THE

STATE

OF

SMALL

BUSINESS

A REPORT

OF THE

PRESIDENT

1996
STATE

OF

SMALL

BUSINESS

A REPORT

OF THE

PRESIDENT

1996

Together with the Office of Advocacy’s Annual

Report on Small Business and Competition and

the Annual Report on Federal Procurement

Preference Goals of the U.S. Small Business 

Administration

United States Government Printing Office

Washington: 1997

Page i = no fo
ISSN: 0735–1437

ISBN: 0–16–049304–8

For sale by the U.S. Government Printing Office

Superintendent of Documents

Mail Stop: SSOP

Washington, DC 20402–9328

Page ii = no fo
THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT 

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION* 

Executive Summary 

Chapter 1 The State of Small Business 

Chapter 2 The White House Conference on Small Business: 

Implementing the Recommendations 

Chapter 3 Changes in Self-Employment as Small Business 

Chapter 4 Regulatory Relief for Small Business 1

Chapter 5 Innovation and Small Business 1

Appendix A Supplementary Tables 1

Appendix B Financing Small Business 2

Appendix C Procurement 3

THE ANNUAL REPORT ON FEDERAL PROCUREMENT PREFERENCE GOALS* 3

GLOSSARY 3

INDEX 4

*For detailed tables of contents of The Annual Report on Small Business and Competit

and The Annual Report on Federal Procurement Preference Goals, see pages 17 and 331.

Page iv = blank Page 1 follo
STATE

OF

SMALL

BUSINESS

A REPORT

OF THE

PRESIDENT

Page 1 = no folio Page 2 = bla
To the Congress of the United States:

I

am pleased to present my fourth annual report on the state of small bu

ness. In short, the small business community continues to perform exce

tionally well. For the fourth year in a row, new business formation reached 

record high: 842,357 new firms were formed in 1996. 

The entrepreneurial spirit continues to burn brightly as the creativity a

sheer productivity of America’s small businesses make our Nation’s busine

community the envy of the world. My Administration has worked hard 

keep that spirit strong by implementing policies and programs designed 

help small businesses develop and expand. We have focused our econom

strategy on three pillars: reducing the deficit, opening up markets overse

and investing in our people through education and technology. Our effo

with respect to small business have been concentrated in a number of speci

areas, including directing tax relief to more small businesses, expanding a

cess to capital, supporting innovation, providing regulatory relief, openi

overseas markets to entrepreneurs, and strengthening America’s work force.

A Balanced Budget and Taxpayer Relief

When I took office, the federal budget deficit was a record $290 billion. I d

termined that one of the best things we could do for the American people, 

cluding small business, would be to balance the budget. Because of our ha

choices, the deficit has been reduced for five years in a row. By Octob

1997, the deficit had fallen to just $22.6 billion—a reduction of $267 billi

or 90 percent. These lower deficits have helped to reduce interest rates, 

important matter for all small businesses.

Small business owners have long recognized the importance of this issu

At each of the White House Conferences on Small Business—in 1980, 198

and 1995—small businesses included on their agenda a recommendation 

balance the federal budget. With passage of the Balanced Budget Act of 199

I signed into law the first balanced budget in a generation. The new budg

will spur growth and spread opportunity by providing the biggest investme

in higher education since the GI bill more than 50 years ago. Even after w

pay for tax cuts, line by line and dime by dime, there will still be $900 billi

in savings over the next 10 years.

And at the same time we are easing the tax burden on small firms. M

Administration and the Congress took the White House Conference tax re

ommendations seriously during deliberations that led to the Taxpayer Rel

Act of 1997. The new law will direct billions of dollars in tax relief to sm

firms over the next 10 years. Small businesses will see a decrease in the esta

Page 3 = No Fo
sociated with the alternative minimum tax. 

Significant new capital gains provisions in the law should provide ne

infusions of capital to new small businesses. By reducing the capital gains t

rate and giving small business investors new options, the law encourages ec

nomic growth through investment in small businesses. 

Access to Capital

For so many small business owners, gaining access to capital continues to 

a very difficult challenge. The U.S. Small Business Administration (SBA) pla

a key role as a catalyst in our efforts to expand this access. The Agency ma

or guaranteed more than $13 billion in loans in 1997. Since the end of fisc

year 1992, the SBA has backed more than $48 billion in loans to small bu

nesses, more than in the previous 12 years combined. In 1997, the SBA a

proved 45,288 loan guaranties amounting to $9.46 billion in the 7(a) guaran

program, a 23 percent increase from 1996, and 4,131 loans worth $1.44 b

lion under the Certified Development Company loan program. 

Included in the 1997 loan totals were a record $2.6 billion in 7(a) a

CDC loans to more than 10,600 minority-owned businesses and anoth

record $1.7 billion in roughly 10,800 loans to women-owned business

Over the last four years, the number of SBA loans to women small busine

owners has more than tripled, and loans to minority borrowers have nea

tripled. 

The Small Business Investment Company (SBIC) program, the SBA’s p

mier vehicle for providing venture capital to small, growing companies, p

duced a record amount of equity and debt capital investments during t

year. The program’s licensed SBICs made 2,731 investments worth $2.37 b

lion. In 1997, 33 new SBICs with combined private capital of $471 milli

were licensed. Since 1994, when the program was revamped, 111 new SBI

with $1.57 billion in private capital have entered the program. 

And in the past year, the SBA’s Office of Advocacy developed a promisi

new tool to direct capital to dynamic, growing small businesses—the Ang

Capital Electronic Network, or ACE-Net. This effort has involved refining fe

eral and state small business securities requirements and using state-of-the-

Internet technology to develop a brand new nationwide market for small bu

ness equity. 

Government Support for Small Business Innovation

As this report documents, small firms play an important role in developing 

novative products and processes and bringing them to the marketplace. Fe

eral research and development that strengthens the national defense, p

4 The State of Small Business
ideas to these efforts. 

The Small Business Innovation Research (SBIR) and Small Business Tec

nology Transfer (STTR) programs help ensure that federal research and dev

opment funding is directed to small businesses. In fiscal year 1996, mo

than 325 Phase I and Phase II STTR awards totaling $38 million went to 2

small businesses. Also in 1996, the SBIR program invested almost $1 bill

in small high technology firms. The program has touched and inspired in

viduals like Bill McCann, a blind—and once frustrated— trumpet player w

used SBIR funding to help start a company that designs software to automa

cally translate sheet music into braille. Today, Dancing Dots Braille Mu

Technology is rapidly expanding the library of sheet music available to bli

musicians.

Other initiatives include the National Institute of Standards and Techn

ogy’s Advanced Technology Program, enabling small high technology firms 

develop pathbreaking technologies, and NIST’s Manufacturing Extension Pa

nership, which helps small manufacturers apply performance-improving tec

nologies needed to meet global competition. Two of the SBA’s loan p

grams—the 7(a) and 504 loan programs—currently assist 2,000 h

technology companies. And the SBA’s ACE-Net initiative is especially d

signed to meet the needs of these dynamic high technology firms.

Because they give small firms a footing on which to build new ideas a

innovative products, these efforts benefit not only the small firms themselv

but the entire American economy.

Regulatory Relief 

A pressing concern often identified by small businesses is unfairly burde

some regulation. My Administration is committed to reforming the system 

government regulations to make it more equitable for small companies. 

1996, I signed into law the Small Business Regulatory Enforcement Fairn

Act, which strengthens requirements that federal agencies consider and m

igate unfairly burdensome effects of their rules on small businesses a

other small organizations. A small business ombudsmen and a new syste

of regulatory fairness boards, appointed in September 1996, give sm

firms new opportunities to participate in agency enforcement actions a

policies. Because agencies can be challenged in court, they have gone 

extra lengths to ensure that small business input is an integral part of th

rulemaking processes.

Many agencies are conducting their own initiatives to reduce the regu

tory burden. The SBA, for example, cut its regulations in half and rewrote 

remaining requirements in plain English. All of these reforms help ensure t

the government maintains health, safety and other necessary standards wi

out driving promising small companies out of business.

A Report of the President 
6 The State of Small Business

gg p

areas where American firms are leading—computer software, medical equ

ment, environmental technology. The information technology agreement w

reached with 37 other nations in 1996 will eliminate tariffs and unshac

trade in computers, semiconductors, and telecommunications. This cut in t

iffs on American products can lead to hundreds of thousands of jobs for o

people.

Measures aimed at helping small firms expand into the global mar

have included an overhaul of the government's export controls and reinve

tion of export assistance. These changes help ensure that our own gove

ment is no longer the hurdle to small businesses entering the internation

economy.

A 21st Century Work Force

American business’ most important resource is, of course, people. I am pro

of my Administration’s efforts to improve the lives and productivity of t

American work force. We know that in this Information Age, we need a ne

social compact—a new understanding of the responsibilities of governme

business, and every one of us to each other. 

Education is certainly the most important investment we can make 

people. We must invest in the skills of people if we are to have the best ed

cated work force in the world in the 21st century. We’re moving forward 

connect every classroom to the Internet by the year 2000, and to raise sta

dards so that every child can master the basics.

We’re also training America’s future entrepreneurs. The SBA, for examp

has improved access to education and counseling by funding 19 ne

women’s business centers and 15 U.S. export assistance centers nationwid

And we are encouraging businesses to continue their important contributio

to job training. The Balanced Budget Act of 1997 encourages employers 

provide training by excluding income spent on education for employees fro

taxation. 

We are taking steps to improve small business workers’ access to e

ployee benefits. Last year, I signed into law the Small Business Job Protecti

Act, which, among other things, makes it easier for small businesses to of

pension plans by creating a new small business 401(k) plan. We made it po

sible for more Americans to keep their pensions when they change jobs wi

out having to wait before they can start saving at their new jobs. As many 

10 million Americans without pensions when the law was signed could ea

them because this law exists.

Given that small businesses have created more than 10 million new jo

in the last four years, they will be critical in the implementation of the welfa

to work initiative. That means the SBA microloan and One-Stop Capital Sh
people from welfare to work. 

A small business starts with one person's dream. Through devotion a

hard work, dreams become reality. Our efforts for the small business comm

nity ensure that these modern American Dreams still have a chance to gro

and flourish. 

I want my Administration to be on the leading edge in working as a pa

ner with the small business community. That is why an essential compone

of our job is to listen, to find out what works, and to go the extra mile 

America’s entrepreneurial small business owners.

THE WHITE HOUSE

A Report of the President 

Page 8 = bla
REPORT ON

SMALL

BUSINESS

AND COMPETITION

THE OFFICE OF ADVOCACY

U.S. SMALL BUSINESS

ADMINISTRATION

Page 9 = no folio Page 10 = bla
Mr. President:

The United States Small Business Administration herewith submits its 19Report on Small Business and Competition in accordance with the Sm

Business Economic Policy Act of 1980. The report was prepared by the Off

of Advocacy of the U.S. Small Business Administration.

