, 2002



OhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming

201,51567,42783,217

226,58524,78075,35220,15896,113

363,33149,19218,485

136,042135,59030,787

112,58916,145

45,32713,85023,92347,8455,036

15,1095,036

16,36859,17715,1095,036

37,77341,5506,295

30,2183,777

8,7774,3883,3448,150

6273,1351,0454,806

18,5991,881

4185,2244,1791,4635,015

627

3,0361,0471,9894,083

5231,151

3141,3618,6881,151

3142,3034,187

3141,884

209

8,8193,5834,6859,370

8273,8581,1024,960

19,0153,307

8277,1657,4411,1025,5121,102

616,178224,183216,288647,67062,666

217,63249,378

358,2531,371,178

143,81153,836

393,478331,70082,300

280,65236,958

415,190138,397159,689436,48231,938

127,75131,938

202,272723,922106,45942,584

266,148244,85653,230

223,56421,292

10,3404,0353,279

10,592757

2,774757

4,54021,6891,765

5046,5574,7921,2614,287

757

6,9722,9882,9887,221

9961,992

7474,482

19,4232,988

4983,9847,719

7473,735

747

99,52334,96832,27899,5238,069

32,2788,069

53,796207,11626,8988,069

67,24551,10610,75945,7275,380

Notes: Employer firms can be in more than one geographic area. A metro area contains an urban core of 50,000 or more people while a micro area contains an urban core of 10,000 to 49,999 people.


23

Table 6c: Number of Businesses by Business Characteristics, Major Industry and Customer, 2002



Total

IndustryForestry, fishing and hunting, and ag. support srv.MiningUtilitiesConstructionManufacturingWholesale tradeRetail tradeTransportation and warehousingInformationFinance and insuranceReal estate and rental and leasingProfessional, scientific, and technical servicesManagement of companies and enterprisesAdmin. & support & waste mngt. & remediation srv.Educational servicesHealth care and social assistanceArts, entertainment, and recreationAccommodation and food servicesOther services (except public administration)Industries not classified

Customer (10 percent or more of total sales) **Export salesFederal governmentState and local governmentHousehold consumers/individualsOther businesses/organizationsAll others

5,524,784

29,25019,3246,223

729,842310,821347,319745,872167,86576,443

241,120266,161727,89328,351

305,46265,251

564,299103,824434,441392,65629,593

104,680168,651447,798

3,128,7722,244,807

953,752

1,259,088

13,8505,0361,259

415,49925,18269,25046,58665,47317,62731,47755,400

229,1541,259

135,98212,59150,36420,14515,10942,8095,036

22,15831,28284,721

596,959630,848181,173

208,975

209418209

6,8966,0606,478

53,0802,926

6277,732

13,1658,9862,926

14,4192,2994,1794,388

64,15514,419

209

1,9194,478

12,368162,27551,60436,251

104,680

1,570523

03,873

21,66928,7877,8518,6882,7221,7801,466

13,2941,2563,350

6283,245

8373,4543,873

105

104,6808,479

10,67719,68056,6329,526

275,583

1,102551276

30,86511,02312,12640,5117,7163,858

11,29911,57436,928

55115,1572,480

26,4565,512

35,82619,8422,756

4,5466,819

16,762156,258102,56250,003

17,449,871

220,04082,70512,673

2,050,481290,360363,764

1,838,817808,961232,674660,248

1,879,9932,552,734

01,262,583

344,4731,456,816

865,917241,675

2,284,9570

249,010325,629861,959

9,155,9155,727,2353,735,154

10,645,910

127,75142,58410,646

1,479,781191,626234,210

1,224,280361,961170,335330,023766,506

2,033,3690

777,151234,210819,735617,46385,167

1,117,8210

135,905169,882520,970

5,628,7423,794,0211,947,975

252,197

1,2611,261

25213,6192,0188,827

52,96113,8712,270

14,37549,68318,663

017,4023,2799,5837,0627,818

27,9940

5,4124,3309,742

170,74750,60250,602

249,010

10,2091,743

24912,7007,968

21,91328,63628,8855,4785,478

12,20243,826

012,4513,7359,960

12,9491,992

28,6360

249,01016,93321,91355,52992,13423,905

2,689,812

21,5185,3802,690

312,01837,65753,796

314,708126,42145,72786,074

193,666473,407

220,56575,315

250,152110,28237,657

320,088

37,35848,853

117,8231,324,790

916,720442,312

* Employer firms can be in more than one industry.** Firms can be in more than one sales category.