We are pleased to present this report and to work with you on behalf 

this important sector of the economy.

Sincerely,

AIDA ALVAREZ JERE W. GLOVER

Administrator Chief Counsel for Advocacy

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Nineteen-ninety-five was a good year for the U.S. economy and for sm

business. Some 3.2 million new jobs were created and real GDP 

creased by 2 percent. The rate of unemployment fell from 6.1 percent in 19

to 5.6 percent in 1995. Consumer prices were stable, employee compen

tion increased and, for the sixth consecutive year, corporate profits were u

The number of business bankruptcies and failures continued to decline: ban

ruptcies dropped from 50,845 in 1994 to 50,516 in 1995 and failures d

clined from 71,558 in 1994 to 71,194 in 1995. 

Overall, business prospered, particularly small businesses. Small-bu

ness-dominated industries added jobs at a rate greater than 1.6 times t

national rate of increase of 1.6 percent. Small firms grew most in the ret

and wholesale trade and service sectors. 

The White House Conference on Small Business

An estimated 2,000 delegates gathered together in Washington, D.C. on Ju

11, 1995, to discuss the small business agenda to be submitted to Congre

and President Clinton. By the end of the conference, the delegates had arriv

at a final list of 60 policy recommendations. Among the recommendatio

were 11 tax policy issues, 14 capital formation and human capital issues, a

six procurement issues. The 1995 WHCSB conference differed from the tw

preceding White House Conferences on Small Business because regional i

plementation chairpersons and issue chairs were elected for each of the 

issue areas in the SBA’s 10 regions. The SBA’s Office of Advocacy has work

with the implementation chairs to ensure that their priorities are also the p

orities of the Congress and the Administration. As of early 1997, 50 of the 

issues had had some action, either administratively or legislatively. The imp

mentation results can be seen in the appendix to Chapter 2.

Self-Employment and Small Business

An important small business development in recent years has been the 

crease in the number of self-employed people. From 1970 to 1994, the no

farm self-employed increased by more than 72 percent, from 5.2 million to 

million. The self-employed accounted for nearly $757 billion in business 

ceipts in 1993. These smallest businesses help increase flexibility and ada

ability in the economy, create new services and products, and add to the n

tion’s productive capacity. Among the factors contributing to the increase 

the self-employed are growth in the labor supply that is not readily accomm

dated by wage-and-salary employment, new unexploited opportunities, t

hope of opportunities for greater financial returns, dissatisfaction with wag

Page 13 = no fo
and salary workers; for example:

d Overall, the self-employed are older than wage-and-salary worke

Of full-time workers, more than 41.7 percent of the unincorporated self-e

ployed were between the ages of 45 and 64 in 1994, compared with on

28.8 percent of wage-and-salary workers. 

d Self-employed workers are more likely to be married than wage-an

salary workers: about three-fourths of the self-employed are married, co

pared with less than 60 percent of full-time wage-and-salary workers. 

d Vietnam and other veterans are slightly more likely to be in the se

employed category (8.6 percent) than the wage-and-salary category (6.

percent). 

d The self-employed have higher levels of formal education: More th

35 percent of the full-time self-employed had 4 or more years of college tra

ing, compared with less than 28 percent of wage-and-salary workers. 

d Self-employed workers work longer hours per week and more wee

per year than those in paid employment. 

d African and Hispanic Americans are less likely to be self-employ

than the population as a whole, although their numbers are increasing. 

d Men are more likely to be self-employed than women; however, t

number of self-employed women is increasing rapidly. The number of un

corporated self-employed women has been increasing five times faster th

their male counterparts. 

Regulatory Relief for Small Firms

President Clinton signed the Small Business Regulatory Enforcement Fairne

Act of 1996 (SBREFA) on March 29, 1996. The new law reinforces a

strengthens the Regulatory Flexibility Act of 1980 (RFA) and provides sm

businesses more opportunities to take part in the federal regulatory process. 

The 1980 RFA stipulated that federal agencies must examine the impa

of their regulations on small businesses and offer reasonable alternatives 

regulations having a significant disproportionate impact on small entiti

SBREFA provides for “judicial review”—that is, it allows small businesses 

take agencies to court in certain instances for noncompliance with the RF

The 1996 legislation also provides assistance to small firms in addressi

agency enforcement actions by requiring federal agencies to reduce penalt

against small businesses, providing for improved economic analyses of reg

latory impact, and condensing the overall regulatory process. SBREFA a

provides for congressional review of federal agencies’ regulatory process

To reap the full benefits of SBREFA, small businesses will need to participa

actively in the federal regulatory process. 

14 The Annual Report on Small Business and Competition
pgy(), ,

new high technology-based companies have been started. NTBFs have an i

portant role to play in commercializing new technologies.

The federal government has implemented new policies and programs 

support of these new technology-based firms, among them the Small Bu

ness Innovation Research (SBIR) program, the Small Business Technolo

Transfer (STTR) program, the Advanced Technology Program (ATP), the Ma

ufacturing Extension Partnership (MEP) program, the Angel Capital Electron

Network (ACE-Net), and several SBA financing programs aimed toward hi

technology companies. These programs focus on commercialization pote

tial, nonfinancial assistance, and the improvement of intellectual prope

rights protection. Overall, they aim to improve the process that allows sm

technology-focused businesses to participate in meeting federal resear

needs, creating new products and processes, and transferring these produ

into the commercial market. 

Small Business Financing

Moderate growth in demand for credit and the easing of credit policy by t

Federal Reserve Board contributed to declines in most interest rates in t

credit markets in 1995. While Increases in borrowing were moderate in U

domestic sectors overall in 1995, business borrowing surged to an annual ra

of $211 billion. Lending to small firms, including bank and finance compa

lending, increased significantly. Because large commercial and industr

loans were increasing so rapidly, however, the small business share of to

loans declined slightly, from 40.4 percent in June 1994 to 39.2 percent 

June 1995. 

A booming stock market contributed to a very active small business e

uity market. Initial public offerings were up significantly and funds raised 

venture capital firms reached a new high of $4.4 billion. 

Procurement from Small Firms

In FY 1995, small businesses acquired $66.7 billion in federal contra

awards, or 33 percent of the total $202.3 billion in contract actions award

by the federal government. The 1995 total was an increase from the previo

year’s 31.4 percent small business share valued at $61.7 billion and from t

29.9 percent share in FY 1993. 

Small minority-owned businesses won contracts worth $1.5 billion 

16.1 percent increase) and women-owned businesses won $508.7 million 

federal procurement dollars (a 22.0 percent increase). Small minority- a

women-owned businesses’ shares of federal procurement have been incre

ing steadily over the past several years. 

Executive Summary 
procurement process.

16 The Annual Report on Small Business and Competition
Chapter 1 The State of Small Business 

The Number of Small Businesses 

Business Formation and Dissolution 

Business Incorporations 

Business Bankruptcies and Failures 

Business Earnings 

Small- and Large-Business-Dominated Industries 

Employment Changes and Firm Size 

Chapter 2 The White House Conference on Small Business:

Implementing the Recommendations 

The 1980 Conference: Taxation, Regulation, and 

Innovation 

1986: A Second Look 

1995: A Penny for Your Thoughts 

Appendix 2.1 The 60 Recommendations of the

1995 White House Conference on Small Business 

Appendix 2.2 White House Conference on Small 

Business Implementation Checklist 

Chapter 3 Changes in Self-Employment as Small Business 

Growth in Self-Employment 

Broader Measures of Self-Employment: Expanding

the Census Definition 

Characteristics of the Self-Employed 

Age 

Education 

Marital Status 

Veteran Status 

Industry 

Occupation 

Self-Employment by Ethnic Group 

African Americans 

Hispanic Americans 1

Executive Summary 

Page 17 = n
Industry/Occupation 1

Entrepreneurial Income 1

Earnings of Men and Women 1

Appendix: The Data 1

Chapter 4 Regulatory Relief for Small Business 1

The Regulatory Flexibility Act 1

General Requirements 1

Strengthening the RFA: The Small Business 1

Regulatory Enforcement Fairness Act 1

Judicial Review 1

Analysis 1

Influence in Regulation Development 1

EPA and OSHA Regulatory Review Panels 1

Congressional Review 1

Compliance Assistance 1

Enforcement Actions 1

Chapter 5 Innovation and Small Firms 1

New Technology-Based Firms’ Contributions to the

Economy 1

SBA Management and Financial Support for NTBFs 1

Small Business Development Centers 1

Financial Support for NTBFs 1

Angel Capital Electronic Network 1

The Small Business Innovation Research Program 1

SBIR at the Department of Defense 1

The National Science Foundation’s SBIR Program 1

The Small Business Technology Transfer Program 1

The Advanced Technology Program 1

The Manufacturing Extension Partnership 1

What Does NIST/MEP Do? 1

What Services Do MEP Centers Provide? 1

MEP Success Stories 1

Technology Policy and the Information Revolution 1

SBIR Program Expansion 1

18 Table of Contents
Manufacturing Extension Partnership 1

National Angel Capital Network 1

Appendix A Supplementary Tables 1

Appendix B Financing Small Business 2

Credit Conditions for U.S. Businesses in 1995 2

Uses of Funds by Major Sectors 2

Small Business Borrowing 2

Lending to Small Businesses by Commercial Banks 2

Profile of Bank Lending to Small Business in 1995 2

Lending Under the SBA’s Guarantee Programs 2

Lending by Finance Companies 2

Borrowing in the Public Issue Markets 2

Venture Capital Funds 2

Research on Current Credit Conditions:

SBA’s Banking Studies 2

Profitability Study 2

The Large Bank Studies 2

Appendix B Tables 2

Appendix C Procurement 3

Size of Federal Contract Actions 3

Sources of Small Business Awards by Agency/

Department 3

Small Business Share of Purchasing Agency

Awards 3

Product/Service Categories 3

Small Business Innovation Research 3

Procurement from Minority- and Women-Owned

Businesses 3

Procurement Reform 3

Increased Threshold for Small Business SetAsides 3

Table of Contents 

Page 20 = bla
Modified Source Selection Requirements 3

Appendix C Tables 3

Glossary 3

Index 4

20 Table of Contents
The Annual Report on Small Business and Competition was prepared the U.S. Small Business Administration under the leadership of Admin

trator Aida Alvarez and Chief Counsel for Advocacy Jere W. Glover. Bruce 

Phillips directed the Office of Economic Research. Kathryn J. Tobias direct

the Office of Information. 

The project was managed by Kathryn J. Tobias and Bruce D. Philli

John Ward and Sarah M. Fleming made significant editorial contributio

Harriett A. Lyles, Marlene E. Delaney, Kathy Mitcham, and Darlene Mahmo

provided staff support. Specific sections were written or prepared by the f

lowing staff:

Chapter 1 William B. Whiston and Bruce D. Phillips

Chapter 2 Jody Wharton

Chapter 3 Jules H. Lichtenstein

Chapter 4 Anita Drummond and Fred A. Tarpley

Chapter 5 Zoltan Acs and Terry Bibbens

Appendix A Samuel Tillery and Brian Headd

Appendix B Charles C. Ou and Robert E. Berney

Appendix C James M. O’Connor and Raymond D. Marchakitus 

The Office of Advocacy appreciates the interest of all who reviewed t

report, including staff of the National Economic Council, the Council of Ec

nomic Advisers, and the Office of Management and Budget. Thanks are a

extended to the U.S. Government Printing Office for their assistance.

Page 21 = no folio—p. 22 Blank—p. 23 no folio F
The State of Small Business

Synopsis

Nineteen ninety-five was an excellent year for the economy and for smbusiness. The economy gained almost 3.2 million jobs and real gross d

mestic product increased by 2.0 percent. The unemployment rate fell fro

6.1 percent in 1994 to 5.6 percent in 1995. Consumer prices remained s

ble, while corporate profits and employment compensation both increase

A record 819,477 new small firms with employees opened their doors 

1995 and new incorporations hit a record high for the third straight ye

More than 22.5 million business tax returns were filed. Business failures a

bankruptcies dropped for the third straight year. Bankruptcies were at th

lowest level since 1981.

Corporate profits increased in 1995 for the sixth straight year. Not sin

the recovery from the 1981–1982 recession has such a string of increases o

curred. Employment compensation and proprietorship earnings also increase

Small-business-dominated industries added jobs to the economy at 

rate more than 1.6 times the national rate of increase of 1.6 percent; larg

business-dominated industries added employment at a rate well below t

national rate. Small businesses are concentrated in the trade and service se

tors that are growing most rapidly.

Introduction

The economy continued to grow in 1995 for the fourth consecutive yeaMajor economic indicators reflected slow, steady and sustainable ec

nomic growth (Table 1.1). Small businesses contributed to and shared in t

benefits of the growing economy.

The production of goods and services, adjusted for inflation, grew by 2

percent in 1995, while the unemployment rate declined from 6.1 percent 

5.6 percent. The economy added 3.2 million jobs to nonfarm payrolls; co

pensation to employees increased by 5.3 percent. This expansion occurr

without igniting inflation: the Consumer Price Index rose by 2.8 percent a

long-term interest rates declined.

The State of Small Business 

1 A comprehensive discussion of the performance of the U.S. economy appears in 

Economic Report of the President: Transmitted to the Congress February 1996 (Washington, D.

U.S. Government Printing Office, 1996).
While the federal deficit was declining by 19.5 percent ($39.6 billio

corporate profits grew by 10.8 percent and nonfarm proprietors’ income—

important measure of the health of the small business sector—rose fro

$415.9 billion to $449.3 billion. 

The Number of Small Businesses

The number of businesses that filed tax returns increased by 2.3 percent 

1995 and reached almost 22.6 million (Table 1.2). Over the 13-year sp

from 1981 to 1994, the number of businesses grew at a compound rate of 3

percent per year. 

24 The Annual Report on Small Business and Competition

Gross Domestic Product 

(Billions of Dollars) 6,935.7 7,253.8 4.6

Gross Domestic Product

(Chained 1992 Billions of

Dollars) 6,608.7 6,742.9 2.0

Unemployment Rate 6.1 5.6

Nonagricultural Payrolls

(Millions of Workers) 113.4 116.6 2.8

Compensation of Employees

(Billions of Dollars) 4,009.8 4,222.7 5.3

Nonfarm Proprietors' Income

(Billions of Dollars) 415.9 449.3 8.0

Corporate Profits

(Billions of Dollars) 529.5 586.6 10.8

Consumer Price Index 148.2 152.4 2.8

Federal Deficit

(Billions of Dollars) 203.4 163.8 219.5

Interest Rates on:

Long-Term Treasury Bills 7.4 6.9

91-Day Treasury Bills 4.3 5.5

Federal Funds 4.2 5.8

High-Grade Corporate

Securities 7.97 7.59

Source: Federal Reserve Board of Governors, "Financial and Business Statistics," Federal

Reserve Bulletin, April 1996, annual averages as reported in various tables.
Of the total, about 6 million small businesses employ between one a

500 workers. About 15,000 employ more than 500 workers and the rema

der have no employees. 

Business Formation and Dissolution

Arecord 819,477 new small firms with employees opened their doors 1995—a 1.1 percent increase over 1994 (Table 1.3).2 The number 

these new firms has increased fairly steadily over the last decade, reachi

successive new highs in 1993, 1994, and 1995 (Chart 1.1). Over t

1982–1995 period, the total number of firms with employees increased at 

rate of just under 2 percent a year, about equal to the rates of growth of t

general population and the work force.

The State of Small Business 

Year and 1120S) (Form 1065) (Schedule C) Total Increase

1995 4,818 1,580 16,157 22,555 2.26

1994 4,667 1,558 15,831 22,056 2.22

1993 4,516 1,567 15,495 21,578 1.64

1992 4,518 1,609 15,066 21,230 2.79

1991 4,374 1,652 14,626 20,653 1.05

1990 4,320 1,751 14,149 20,439 4.78

1989 4,197 1,780 13,529 19,506 2.78

1988 4,027 1,826 13,126 18,979 3.79

1987 3,829 1,824 12,633 18,286 4.50

1986 3,577 1,807 12,115 17,499 3.18

1985 3,437 1,755 11,767 16,959 4.88

1984 3,167 1,676 11,327 16,170 6.40

1983 3,078 1,613 10,507 15,198 5.96

1982 2,913 1,553 9,877 14,343 5.38

1981 2,813 1,458 9,345 13,616 --

Average Annual Growth 

Rate (Percent) 3.8 0.5 4.2 3.8

Source: U. S. Department of the Treasury, Internal Revenue Service, Statistics of Inco

Bulletin (Spring 1996), Table 21.

2 The United States has no formal annual survey of new business formation. Three prox

are used instead: the change in the total number of tax returns filed, the count of new firms w

employees, and new incorporations. Good records of the number and size of new busines

with employees are available through the reports of employment and unemployment insuran

tax liabilities to state employment security agencies. Casual business activities are less likely 

be included in this measure than in the tax return total. The number of firms filing these report

reported by the U.S. Department of Labor. Larger firms often report in more than one state, so 

nationwide employment security count is about 10 percent higher than the Bureau of the Cen

count for the same year. Data from the Census Bureau are available only after a two-year de

while the employment security data are available on a current basis, which makes these d

particularly useful.
Although the net annual increase averages just 2 percent, the level of a

tivity in business formation and closure is actually much higher. Each ye

about 14 percent of small firms with employees drop from the unemployme

insurance rolls, while the number of new and successor firms added is equ

to about 16 percent of the total. 

A high rate of business formation and dissolution is characteristic of a d

namic economy. Changing tastes and preferences, new technologies, a

changes in demography and geography are all accommodated by the en

and exit of firms. New small businesses answer many of the needs, enteri

26 The Annual Report on Small Business and Competition

Firms at Successor New and Termi- of Growt

Year End of Year Firms Firms Successor nations (Percent

1995 6,057 164 819 983 871 1.09

1994 5,992 137 807 944 803 2.40

1993 5,851 136 776 911 801 1.93

1992 5,741 138 737 875 819 0.95

1991 5,687 140 724 864 818 0.84

1990 5,639 146 769 915 846 1.27

1989 5,568 153 743 896 826 1.01

1988 5,513 153 755 907 752 1.71

1987 5,420 163 775 939 717 3.64

1986 5,230 175 741 916 801 1.70

1985 5,142 166 722 888 746 2.67

1984 5,009 164 691 855 687 3.54

1983 4,837 171 633 804 720 1.26

1982 4,777 185 595 781 707 1.55

Note: Successors are existing firms taken over by new or existing firms; new firms repres

applications for new account numbers; terminations represent firms that either reported be

out of business or reported no employment for two years. Each quarter, firms with employees 

required to report their employment, payrolls, and unemployment insurance tax liabilities 

state employment services.The states in turn report the number of new firms, terminations, a

successors to the U.S. Department of Labor. These statistics from the Employment and Train

Administration are organized into a master file that begins in third quarter, 1981. Data in this 

riod are available from all states except Michigan, for which a 31⁄2-year period beginning in 19

was estimated from previous data. Current data are available six months following the end of 

quarter. The count of firms includes all active unemployment insurance taxpayers, includ

local, state, federal, and international governmental agencies. It includes virtually all nonfa

employers, except households, railroads, and selected religious organizations. Multistate e

ployers submit reports to each state in which they operate; therefore, the enterprise count 

cludes some duplication, but because multistate firms are relatively few in number, the count 

firms in the United States is not significantly affected. The change in the number of firms fr

one period to the next represents the addition of new and successor firms less the number of t

minations during the period; however, because of changes in counting rules, computer pro

dures, and other problems, the computed changes are sometimes at variance with the repor

data. In these few cases the data are edited so that they are internally consistent.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from d

provided by the U.S. Department of Labor, Employment and Training Administration, based up

state employment security agencies’ quarterly reports, 1995.
the marketplace with new products and services, at new locations, and w

new and different methods of distribution.

The formation and dissolution of businesses varies by region across t

United States (Table 1.4). Region VIII (the Mountain states) showed the large

net growth in the number of firms during 1995, posting a gain of nearly 

percent. Regions III, V, and X all exceeded the average growth rate of ne

firms by wide margins.

Increases in business formation are almost always accompanied by 

creases in firm dissolution. For example, Region IX had the highest rates of 

crease in both starts and terminations, and in Region V both indicators far e

ceeded the national averages.

Business Incorporations

Corporations represent more than 60 percent of businesses with employe

and account for nearly 90 percent of the nation’s sales and employment.3 T

number of new business incorporations increased by 3.8 percent in 1995 

770,206 (Table 1.5). 

The State of Small Business 

Source: U.S. Small Business Administration, Office of Advocacy, based upon U

Department of Labor, Employment and Training Administration. Thousands of Firms

Years

500

550

600

650

700

750

800

1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 199

3 The business incorporation series of the Dun and Bradstreet Corporation measures fir

that choose to incorporate in each state and operate as corporations. 
28 The Annual Report on Small Business and Competition

Successor Firms

j

Terminations

Change Change Chan

Firms at from from from

End of 1994 Number in 1994 Number in 1994

1995 (Percent) 1995 (Percent) 1995 (Perce

Total,

United States 6,056,668 1.09 819,477 1.56 858,391 6.

Region I 366,090 0.31 40,328 -0.41 45,318 10.

Region II 647,838 1.46 81,726 1.41 82,480 24.

Region III 590,273 2.23 72,169 3.13 73,617 1.

Region IV 1,045,611 1.92 150,807 29.42 152,656 29.