24

Table 6d: Number of Businesses by Business Characteristics and Finance Type, 2002



Total

Start-up capitalNumber of businesses

None neededPersonal/family savingsBusiness loan from bankPersonal/business credit cardOther personal/family assetsGovernment-guaranteed bank loanBusiness loan from governmentOutside investor

Percent of totalNone neededPersonal/family savingsBusiness loan from bankPersonal/business credit cardOther personal/family assetsGovernment-guaranteed bank loanBusiness loan from governmentOutside investor

Expansion financingNumber of businesses

None neededPersonal/family savingsBusiness loan from bankPersonal/business credit cardOther personal/family assetsGovernment-guaranteed bank loanBusiness loan from governmentOutside investor

Percent of totalNone neededPersonal/family savingsBusiness loan from bankPersonal/business credit cardOther personal/family assetsGovernment-guaranteed bank loanBusiness loan from governmentOutside investor

5,524,784

676,9723,683,1891,273,626

527,809751,55497,53097,530

269,642

12.366.723.19.6

13.61.81.84.9

2,955,7881,397,0721,154,605

727,401340,60840,41151,957

103,914

53.525.320.913.26.20.70.91.9

1,259,088

173,886920,201153,578152,309158,655

6,34610,15426,654

13.873.112.212.112.60.50.82.1

673,915370,396190,342209,63491,3133,8587,717

15,433

53.529.415.116.67.30.30.61.2

208,975

10,364140,86778,89419,03637,01511,4226,557

13,114

5.067.437.89.1

17.75.53.16.3

104,91656,85749,13325,96114,3752,5752,5753,647

50.227.223.512.46.91.21.21.7

104,680

9,90472,94621,40511,92717,0381,8102,236

10,436

9.569.720.411.416.31.72.1

10.0

46,57230,87027,45215,5959,5071,3891,8165,020

44.529.526.214.99.11.31.74.8

275,583

27,809185,20563,40441,99148,6658,0646,396

18,632

10.167.223.015.217.72.92.36.8

118,957107,62844,18447,29928,6062,5492,8329,347

43.239.116.017.210.40.91.03.4

17,449,871

5,980,2169,361,1291,435,9791,563,2181,399,625

72,708127,239363,539

34.353.68.29.08.00.40.72.1

11,023,8294,688,2951,031,7871,991,168

832,67036,20372,406

181,015

63.226.95.9

11.44.80.20.41.0

10,645,910

3,477,0926,074,178

611,7111,083,908

837,07821,46453,659

139,513

32.757.15.7

10.27.90.20.51.3

6,511,2603,147,109

488,3441,345,660

542,60510,85232,55675,965

61.229.64.6

12.65.10.10.30.7

252,197

56,536144,85736,73526,83525,7933,1263,647

13,027

22.457.414.610.610.21.21.45.2

136,00279,75221,12635,12316,1091,0562,1135,282

53.931.68.4

13.96.40.40.82.1

249,010

59,814148,37932,08929,77928,4952,0543,851

10,782

24.059.612.912.011.40.81.54.3

116,76392,14127,92242,13622,8451,7773,3007,361

46.937.011.216.99.20.71.33.0

2,689,812

1,127,5471,276,981

138,566290,717195,623

8,15116,30251,623

41.947.55.2

10.87.30.30.61.9

1,718,186760,28493,320

301,918137,235

2,7458,234

30,192

63.928.33.5

11.25.10.10.31.1

Note: Firms can appear in more than one category.


25

Table 6e: Cross-Tabulation of the Number of Employers and Non-Employers by Start Year and Firm-Size Related Variables

AllEmployer Start Years Non-Employer Start Years

2002 2001 2000 Before 2000 All 2002 2001 2000 Before 2000

Total



Legal form of organizationCorporations (including tax-exempt corp.)PartnershipsSole proprietorsOther**

Owner statusOnly one ownerFamily-OwnedNot family-owned

5,524,784

--810,950

2,600,314948,715581,596484,85760,77337,579

121,053534,004627,518

1,283,7401,798,618

872,916286,935

3,646,357453,032

1,093,907331,487

2,892,8541,593,9061,038,024

275,583

--184,91656,77015,9849,3707,441

827276

15,70865,58950,43266,69155,11717,6374,409

169,48445,74746,29814,055

124,90990,46164,975

334,637

--80,982

157,94849,52625,09818,7401,673

669

9,03542,16448,52291,356

100,05635,8067,697

213,83352,53856,55411,712

165,95298,34276,488

347,760

--55,642

181,18356,68530,25521,2131,739

696

7,65136,51545,90492,156

112,67443,8189,042

227,43548,33961,55310,781

179,92598,85275,028

4,566,805

--397,312

2,224,034863,126548,017452,11454,80222,834

59,368319,676452,114

1,036,6651,602,948

826,592269,441

3,100,860310,543922,495232,907

2,502,4231,407,321

736,281

17,449,871

17,449,871--------------

7,574,3106,373,6061,759,9311,199,885

515,48026,659

--

1,064,4421,081,892

15,094,138191,949

12,292,9893,976,6101,180,272

2,689,812

2,689,812--------------

1,632,716809,633142,56075,31526,898

0--

131,801129,111

2,428,9000

2,013,267485,585201,872

1,785,673

1,785,673--------------

839,266642,842162,49698,21239,2851,786

--

103,569116,069

1,566,0360

1,289,653364,350135,278

1,537,035

1,537,035--------------

679,370559,481147,555106,05541,5001,537

--

89,148116,815

1,331,0730

1,079,658345,366115,122

11,437,351

11,437,351--------------

4,186,0704,311,8811,429,6691,040,799

446,05722,875

--

846,364857,801

9,744,6230

7,655,7393,053,044

751,696

* Annual payroll but no employees on March 12, 2002**Contains nonprofits and some miscellaneous legal forms of organization.Source: Office of Advocacy, U.S. Small Business Administration, from special tabulations of U.S. Census Bureau, Survey of Business Owner data.

26

Table 7a: Owner Characteristics by Firm-Size Related Variables, 2002(percent)

All

Employers Non-Employers

VeteranDisabledVeteran

Younger(under 35)

Older(65 and over) All Veteran

DisabledVeteran

Younger(under 35)

Older(65 and over)



Legal form of organizationCorporations (including tax-exempt corp.)PartnershipsSole proprietorsOther**

Year business acquiredBefore 19801980 to 19891990 to 19981999200020012002

Owner statusOnly one ownerFamily-ownedNot family-owned

--12.244.418.312.310.91.30.5

1.57.69.8

21.634.019.16.4

69.010.616.53.9

19.023.234.65.86.46.05.0

38.540.322.3

--10.447.018.211.910.71.30.5

1.67.9

10.321.833.418.76.3

68.19.1

18.04.9

33.224.627.13.94.13.93.1

44.036.521.0

--15.652.417.77.46.10.70.2

1.810.713.825.733.411.92.7

64.07.7

22.55.8

26.024.528.15.55.95.64.5

46.640.614.4

--23.543.216.39.36.80.60.2

2.411.112.624.932.613.23.1

66.015.016.62.4

4.85.5

35.511.514.315.013.4

34.044.822.3

--7.6

47.217.512.212.72.00.8

1.79.7

10.219.830.419.68.5

70.29.4

14.36.1

52.222.218.12.11.91.81.6

59.634.95.8

100.0--------------

41.835.910.87.83.40.20.0

7.19.1

83.80.0

11.116.232.26.88.7

10.014.8

59.532.18.7

100.0--------------

40.336.111.68.43.50.20.0

7.99.7

82.40.0

21.919.529.85.36.67.09.8

57.534.38.5

100.0--------------

42.937.710.66.42.30.10.0

6.55.6

88.00.0

17.318.131.46.07.67.6

12.0

59.634.95.8

100.0--------------

52.134.57.44.31.60.10.0

4.15.0

90.90.0

0.81.6

23.29.0

13.919.132.5

68.823.58.1

100.0--------------

44.535.59.27.03.70.10.0

9.212.978.00.0

36.622.025.63.63.83.64.7

52.239.88.2

* Annual payroll but no employees on March 12, 2002**Contains nonprofits and some miscellaneous legal forms of organization.