Region V 1,040,612 2.30 120,286 9.61 118,332 9.

Region VI 614,117 1.96 83,357 21.07 86,109 2.

Region VII 295,063 22.55 32,533 20.09 38,322 3.

Region VIII 236,143 3.71 36,541 21.74 36,793 14.

Region IX 917,139 21.95 150,143 13.67 178,812 39.

Region X 303,782 1.39 51,587 23.57 51,260 11.

Note: Figures for “firms at end of 1995” include successor firms, not shown in this tab

SBA regions are defined as follows: Region I: Connecticut, Maine, Massachusetts, N

Hampshire, Rhode Island, Vermont; Region II: New Jersey, New York; Region III: Delawa

District of Columbia, Maryland, Pennsylvania, Virginia, West Virginia; Region IV: Alabam

Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee; Region 

Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin; Region VI: Arkansas, Louisiana, N

Mexico, Oklahoma, Texas; Region VII: Iowa, Kansas, Missouri, Nebraska; Region VIII: Colora

Montana, North Dakota, South Dakota, Utah, Wyoming; Region IX: Arizona, California, Haw

Nevada; and Region X: Alaska, Idaho, Oregon, Washington.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from d

provided by the U.S. Department of Labor, Employment and Training Administration, based up

state employment security agencies’ quarterly reports, 1996.

Region II (New York and New Jersey) experienced the greatest increa

in incorporations (Table 1.6). The rate of increase was above the national a

erage, due almost entirely to a 22.7 percent gain in New Jersey. Region 

(the Middle Atlantic states) showed a 6.8 percent increase over 1994. Regi

IV (the South) had the third highest rate of growth in new incorporations, 

4.1 percent over 1994.

Business Bankruptcies and Failures

Over the past three years, the levels of both failures and bankruptcies ha

dropped sharply from the periods of increasing failures and bankruptcies 

the beginning of the decade.
The State of Small Business 

bankruptcies was the lowest recorded in at least 12 years.

Business failures and bankruptcies display wide variation across the 

gions of the country. In 1995 both measures decreased markedly in some 

gions (Regions I and IV) while increasing in others (Regions III, VI, VII, and 

(Table 1.8). 

Most firms fail in their early years. For a given cohort, about 20 perce

of the remaining firms fail in each of the first and second years after start

(Chart 1.2). The rate of failure decreases year by year; by the ninth or ten

year only about 7 or 8 percent of the remaining firms fail. Fewer than half 

all new firms are in operation after five years.

Business Earnings

Corporate profits increased in 1995 for the sixth consecutive year (Table 1.

Not since the recovery from the 1981 to 1982 recession has such a string 

increases in corporate profits occurred. The 10.8 percent increase in corp

rate profits in 1995 builds upon increases of 15.7 percent in 1993 and 14

percent in 1994. Employment compensation increased 5.3 percent in 199

the third largest increase since 1990. 

Nonfarm proprietorship earnings, an important measure of the health 

the small business sector, rose by 8.0 percent during 1995. The growth in pr

prietorship earnings between 1991 and 1995 was the highest for any fo

year period since 1984–1988.5 Approximately 85 percent of small business

are legally organized as proprietorships or partnerships.

4 Business failures represent business closings with a financial loss to one or more credit

that are reported to the Dun & Bradstreet Corporation. This definition is much narrower than 

definition for terminations, as reported in the unemployment insurance data. Terminations rep

sent businesses ceasing to report employment and may be closings with or without repor

creditor losses. A bankruptcy is the legal recognition that a company is insolvent and not able 

satisfy creditors or discharge liabilities. The company must restructure or liquidate. Not all firm

particularly those with no employees, are listed with Dun & Bradstreet and not all closing fir

are reported as having an outstanding debt to a creditor. The result is that closings or “disconti

ances” are about 10 times as frequent as closings with reported creditor losses. The number 

bankruptcies is also about one-tenth of the overall number of business terminations. In ev

year observed, the number of businesses that “fail” or apply to bankruptcy court is small co

pared with the number that just close their doors, and is equal to about 1.5 percent of all fir

reporting employment. 5 Nonfarm proprietorship earnings, like a number of income components other than wa

and salaries, are based on Internal Revenue Service data and must be corrected for underrepo

ing. Such corrections are difficult to make and are based on periodic IRS audit studies. 
30 The Annual Report on Small Business and Competition

Table 1.5 New Business Incorporations, 1981–1995

Incorporations Percent Chang

1995 770,206 3.8

1994 741,657 5.0

1993 706,537 6.0

1992 666,800 6.1

1991 628,580 22.9

1990 647,366 24.3

1989 676,567 21.2

1988 685,095 20.1

1987 685,572 22.4

1986 702,101 5.0

1985 668,904 5.3

1984 634,991 5.8

1983 600,400 5.9

1982 566,942 22.5

1981 581,661 —

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from 

Dun and Bradstreet Corporation, New Business Incorporations (various issues).

Note: Figures represent the percentage of the remaining firms that "fail"—i.e., are no 

longer in business at the same location—in each year after startup.

Source: U.S. Department of Commerce, Bureau of the Census, Center for Economic 

Studies, The Demography of Business Failure, Alfred R. Nucci, 1993. Percent

Age of Business in Years

0

5

10

15

20

0 1 2 3 4 5 6 7 8 9 10
The State of Small Business 

U.S. Total 741,657 770,206 3.8

Region I 30,702 30,609 20.3

Region II 101,558 110,294 8.6

Region III 103,619 110,646 6.8

Region IV 170,043 176,940 4.1

Region V 116,197 119,165 2.6

Region VI 65,278 67,199 2.9

Region VII 23,657 24,503 3.6

Region VIII 27,249 27,574 1.2 

Region IX 74,934 75,497 0.8

Region X 28,417 27,779 22.2

Note: SBA regions are defined as follows: Region I: Connecticut, Maine, Massachuse

New Hampshire, Rhode Island, Vermont; Region II: New Jersey, New York; Region III: Delawa

District of Columbia, Maryland, Pennsylvania, Virginia, West Virginia; Region IV: Alabam

Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee; Region 

Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin; Region VI: Arkansas, Louisiana, N

Mexico, Oklahoma, Texas; Region VII: Iowa, Kansas, Missouri, Nebraska; VIII: Colora

Montana, North Dakota, South Dakota, Utah, Wyoming; Region IX: Arizona, California, Haw

Nevada; and Region X: Alaska, Idaho, Oregon, Washington.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from 

Dun and Bradstreet Corporation, New Business Incorporations (various issues).

Small- and Large-Business-Dominated Industries

A convenient way to view the role of small business in the economy is to co

pare sectors dominated by small businesses with those dominated by lar

businesses.6 Some 53.1 percent of all nonfarm private sector employment 

1993 (the latest year for which data are available) was in firms with fewer th

500 employees, down slightly from 53.7 percent in 1991 (Table 1.10)

U.S. nonfarm private sector employment totaled 98.5 million 

December 1995, a gain of almost 1.6 million over December 1994. T

greatest gains in employment were in industries with the highest shares 

employment in small firms.

6 Employment data by firm size are available for no later than 1992. Employment data 

industry are available through 1995. The percentage employment in small firms is calcula

from 1992 Census data and is used to classify industries in 1995 by employment in small 

large firms. Within the major industrial sectors, the individual industries can be classified by 

percentage of employment in firms with fewer than 500 employees. The classifications are as f

lows: small-business-dominated industries—those with more than 60 percent of employees 

small firms; large-business-dominated industries—those with more than 60 percent of employ

in large firms; and a remainder called “indeterminate industries”—those with between 40 and 

percent of their employment in small or large business.
32 The Annual Report on Small Business and Competition

1995 50,516 20.6

1994 50,845 217.7

1993 61,799 211.5

1992 69,848 21.1

1991 70,605 10.5

1990 63,912 2.3

1989 62,449 20.6

1988 62,845 222.9

1987 81,463 1.9

1986 79,926 12.2

1985 71,277 11.0

1984 64,211 2.9

Failures Percent Chang

1995 71,194 20.5

1994 71,558 216.9

1993 86,133 211.4

1992 97,069 9.9

1991 87,266 43.7

1990 60,746 20.6

1989 50,361 211.8

1988 57,099 26.6

1987 61,111 20.8

1986 61,601 7.9

1985 57,067 9.6

1984 52,078 —

Sources: For failures, adapted by the U.S. Small Business Administration, Office 

Advocacy, from the Dun and Bradstreet Corporation, Business Failure Record (various issues); 

bankruptcies, from data provided by the Administrative Office of the U.S. Courts, Statisti

Analysis and Reports Division. 

The services industry continues to be the largest creator of new job

adding almost 1.1 million positions in calendar year 1995. The service sect

was defined as “dominated” by small businesses (with 60 percent or more 

its employment in firms with fewer than 500 employees) until 1991. Sm

businesses still constitute 57.6 percent of the employment in this sector.

The largest numbers of new jobs in small-firm-dominated service secto

occurred in offices of physicians and other health practitioners (119,000); e

gineering, accounting and research (102,000); services to buildings (26,00
The State of Small Business 

Business Failures Change Bankruptcies Change

1994– 1994–

1994 1995 1995 1994 1995 1995

U.S. Total 71,558 71,194 20.5 50,845 50,516 20.6

Region I 3,771 3,389 210.1 2,224 2,016 29.4

Region II 7,730 7,842 1.4 4,765 4,569 24.1

Region III 6,363 6,781 6.6 5,112 5,215 2.0

Region IV 9,694 8,824 214.5 6,917 6,009 213.1

Region V 8,504 8,340 21.9 7,420 7,558 1.9

Region VI 8,355 9,103 9.0 5,361 5,662 5.6

Region VII 2,717 2,950 8.6 1,697 1,708 0.6

Region VIII 2,096 2,359 12.5 1,440 1,422 21.3

Region IX 18,908 18,467 22.3 13,451 13,691 1.8

Region X 3,420 3,679 7.6 2,458 2,666 8.5

Sources: For failures: adapted by the U.S. Small Business Administration, Office 

Advocacy, from the Dun and Bradstreet Corporation, Business Failure Record (various issues); 

bankruptcies: from data provided by the Administrative Office of the U.S. Courts, Statisti

Analysis and Reports Division.

Table 1.9 Employment Compensation, Nonfarm Proprietorship Income, a

Corporate Profits, 1982–1995 (Billions of Dollars)

Nonfarm Pre-Tax

Employment Proprietorship Corporate

Compensation 1

j

Earnings

j

Profits 2

Percent Percent Percent

Year Amount Change Amount Change Amount Change

1995 4,222.7 5.3 449.3 8.0 586.6 10.8

1994 4,009.6 5.3 415.9 7.2 529.5 14.0

1993 3,809.5 4.5 388.1 4.5 464.4 15.7

1992 3,644.9 5.4 371.5 11.7 401.4 4.9

1991 3,457.9 3.1 332.7 2.5 382.5 3.5

1990 3,352.8 6.4 324.6 5.3 369.5 3.7

1989 3,151.6 6.0 308.2 4.6 356.4 20.2

1988 2,973.9 7.8 294.7 13.1 357.2 15.3

1987 2,757.7 7.2 260.6 7.4 309.7 14.3

1986 2,572.4 6.0 242.6 4.3 271.0 24.0

1985 2,425.7 7.5 232.5 9.1 282.2 5.2

1984 2,257.0 10.4 213.1 21.2 268.2 26.3

1983 2,044.2 6.0 175.8 14.5 212.3 33.4

1982 1,927.6 153.5 159.2

1 Includes employee contributions for Social Security insurance.

2 Includes inventory valuation and capital consumption adjustment.

Note: The data are seasonally adjusted at annual rates. 

Source: U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current Busine

Table 1.14, January 1997.
34 The Annual Report on Small Business and Competition

and residential care (22,000). Many of these new jobs came from births 

new small firms, which are incompletely captured in the available data fro

the Census Bureau, and from the unincorporated self-employed, which a

also omitted from Census employment counts.

It is also likely that some large firms are growing and entering industr

dominated by small firms. When a large firm transfers resources to a growi

sector, no net jobs may be created, but small firms’ (static) employment sha

in that sector may decline (as in services). Examples may be found in hea

services, child care, and auto dealerships, where mergers and consolidati

have been occurring. These dynamic changes are probably at least partia

responsible for declines in small firms’ measurable share of services emplo

ment. Because of incomplete data, these indicators reveal only incomple

information about small firm job creation.

Retail trade, which added 233,000 new jobs, was the next largest co

tributor to employment. Construction added 133,000 new jobs. More than 

percent of employment in the construction industry was in firms with few

than 500 employees.

Comparisons among industrial sectors illustrate the importance of sm

businesses in the growth of employment. Employment in smaller firms grow

Business 1994 1995 Employmen

Share Employment Employment Change

Industry (Percent) (Thousands) (Thousands) (Thousands

Total, All Industries 53.1 96,858 98,481 1,623

Mining 40.9 593 569 224

Construction 88.9 5,073 5,206 133

Manufacturing 38.5 18,481 18,315 2166

Transportation, 

Communications and 

Public Utilities 35.8 6,183 6,298 115

Wholesale Trade 67.6 6,226 6,392 166

Retail Trade 53.6 21,344 21,577 233

Finance, Insurance, and 

Real Estate 43.9 6,915 6,987 72

Services 57.6 32,043 33,137 1,094

Source: Employment is from the U.S. Department of Labor, Bureau of Labor Statist

Employment and Earnings (Washington, D.C.: U.S. Government Printing Office, March 199

Table B-12. Employment share is calculated from special tabulations for the U.S. Small Busin

Administration by the U.S. Department of Commerce, Bureau of the Census, based upon 19

measurements.
The State of Small Business 

faster than employment in larger firms in growing industries, not necessar

because smaller firms are more efficient in their operation, but because of d

mand for the output of the industry and the high level of entry of smal

firms. 

As employment in successful small firms increases within a growing 

dustry and larger firms enter from other industries, the average firm size 

creases. The percentage of small business employment in the industry m

then decline slightly, even though small businesses are supplying most of t

net new jobs.7

The rate of employment growth in small-business-dominated industr

in 1995 was higher than the national average and 10 times the employme

growth in large-business-dominated industries (Table 1.11). 

Employment rose by 1.5 million overall between December 1994 a

December 1995; job creation varied considerably across sectors and firm siz

Employers in large-business-dominated industries added only 77,400 job

while small-business dominated industries added 1.1 million (Table 1.12).

The rates of employment growth demonstrate the importance of sm

business in intrasector employment growth (Table 1.13). Small-business-do

inated industries in transportation showed the largest percentage gain, w

7 Without specific data on business entries and exits, it is not possible to know the prec

reasons for a declining or rising share of small firm employment in any particular sec

However, it is not inconsistent for small firms to create many or most of the new jobs in a giv

industry and then show a declining market share by the end of the period if large firms enter t

industry. Static employment data are based on information at the end of the period, not dur

the period when jobs are created. The Census Bureau data received by the SBA do not meas

or indicate large firm entries into industries that were formerly small-business-dominated. 

Beginning of Period Change Percent

Type of Industry (Millions) (Thousands) Change

Small-Business-Dominated 41.9 1,072.2 2.56

Indeterminate 17.2 352.4 2.05

Large-Business-Dominated 32.6 77.4 0.24

Total 91.8 1,499.3 1.63

Note: Small firm dominance is calculated at the three-digit Standard Indust

Classification (SIC) level. Total employment at the beginning of the period was 96.9 million; 

difference from the total shown reflects the omission of those industries whose employmen

not reported at the three-digit SIC level.

Source: U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earni

(February 1996), Table B-12 and Bureau of the Census, special tabulation for the U.S. Small Busin

Administration, Office of Advocacy, 1993. Employment and Earnings was used to measure empl

ment; the special Census tabulations were used to determine small- and large-firm domination.
36 The Annual Report on Small Business and Competition

Business- BusinessIndustry Dominated Indeterminate Dominated

Industry Totals Industries Industries Industries

Total, All Industries 1,502 1,072.2 352.4 77.4

Mining 223 0.6 25.0 218.3 

Construction 102 102.4 NA NA 

Manufacturing 2159 23.2 229.0 2126.4

Transportation and Utilities 117 7.2 35.8 24.2

Wholesale Trade 175 99.6 75.5 0.1

Retail Trade 272 232.5 21.0 236.3

Finance 60 45.6 211.9 25.9

Services 1,012 537.5 266.6 208.2

NA = Indicates lack of industry representation within that size category.

Note: Data exclude self-employed workers. Small-business-dominated industries are ind

tries in which 60 percent or more of employment is in firms with fewer than 500 employe

Large-business-dominated industries are industries that have 60 percent or more of employm

in firms with more than 500 workers. A third set of industries, in which 40.1 to 59.9 percent 

employment is in firms with fewer than 500 employees, constitutes an indeterminate gro

where dominance is unclear.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from 

U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings (Washingt

D.C.: U.S. Government Printing Office, March 1996), Table B.12. Small- and large-busine

dominated industries are calculated from special tabulations prepared for the U.S. Sm

Business Administration, Office of Advocacy, by the U.S. Department of Commerce, Bureau 

the Census, based upon 1993 measurements.

employment growth of more than 5.68 percent. Large-business-dominat

mining industries grew at rates far below the national average. The service 

dustry posted the largest numerical gain in employment among the sma

business-dominated industries, with about 537,500 new jobs. 

The service sector job gains in non-small-business-dominated sectors 

lustrate another trend: just as manufacturing and finance firms are downs

ing, companies in the service industries are “upsizing.” The sector’s 208,0

new jobs in large-business-dominated industries and 266,600 new jobs in 

determinate industries reflect services’ movement toward larger firms. Of 

the large-business-dominated industries, those in the services sector record

the largest absolute and percentage increases in employment.

Many small firms are growing into large firms, and service industries p

viously dominated by small firms are becoming “indeterminate.” This trend 

a natural result of the growth of industries and of scale economies in purcha

ing, advertising, management, and finance. Franchising is a frequent meth

of achieving such economies.

Economies of scale are appearing in many industrial sectors as a result 

improved information processing and transmittal, offering faster and add
tional channels of distribution. The relative increases in the indetermina

classification are attributed to the growth of some previously small entitie

the entry of larger firms, and the downsizing of previously large firms who

employment has fallen below 500. Industrial sectors differ as to which 

these factors is most active.

Employment Changes and Firm Size

One way to look at the changing composition of employment growth in t

United States is to examine the 15 small-business-dominated industries a

the 15 large-business-dominated industries exhibiting the largest gains in 

dustry employment (Table 1.14).8

The State of Small Business 

8 Data on employment changes by firm size are not available on a current basis. As sta

in Tables 1.12 and 1.13, the small-business-dominated concept is used instead—in which sm

business-dominated industries have at least 60 percent of employment in firms with fewer th

500 employees based on 1993 Census data. Because of data limitations, it is possible for a sm

firm-dominated industry to contain growing large firms, or vice versa.

Business- BusinessIndustry Dominated Indeterminate Dominated

Industry Totals Industries Industries Industries

Total, All Industries 1.64 2.56 2.05 0.24

Mining 24.51 1.90 22.44 26.14

Construction 2.39 2.39 NA NA

Manufacturing 21.21 0.08 20.76 21.21

Transportation 2.04 5.68 1.66 0.94

Wholesale Trade 2.61 2.50 2.97 0.05

Retail Trade 1.23 1.92 2.69 20.49

Finance 0.91 2.09 21.79 0.70

Services 3.44 3.75 3.75 2.62

NA = Indicates lack of industry representation within that size category.

Note: Data exclude self-employed workers. Small-business-dominated industries are ind

tries in which 60 percent or more of employment is in firms with fewer than 500 employe

Large-business-dominated industries are industries that have 60 percent or more of employm

in firms with more than 500 workers. A third set of industries, in which 40.1 to 59.9 percent 

employment is in firms with fewer than 500 employees, constitutes an indeterminate gro

where dominance is unclear.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from 

U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings (Washingt

D.C.: U.S. Government Printing Office, March 1996), Table B.12. Small- and large-busine

dominated industries are calculated from special tabulations prepared for the U.S. Sm

Business Administration, Office of Advocacy, by the U.S. Department of Commerce, Bureau 

the Census, based upon 1993 measurements.
38 The Annual Report on Small Business and Competition

Change

(Thousands)

Small-Business-Dominated Industries

Eating and Drinking Places 108.1 

Management and Public Relations Services 98.4 

Offices and Clinics of Doctors of Medicine 53.1 

Miscellaneous Amusement and Recreation Services 43.5 

Plumbing, Heating, and Air Conditioning 40.3 

Offices and Clinics of Other Health Practitioners 36.4 

Electrical Work 34.8 

Offices and Clinics of Dentists 29.2 

Motor Vehicle Dealers (New and Used) 28.5 

Accounting, Auditing, and Bookkeeping Services 28.2 

Automotive Repair Shops 27.9

Engineering, Architectural, and Surveying Services 26.5

Local and Suburban Passenger Transportation 24.8

Real Estate Agents and Managers 22.7 

Residential Care 22.0 

Total, Top 15 Industries 624.4 

Large-Business-Dominated Industries

Personnel Supply Services 82.4 

Grocery Stores 68.3 

Hospitals 49.5 

Motion Picture Production and Allied Services 47.0 

Electronic Components and Accessories 45.1 

Accident and Health Insurance and Medical Service Plans 21.1 

Air Transportation, Scheduled, and Air Courier Services 17.4 

Cable and Other Pay Television Services 17.1 

Colleges, Universities, Professional Schools, and Junior Colleges 13.3

Automotive Rental and Leasing, Without Drivers 12.3 

Meat Products 9.1 

Personal Credit Institutions 8.3 

Airports, Flying Fields, and Airport Terminal Services 7.8 

Telephone Communications 7.7 

Business Credit Institutions 7.3 

Total, Top 15 Industries 413.7 

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from d

supplied by the U.S. Department of Labor, Bureau of Labor Statistics, Employment and Train

Administration. The size distribution is taken from special tabulations prepared by the U

Department of Commerce, Bureau of the Census, 1993.
gppygp pp

service industry and in retail grocery stores led the gains in the large-bu

ness-dominated group. Eating and drinking places and management and pu

lic relations services, among the small-business-dominated industries, creat

the most new jobs. 