27

Table 7b: Owner Characteristics by Metropolitan Location and State, 2002(percent)

All



Younger(under 35)


DisabledVeteran

Younger(under 35)

Older(65 and over)

Geographic concentrationNot within a metro/micro areaWithin a metro/micro area

StateAlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareDistrict of ColumbiaFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhio

7.692.8

1.30.31.81.0

11.62.41.40.30.26.12.70.40.74.52.21.31.21.31.40.61.82.43.42.30.82.20.60.80.70.63.40.66.32.90.33.9

8.292.3

1.60.31.81.1

10.42.21.30.30.15.73.00.40.74.22.31.41.21.41.60.71.82.43.02.30.92.40.70.90.80.72.90.75.03.30.44.1

8.391.9

1.60.72.21.39.82.41.20.30.17.83.00.70.82.72.00.81.31.01.31.11.52.62.82.70.81.80.70.90.70.62.41.25.13.50.42.9

7.392.8

1.40.21.81.1

10.22.81.10.30.16.23.10.30.84.32.31.31.11.31.40.61.72.13.62.80.72.20.60.80.70.53.00.55.93.20.43.7

28

8.492.3

1.40.21.51.1

11.91.81.50.40.25.72.40.50.54.92.31.41.41.41.60.51.82.33.41.71.02.40.50.80.70.53.40.76.93.00.34.2

7.892.2

1.30.31.70.9

12.32.21.30.30.26.12.70.50.64.02.11.21.01.41.40.62.02.43.42.20.82.10.50.70.70.62.80.66.22.90.33.8

8.891.2

1.50.41.91.1

10.52.31.30.30.16.53.00.50.63.52.01.21.11.31.50.72.12.23.12.10.92.20.60.80.80.72.30.74.53.20.33.8

8.891.2

2.00.81.81.1

10.22.41.00.20.17.83.60.70.82.41.81.01.21.41.40.82.32.42.71.80.91.90.61.11.10.81.81.13.93.60.32.8

7.792.3

1.40.31.51.0

11.62.41.10.30.25.53.20.40.74.32.31.41.01.61.40.61.82.33.62.50.82.20.40.80.60.52.40.56.33.00.33.8

8.891.2

1.30.21.71.0

12.01.91.40.30.26.62.20.50.54.12.21.41.31.21.40.72.02.33.31.80.82.10.50.80.80.52.90.66.12.70.33.8

Table 7b: Owner Characteristics by Metropolitan Location and State, 2002(percent)

All



Younger(under 35)


DisabledVeteran

Younger(under 35)

Older(65 and over)

OklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming

1.31.74.10.41.30.41.86.11.00.32.52.60.62.30.3

1.51.84.30.41.70.42.06.60.70.32.92.80.62.20.3

1.91.83.00.31.60.51.67.80.50.43.43.00.61.50.5

1.21.73.90.41.30.51.75.81.80.32.42.60.52.50.3

1.71.44.40.41.50.42.06.80.70.22.62.10.72.00.3

1.41.44.00.41.20.32.07.20.90.32.42.20.51.90.2

1.61.54.30.41.60.42.17.70.70.32.72.30.51.90.3

2.21.53.30.21.60.42.28.00.70.33.22.70.51.30.1

1.41.33.70.31.20.42.27.31.40.32.31.90.52.00.2

1.61.44.20.31.30.41.77.60.70.32.42.00.61.80.2


29

Table 7c: Owner Characteristics by Major Industry, 2002(percent)

All



Younger Older(under 35) (65 and over) All Veteran

DisabledVeteran

Younger Older(under 35) (65 and over)