The 15 fastest-growing small-business-dominated industries feature ma

agement and public relations services and two transportation industries (Tab

1.15). Large-business-dominated industries with both high percentage a

high absolute gains in employment are temporary help supply services a

motion picture production.

The changing structure of industry can also be viewed through a revie

of the industries losing the most jobs (Table 1.16). Seven of the 15 small-bu

ness-dominated industries losing the most jobs are in manufacturing, in sp

of the low small business representation in that sector overall. The emplo

ment loss percentages are small for this group, but together they account f

more than half of the job losses among the top 15 losers.

The large-business-dominated industries continued to experience lar

job losses in the aerospace and defense industries. Department stores a

family clothing stores led the list of large-business-dominated industries w

the largest declines in employment.

The jobs lost among large-business-dominated industries are in very d

ferent sectors from the jobs gained by small-business-dominated industrie

Moreover, the number of jobs lost in the 15 large-business-dominated secto

was 2.75 times the number of jobs lost in the 15 top small-business-dom

nated job losers.

Conclusion

Nineteen-ninety-five was an excellent year for the economy, for business, a

for small business. The economy gained almost 3.2 million jobs and re

gross domestic product increased by 2.0 percent. The unemployment rate f

from 6.1 percent in 1994 to 5.6 percent in 1995. Consumer prices were s

ble, as were wholesale prices. Corporate profits and employee compensati

both increased.

Small-business-dominated industries added jobs to the economy at a ra

more than 1.6 times the national rate of increase of 1.6 percent; large-bu

ness-dominated industries added employment at a rate well below the n

tional rate. Small businesses are concentrated in the trade and service secto

that are growing and consolidating most rapidly. Within the trade and servi

sectors many small business owners view business growth as an importa

goal for their firms. As their businesses become larger, the small busine

share of employment in these sectors is declining—an indicator that sm

businesses are succeeding in generating economic growth.

The State of Small Business 
40 The Annual Report on Small Business and Competition

Change Change

(Thousands) (Percent

Small-Business-Dominated Industries

Management and Public Relations Services 98.4 13.33 

Local and Suburban Passenger Transportation 24.8 11.80 

Arrangement of Transportation of Freight and Cargo 18.6 10.81 

Taxicabs 3.4 10.30 

Offices and Clinics of Other Health Practitioners 36.4 9.25 

Advertising 19.6 8.51 

Miscellaneous Equipment Rental and Leasing 16.6 7.56 

Special Industry Machinery except Metalworking 11.7 7.29 

Furniture and Home Furnishings 10.5 7.15 

Mailing, Reproduction, Commercial Art and Photography, 

and Stenographic Services 19.0 7.07 

Carpentry and Floor Work 14.9 6.88 

Vocational Schools 5.3 6.80 

Automotive Services except Repair 11.9 6.10 

Electrical Work 34.8 5.84 

Musical Instruments 0.8 5.84 

Total, 15 Fastest Growing Industries 326.7 8.90 

Large-Business-Dominated Industries

Motion Picture Production and Allied Services 47.0 18.07 

Cable and Other Pay Television Services 17.1 11.38 

Business Credit Institutions 7.3 8.41 

Electronic Components and Accessories 45.1 8.05 

Intercity and Rural Bus Transportation 1.7 7.46 

Airports, Flying Fields, and Airport Terminal Services 7.8 7.16 

Accident and Health Insurance and Medical Service Plans 21.1 7.03 

Tires and Inner Tubes 5.5 7.02 

Automotive Rental and Leasing, Without Drivers 12.3 6.85 

Personal Credit Institutions 8.3 5.95 

Holding Offices 5.3 5.05 

Personnel Supply Services 82.4 3.38 

Refrigeration and Service Industry Machinery 6.4 3.28 

Motion Picture Theaters 3.7 3.26 

Chemical and Fertilizer Mineral Mining 0.4 2.86 

Total, 15 Fastest Growing Industries 271.4 5.71 

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from d

supplied by the U.S. Department of Labor, Bureau of Labor Statistics, Employment and Train

Administration. The size distribution is taken from special tabulations prepared by the U

Department of Commerce, Bureau of the Census, 1993.
The State of Small Business 

Change Change

(Thousands) (Percent

Small-Business-Dominated Industries

Women’s, Misses’, and Juniors’ Outerwear 231.7 211.27 

Miscellaneous Fabricated Textile Products 211.1 25.11 

Sawmills and Planing Mills 27.6 24.01 

Labor Unions and Similar Labor Organizations 26.8 24.86 

Farm-Product Raw Materials 24.7 24.15 

Arrangement of Passenger Transportation 24.6 22.31 

Girls’, Children’s, and Infants’ Outerwear 24.4 29.95 

General Contractors-Nonresidential Buildings 24.2 20.71 

Household Appliance Stores 23.4 24.20 

Millwork, Veneer, Plywood, and Structural Wood Members 23.3 21.20 

Heavy Construction except Highway and Street 22.9 20.57 

Miscellaneous Apparel and Accessories 22.9 27.32 

General Contractors-Residential 22.8 20.46 

Costume Jewelry, Costume Novelties, Buttons, and Notions

Except Precious Metal 22.6 29.12 

Bowling Centers 21.4 21.56 

Total, 15 Largest Job Losers -94.4 22.77

Large-Business-Dominated Industries

Department Stores 248.4 21.94 

Family Clothing Stores 230.7 28.42 

Men’s and Boys’ Furnishings, Work Clothing, etc. 229.3 211.04 

Aircraft and Parts 225.8 25.54 

Miscellaneous General Merchandise Stores 216.7 27.80 

Knitting Mills 214.2 27.22 

Search, Detection, Navigation, Guidance, Aeronautical 

and Nautical Systems, Instruments, and Equipment 213.7 28.02 

Crude Petroleum and Natural Gas 212.4 27.92 

Electric Services 212.3 22.99 

Life Insurance 212.3 22.15 

Guided Missiles and Space Vehicles and Parts 29.9 29.48 

Petroleum Refining 29.8 28.95 

Canned, Frozen, Preserved Fruits, Vegetables, and Specialties 29.5 24.30 

Women’s Clothing Stores 27.4 22.02 

Gas Production and Distribution 27.1 24.50 

Total, 15 Largest Job Losers 2259.5 24.14 

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from d

supplied by the U.S. Department of Labor, Bureau of Labor Statistics, Employment and Train

Administration. The size distribution is taken from special tabulations prepared by the U

Department of Commerce, Bureau of the Census, 1993.

p. 42 Blank P. 43 Fols.
The White House Conference on 

Small Business:

Implementing the Recommendations

Synopsis

I

n 1976, presidential candidate Jimmy Carter and Senator Gaylord Nelso

then chairman of the Senate Select Committee on Small Business, beg

conversations about how small business owners could meet to air their co

cerns about government and develop constructive solutions. Two years lat

on April 6, 1978, the Carter White House announced a week-long conf

ence to be held in Washington that would bring together some 2,000 rep

sentatives of small businesses nationwide. That was the beginning of t

1980 White House Conference on Small Business (WHCSB), which asse

bled small business delegates from across the country to provide their p

spectives on federal policy. 

Small business men and women met again at White House Conferenc

in 1986 and 1995 and again developed very specific agendas for t

Congress and the federal government. The success of the White Hou

Conference process can be measured by the number of recommendatio

implemented following each conference. In 1980, Congress and the exec

tive branch acted upon about two-thirds of the White House Conference re

ommendations. In 1986, the government implemented 43 percent of the 

final recommendations. 

In the year since the 1995 White House Conference on Small Busine

a national audience has focused attention on the conference recommend

tions and an unprecedented number of them have been implemente

President Clinton referred to the White House Conference initiatives in 

State of the Union address. House Speaker Newt Gingrich held a press co

ference to discuss the implementation of the 1995 agenda. The recomme

dations have influenced the debate on Capitol Hill, where delegates ha

been invited to testify and continue to promote their issue priorities.

The State of Small Business 
SNational White House Conference on Small Business January 13–1

1980. All told, some 25,000 small business entrepreneurs had participated 

the preliminary state meetings and more than 5,000 people attended the n

tional meeting, including 1,682 official delegates. 

The delegates agreed on 60 recommendations and 11 resolutions 

congressional and executive branch action. Topping the list were recomme

dations to replace the corporate and individual income tax schedules w

more graduated rate scales, to adopt a simplified accelerated capital cost 

covery system, and to balance the federal budget by limiting total fede

spending to a percentage of the gross national product.

The 1980 WHCSB recommendations had important effects on small bu

ness’ relationship to the federal government. Among the significant laws e

acted in response to the recommendations were the Regulatory Flexibility A

of 1980, which required federal agencies to consider small business in t

rulemaking process, and the Small Business Innovation Development Act 

1982, which required federal agencies to set aside a percentage of their ext

nal research and development budgets for small firms. 

1986: A Second Look

The resounding success of the first White House Conference on SmBusiness led Congress and the small business community to support a

other conference in the mid-1980s. More than 20,000 entrepreneurs parti

pated in the state meetings that preceded the second national White Hou

Conference on Small Business in August 1986. Approximately 4,000 peop

including 1,813 official delegates, attended. 

The final vote produced the top 60 recommendations of the 1986 co

ference. The delegates reported that the top three problems facing small bu

ness were insurance availability and affordability, mandated employee ben

fits, and competition from government and nonprofit organizations. T

1986 conference, while less impressive than the 1980 conference in its le

islative results, nevertheless helped advance the small business agenda in i

portant ways. 

1995: A Penny for Your Thoughts

I

n September 1993, President Bill Clinton appointed 11 commissioners re

resenting the small business community to oversee the 1995 White Hou

Conference on Small Business. 

The state conferences held between June 2, 1994, and April 13, 199

had two goals: to develop federal policy recommendations that wou

strengthen the role of small business and to elect delegates to represent the 

44 The Annual Report on Small Business and Competition
ppg 

Each one-day state conference enabled members of the small busine

community to name issues of concern, develop specific recommendation

and identify the appropriate federal government agency to address ea

issue. Initially, issues were classified in 10 categories: capital formation, co

munity development, environmental policy, human capital, internation

trade, procurement, regulation and paperwork, taxation, technology and t

information revolution, and an open forum for miscellaneous topics that d

not fit easily into any of the other categories. A “Main Street” session w

added during the process to incorporate the concerns of small retail and se

vice firms, as well as the issues of crime, antitrust, and franchising. 

Small business participants in each state elected delegates to represe

their interests at the regional and national levels—a total of 1,130 delegat

nationwide. State residents who were owners, corporate officers or full-tim

employees of for-profit businesses employing fewer than 500 people were e

gible to run. The number of delegates elected from each state was twice t

state’s electoral college vote. (In states with two conferences, half of the de

gates were elected at each conference). 

Each member of Congress and each governor (both those newly elected a

those defeated in the 1994 elections) appointed one delegate and one alterna

for a total of 674 appointed delegates. President Clinton was also authorized 

appoint 100 delegates and alternates. All appointed delegates were required 

meet the same criteria as those elected through the state conference proce

Between April 18 and May 12, 1995, the WHCSB held regional me

ings in six cities across the country—Atlanta, Dallas, Denver, San Francisc

New York and Chicago. This intermediate stage of the WHCSB process af

the state conferences and just one month prior to the national conferen

provided an opportunity for state delegations to confer with other delegatio

in the region. The regional meetings permitted further refinement of reco

mendations in the 11 issue areas. 

The national conference, held June 11–15, 1995, was the culmination 

the grass roots work at the state conferences and the consensus-building 

forts at the regional meetings. Nearly 2,000 delegates gathered 

Washington, D.C., to hammer out the national small business action agen

to be forwarded to President Clinton and the Congress.

Of particular note were the six “agency dialogues” that were part of t

national conference process. Moderated by a WHCSB commissioner a

ranging from environmental and work safety regulation to export promotio

these interactive forums helped facilitate communication among the fede

agency representatives and delegates attending the national conference.

The WHCSB rules committee structured the issue sessions at the nation

conference to focus on the development, discussion, and elimination of re

The State of Small Business 
critical exercise in crafting and advocating specific slates of recommend

tions. Effective caucusing around a slate of recommendations increased t

chances of prevailing in both the interim and final votes.

Through a series of votes, the small business delegates arrived at a final 

of 60 policy recommendations (Appendix 2.1). Delegates cast the last vote t

old-fashioned way—by dropping pennies in numbered buckets—when t

electronic counting system failed. Among the issues on the agenda were 

dealing with tax policy, 14 focusing on capital formation and human capital 

sues, and six each in the procurement and regulations and paperwork areas.

The WHCSB was required by law to complete its efforts and present 

final report to the President and Congress no later than September 30, 199

at which time the White House Conference on Small Business Commissi

closed its operation. Under the WHCSB enabling legislation, the U.S. Sm

Business Administration (SBA) is required to report to Congress annually 

three years on the status and implementation of the recommendations.

Implementation

In contrast to their predecessors in the 1980 and 1986 conferences, the 19

WHCSB delegates provided a mechanism for following up on the conferen

recommendations by electing regional implementation chairpersons and iss

chairs for each of the 11 issue areas in each of the SBA’s ten regions. The WHC

regional implementation efforts are as varied as the delegates themselves. 

Immediately following the June conference, most of the delegations we

home and presented their work to their governors and congressional represe

tatives. While state officials recognize that the focus of the conference reco

mendations is on federal government action, many are looking at the agen

closely. As more programs and policies are passed to the states for administ

tion and regulation, the opinions of small business will carry more weight 

the state level. As always, in key areas such as tax policy, states will contin

to follow the lead of the federal government.

Several governors have used the issue recommendations as the basis 

calling state small business conferences. In fact, many states already hold a

nual small business conferences that have their roots in the earlier White Hou

Conferences on Small Business. Other states are working to identify areas 

which state problems mirror those identified at the federal level, where solutio

such as those proposed in the WHCSB recommendations might apply.

Highlights of the implementation results can be seen in the appendix 

this section, which lists each of the 60 final recommendations and reports 

executive and legislative branch activity (Appendix 2.2). The Small Busine

Administration’s Office of Advocacy will continue to monitor the implemen

tion process and will report to Congress on its progress annually for three yea

46 The Annual Report on Small Business and Competition
on Small Business

This appendix contains the full text of the 60 recommendations of the 19

White House Conference on Small Business. As decided by the delegates, t

recommendations are not rank ordered by the number of votes the reco

mendations received. Instead, they are listed here in alphabetical order 

issue area, and within each issue in order of the National Conferen

Recommendation Agenda number that was assigned to it.

Capital Formation

5. In order to increase the availability of capital for small business, Congre

shall:

(a) Authorize the SEC or an appropriate entity to create or streamli

regulations and vehicles for public and small and large private compa

pensions, profit sharing, 401(k) plans, individual IRAs, Keogh and S

Plans to invest in small businesses by accessing the private capital ma

kets and encouraging development of viable markets for small-busine

loans.

(b) Modify current legislation to facilitate the ability of an individual 

invest up to 50 percent of his or her own self-directed and/or manag

qualified plans including profit sharing, 401(k) plans, individual IRAs, Keo

and SEP Plans in a specific small business(es) of his/her own choice. The

funds could be used as a direct investment or as collateral to obtain de

financing. (Votes received: 1,279)

Capital Formation 

9. Banks are too highly regulated and restrictions on lending to small bu

nesses are too severe. To increase the amount of small-business lendi

(and create thousands of jobs) we propose: (a) small-business loans shou

be reviewed collectively based on institutions’ overall loan delinquency 

tios, and (b) relaxing of collateral and income to debt ratio requirements 

lowing banks to make smaller loans based on character, personal bac

ground and creditworthiness, such as those loans permitted pursuant to t

loan-basket guidelines under the capital availability program. Als

Congress should enact or amend legislation to direct the Comptroller of t

Currency and other examining authorities to allow banks, especially com

munity banks, to invest more readily in small business through no-co

low-cost incentives, such as:

(a) Directing bank regulatory agencies to reduce paperwork commens

rate with loan size; 

The State of Small Business 
centage of that banks portfolio that is placed in small-business loans. (Vo

received: 1,275) 

Capital Formation

14. To increase the availability of growth capital to invest in small business

Congress should:

(a) Further privatize the Small Business Investment Company (SBIC) p

gram, now administered by the SBA, by creating a new, government-spo

sored, but privately managed, corporation named Venture Capital Marketi

Association or “Vickie Mae”), which would function similarly to the Fede

National Mortgage Association (Fannie Mae);

(b) Extend the capital gains tax deferral currently afforded investme

rolled into Specialized Small Business Investment Companies (SSBICs) to 

clude investments in SBICs to encourage more investment in new SBICs; 

(c) Remove barriers to pension funds, foundations and endowments wis

ing to invest in SBICs and SSBICs; eliminate the “unrelated business taxab

income” (UBTI) tax on all such activities; and

(d) Reduce the minimum capital size requirements for establishing SBI

owned by regulated financial institutions, thereby encouraging them to p

vide equity to small businesses provided that no leverage is utilized by su

SBICs until current minimum capitalization for leverage is achieved. (Votes 

ceived: 1,009)

Capital Formation 

20. Congress should support the investment in small businesses by:

(a) Establishing a tax-free rollover provision for the gains on sale of ass

or ownership interests in a small business that are reinvested or rolled ov

into another small business within one year.

(b) Amending Code Section 1202, which is legislation excluding 50 p

cent of all capital gains from income, to extend its benefits to S Corporatio

and Limited Liability Companies by defining a “qualified small business” 

include C Corporations and the other two entities, and extend the definiti

of a “qualified trade or business” under Section 1202 to all businesses.

(c) Enacting tax legislation to allow tax deductions against ordinary 

come for investments in small business. (Votes received: 672)

48 The Annual Report on Small Business and Competition
minimum of professional assistance (legal and accounting services) and t

lowest origination costs. To facilitate the use of SCORs, we propose that t

SEC/Congress raise the $1 million per year ceiling to $5 million, remove li

its on the number of investors, allow for “tombstone advertising” of stock o

ferings and fund educational programs for investors and issuers to be adm

istered at state and local levels. A greater degree of uniformity of state laws 

reciprocity between states would be encouraged by the SEC through granti

educational grants to states that accomplish this goal. (Votes received: 1,02

Capital Formation

25. Comprehensive Federally Guaranteed Financing Reform: Congress sh

continue to appropriate funds for the Small Business Administration Lo

Guarantee programs, while focusing on the following: 

(a) Prohibit excessive abuses in the over-collateralization of all federa

guaranteed loan programs. 

(b) Establish criteria that would allow greater access to all federally gua

anteed loan programs. 

(c) Increase the SBA loan guarantee programs from their current level 

$750,000 to $1,000,000. 

(d) Require only primary owners (not passive investors) to make person

guarantees on federally guaranteed loans. 

(e) Increase the number of non-bank lenders (SBLC) eligible to proce

SBA loans. 

(f) Require all federally guaranteed loans be processed in a timely ma

ner. (Votes received: 784)

Capital Formation 

28. Congress should require that federal agencies evaluate the performan

of financial institutions under the Community Reinvestment Act (CRA) on t

basis of such institutions’ efforts to meet the credit and banking needs 

small businesses in their communities. In making such evaluations, tho

financial institutions that extend credit to small businesses without the su

port of government loan guarantees should be rated higher than those instit

tions that simply participate in SBA, FaHA and other guarantee program

and/or purchase government-insured loans and loan pools. Further, Congre

should direct such federal agencies to issue a separate rating of each financ

institution’s CRA performance relative to small business (as opposed to t

current practice of issuing one rating for overall CRA performance with 

spect to the entire community). (Votes received: 554)

The State of Small Business 
y

(a) Creating a “most favored” community status;

(b) Continuing and enhancing the SBA micro-loan program;

(c) Vigorously enforcing the Community Reinvestment Act with spec

efforts placed on elimination of redlining;

(d) Providing economically oriented incentives such as abatement of fe

eral income taxes to encourage the service/retail industry and other sm

businesses to locate and expand in these areas;

(e) Continuing to emphasize small, non-traditional financial institutio

and women and minority- owned business participation. (Votes receive

949)

Community Development

34. Congress should further legitimize home-based business and restore t

home-office tax deduction by reversing the effect of the 1993 Soliman de

sion, which requires that: 

(a) Clients physically visit a home office; and, 

(b) Business income be generated within the home office. 

This would again allow essential administrative, operational and/or ma

agement tasks to qualify a home office as the “principal place of busines

(Votes received: 1,239)

Community Development

41. The U.S. Department of Education in cooperation with the U.S. Sm

Business Administration should work constructively to encourage the futu

growth of small business enterprises by promoting entrepreneurship educati

across America’s school systems (K – Adult Education). It would be acco

plished in the following manner.