IndustryForestry, fishing and hunting, and ag. support srv.MiningUtilitiesConstructionManufacturingWholesale tradeRetail tradeTransportation and warehousingInformationFinance and insuranceReal estate and rental and leasingProfessional, scientific, and technical servicesManagement of companies and enterprisesAdmin. & support & waste mngt. & remediation srv.Educational servicesHealth care and social assistanceArts, entertainment, and recreationAccommodation and food servicesOther services (except public administration)Industries not classified

Customer (10 percent or more of total sales) *Export salesFederal governmentState and local governmentHousehold consumers/individualsOther businesses/organizationsAll others

0.60.40.1

13.76.76.6

14.22.91.34.25.1

14.00.55.30.78.81.57.66.90.2

2.03.08.5

56.043.016.5

0.50.50.1

13.77.47.1

13.33.31.15.35.8

14.70.54.90.69.41.35.36.40.2

1.83.89.4

54.145.017.9

0.40.60.1

13.75.56.8

13.64.01.15.05.6

14.80.26.00.57.21.06.87.40.3

2.25.89.8

54.242.419.3

0.70.20.1

17.34.64.7

12.93.21.63.73.4

12.60.27.61.07.51.99.67.50.3

2.22.57.1

58.941.415.5

0.60.90.18.99.38.5

16.63.01.34.99.8

11.50.93.90.66.91.87.05.50.2

2.33.28.6

50.841.621.2

1.30.60.1

10.81.72.1

11.43.91.33.9

12.915.50.06.42.07.35.01.3

12.30.0

1.41.94.8

52.633.021.3

1.40.90.1

12.12.02.5

10.44.91.05.5

14.817.10.05.51.44.43.81.2

10.90.0

1.32.45.3

49.235.422.7

1.50.70.1

12.71.82.2

11.66.00.95.0

11.116.00.06.41.64.64.11.7

11.90.0

1.53.46.0

52.232.223.4

1.40.20.1

13.51.31.6

11.44.02.02.96.2

14.40.07.82.48.96.91.0

13.90.0

1.71.64.2

54.231.721.0

1.21.50.16.81.92.6

12.03.00.85.9

20.116.80.04.81.65.34.01.4

10.10.0

1.32.24.7

45.030.728.3

* Firms can be in more than one sales category.


30

Table 7d: Owner Characteristics by Finance Type, 2002(percent)

All



Younger Older(under 35) (65 and over) All Veteran

DisabledVeteran

Younger Older(under 35) (65 and over)

Start-up capitalBusiness loan from bankPersonal/business credit cardGovernment-guaranteed bank loanBusiness loan from governmentNone neededOther personal/family assetsOutside investorPersonal/family savings

Expansion financingBusiness loan from bankGovernment-guaranteed bank loanNone neededOutside investorPersonal/business credit cardBusiness loan from governmentOther personal/family assetsPersonal/family savings

24.79.92.01.79.4

15.34.6

69.7

23.10.7

51.91.8

13.30.96.6

25.7

25.08.21.81.6

10.114.44.1

69.3

22.20.6

54.91.3

11.60.86.2

24.0

22.113.32.41.88.9

17.44.3

73.3

22.20.8

45.91.7

18.11.29.8

33.4

24.016.82.52.38.1

17.65.9

69.7

23.51.0

42.92.9

20.41.29.4

32.7

23.83.91.31.4

11.213.83.9

69.3

19.60.5

61.11.16.40.74.6

20.6

9.89.30.40.8

30.89.12.3

55.7

6.90.2

61.11.1

11.80.45.4

28.1

10.98.20.50.8

28.79.62.0

57.5

7.50.2

62.70.9

10.50.45.3

26.7

8.611.30.50.8

27.010.21.8

60.4

7.30.3

55.20.9

15.30.87.0

32.9

6.511.80.30.7

38.17.52.4

50.4

4.90.2

60.61.4

13.90.45.2

29.9

10.63.60.40.8

34.58.72.0

52.3

5.90.1

72.00.65.00.33.4

19.9


31

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U.S. SBA-Office of Advocacy--Do Business Definition ... · Do Business Definition Decisions Distort Small Business Research Results? A Working Paper by Brian Headd and Radwan Saade