(a) A comprehensive school-based youth entrepreneurship program th

creates real world business exposure and mentorships would be develop

and implemented.

(b) The program would be under the auspices of the Department 

Education and funded by grants through public/private partnerships.

(c) All funds would be matched one to one in the community served 

the program.

(d) Businesses would receive tax incentives for financially supporting t

entrepreneurship training programs in their area. (Votes received: 1,035)

Community Development

44. Efforts of an individual state or municipality to benefit its local econom

should not be made at the expense of other states or municipalities and at t

peril of the strength of the entire economy. It should be the interest of t

50 The Annual Report on Small Business and Competition
y g g

financing that funds, in whole or in part, any special tax, infrastructure i

provement and/or financing incentive by any state or municipality to lure e

isting jobs and businesses from one location to another. (Votes received: 59

Environmental Policy

51. Congress shall mandate a complete review of current laws and regu

tions relating to public health and safety, energy and the environment, su

as the Resource Conservation and Recovery Act, Clean Water Act, and Cle

Air Act, Endangered Species Act, and National Environmental Policy Act. Th

mandated review shall be completed within six months.

Before Congress passes laws to be regulated through the EPA and a

other agency, which require specific technology and/or procedures for pr

tecting the environment, the agency(ies) must conduct a cost-benefit analy

on a dynamic-basis model and ensure that the particular regulation is bas

on sound science. For any proposed regulation, said agency shall have s

months to complete the cost-benefit analysis prior to implementation. In a

dition, regulations shall include a funding mechanism that will facilitate co

pliance and be enforceable on a site-specific basis. All costs shall be allow

to be expensed within the current year. The regulated community shall be 

cluded in any cost-benefit analysis.

Where natural conditions exist, compliance based on technical expert

should be accepted as conforming to the intent of the regulation. Regulatio

should take into consideration site-specific conditions or future use. Any d

putes about implementation must be subject to a non-governmental pe

group review board. Voluntary environmental audit privilege and disclosu

shall release the party(ies) from administrative, civil, and/or criminal penalt

(so long as non-compliance is not caused by gross negligence or willful m

conduct) when the disclosing entity initiates actions to comply within a re

sonable time. No fines can be used to fund the fining agency.

Congress shall mandate EPA and any other agencies to review existi

and new regulations to ensure that they adhere to the same standards as o

lined in this document. All existing and proposed regulations must not crea

duplication of enforcement. There shall be no retroactive liabilitie

Additionally, the fining ability of the EPA shall be revoked.

Federal agencies regulating environmental matters must make sure th

current science, realistic risk assessments, net health analysis, and co

benefit analysis shall apply in order to reduce, condense and/or elimina

regulations, prohibit abuse, allow adequate time to correct, and hold gover

ment and its employees accountable. (Votes received: 1,342)

The State of Small Business 
pp

for environmental harm, risk assessment, and cost-benefit analysis are used 

land use decisions. The issues of takings, wetlands, and brownfields should 

ceive special attention, as articulated below.

Takings

Any governmental action, law, or regulation that deprives a prope

owner of value or benefits of his or her private property shall constitute a “ta

ing” for which said property owner shall be entitled to full “fair market valu

compensation. Specifically, government should examine the economic i

pact before property is taken and prohibit the taking of property without j

compensation.

Wetlands

Congress should direct the following changes in wetlands laws and reg

lations:

(a) If regulations affect a property use after it is acquired, the prope

owner should be compensated.

(b) The Army Corps of Engineers should have exclusive jurisdiction ov

Section 404.

(c) Use-based regulations should be encouraged based on relative imp

tance of a wetland to the local environment.

(d) A statutory definition of wetlands should be adopted using saturati

at start of a growing season as a criterion.

Brownfields

Congress should enact legislation to encourage reuse of industrial land 

follows:

(a) Direct EPA to specify the circumstances under which it would 

would not sue a business that is involved with a state-approved reclamati

project.

(b) For brownfield projects in which cleanup is commensurate with t

intended use, EPA should be required to enter into binding agreements w

the parties that no future federal action will be taken. (Votes received: 1,11

Environmental Policy

63. Congress should enact reformation of the Comprehensive Environmen

Response, Compensation and Liability Act (CERCLA) to apply prospectively 

well as retroactively to cleanup sites in progress:

(a) Eliminate retroactive and strict liability prior to January 1, 1987, 

prohibit liability for conduct that was not negligent, illegal, or in violation 

regulations or permits at the time.

52 The Annual Report on Small Business and Competition
yg p 

sideration of future uses of the site and actual environmental and health ris

associated with such use.

(d) Eliminate “re-openers”—disallowing the reopening of the remed

tion process at a site or a company’s contribution to the cleanup, after it h

been closed. 

(e) Offer alternative funding strategies for cleanups.

(f) Make greater use of de minimis and de micromis exemptions, requ

ing the EPA to identify all contributions to a site within a reasonable time p

riod and making de minimis settlements available prior to litigation or e

forcement actions.

(g) Eliminate liability of fiduciaries and lending institutions who hold 

dicia of ownership primarily to protect security interest in property which 

subject to the act.

(h) Eliminate joint and several liability for contamination.

(i) Require potentially responsible parties (PRPs) to inform non-PRPs (pa

ties not named by the EPA) in contribution actions of availability of de m

imis and/or de micromis settlements within a reasonable time period. (Vot

received: 1,371)

Environmental Policy

74. Congress should adopt changes in environmental statutes and regulatio

to assure that they are internally consistent for all requirements of the ac

across all regions. Congress should require the EPA to demonstrate that e

forcement of environmental laws and regulations is substantially equal in 

areas of the country. The Clean Air Act, the Clean Water Act, the Endanger

Species Act, and other such acts should be enforced equitably across all 

gions. (Votes received: 911)

Human Capital

78. Congress shall enact a 100-percent deduction for health care premium

for all business entities so that there is equity in taxation for the self-e

ployed, partnerships, S Corporations, limited liability corporations, and 

Corporations. This benefit shall continue to be excluded for tax purposes fro

the income of employees of all small businesses regardless of form, includi

from the income of the self-employed. (Votes received: 1,283)

Human Capital

87. Congress should pass a health care package that:

(a) Creates tax deductible medical savings accounts.

(b) Allows the formation of voluntary competitive health insurance pu

chasing cooperatives.

The State of Small Business 
(e) Provides for portability of health insurance.

(f) Provides a full 100 percent deductibility of health care costs for 

purchasers or limits the deduction to the same percentage for all purchase

(g) Provides medical malpractice reform.

(h) Prohibits any mandated coverage.

(i) Permits choice of health care insurer. (Votes received: 1,371)

Human Capital

91. Congress should repeal current disincentives and burdensome regulatio

on qualified retirement plans and IRAs, and encourage adequate retireme

savings and capital accumulation, including:

(a) Adopt a pension simplification bill, which contains the volunta

401(k) safe harbors, such as H.R. 13 and H.R. 3419.

(b) Raise compensation and benefit levels to 1992 limits and index for 

flation.

(c) Provide an exclusion from estate tax for retirement plan and IRA 

sets to avoid double taxation (they are already subject to income tax).

(d) Eliminate the 15 percent excise tax of IRC Section 4980A.

(e) Repeal the family aggregation rules of IRC Section 414(q)(6).

(f) Reinstate deductible IRAs and expand to include non-employ

spouses in full.

(g) Expand SARSEPs to employers with up to 100 employees.

(h) Repeal the minimum participation rules of IRC Section 401(a)(26) 

defined contribution plans.

(i) Lower the Qualified Separate Line of Business exception to 15 e

ployees.

(j) Increase the exceptions to the affiliated service group rules and 

clude a minimum 20-percent ownership test for “A” organizations.

(k) Repeal all defined benefit plan rules enacted after 1985.

(h) Amend section 72(p) of the IRC on pension plan loans to: (1) allow 

plan loans by proprietorships and partnerships; (2) increase the plan loan b

ance to $100,000; and (3) allow for balloon payments in lieu of quarterly pa

ments if the loan is secured by the participant’s account balance. (Votes 

ceived: 1,369)

Human Capital

103. The President and Congress must support the principle of equal oppor

nity, which is provided for in the U.S. Constitution. Small, women-owne

and minority-owned companies are entitled to equal consideration in ban

ing, lending, bonding, contracting, and hiring. Laws designed to address the

disparities cannot be abolished or restricted.

54 The Annual Report on Small Business and Competition
ppy ppy

jobs, and saves taxpayer dollars, thereby benefiting all Americans.

(b) There should be rigorous enforcement of this policy, including san

tions against fraud and abuse.

(c) There should be periodic review to ensure compliance with this po

icy. (Votes received: 949)

Human Capital

105. Congress should pass legislation assuring that no business or work

would be discriminated against on any contract based solely on their choi

not to be affiliated with a labor union or organization, and ensuring the co

petition of a trained qualified labor pool without undue union pressures a

privileges by:

(a) Passing and enacting the Open Contracting Act;

(b) Passing and enacting national Right to Work Legislation;

(c) Never prohibiting the hiring of permanent replacement workers du

ing or following an economic strike. This includes taking whatever steps a

necessary to override President Clinton’s executive order that prohibits go

ernment contracting with firms who have replaced striking workers; and

(d) Revising the Hobbs Act and the Federal Criminal Code along w

other applicable legislation that would:

(1) Reverse the Enmons ruling and eliminate other special pri

leges such as union exemption from prohibitions against libelous and 

olent speech and union officials’ legally-sanctioned power to force wo

ers to pay union dues to an unwanted union;

(2) Require union officials and unions to bear full responsibil

for their violence and extortion and criminal acts just like everyone els

(3) Make union pensions and benefit trusts applicable to the sam

regulations as other commercial or employer-provider plans;

(4) Make unions subject to all discriminatory and civil rights pr

visions the same as all businesses, and liable for the blackballing 

members who exercise their first amendment rights in opposition to t

union leadership;

(5) Use the RICO Act against Union Organizations involved in e

tortion and the commission of criminal acts; and

(6) Strictly prohibit compulsory union membership. (Votes 

ceived: 655)

Human Capital

203. Congress should amend the National Labor Relations Act to:

(a) Protect small businesses from abuses and intimidation practices 

organized labor.

The State of Small Business 
efficiency.

(e) Prevent the use of taxpayer funds to sue on behalf of multimillion-d

lar unions.

(f) Encourage labor organizations to permit compensation based on p

ductivity and quality of work.

(g) Restore employers’ ability to establish and use employee involveme

committees by repealing the impact of the Electromation case (309 NRLB N

163) and the Dupont case (311 NRLB No. 88). (Votes received: 591)

Human Capital

324. Social Security Privatization. Congress should privatize Social Security 

adopting a graduated phaseout and giving full disclosure to the American pe

ple on the solvency of the fund and the amount of money they, as individua

have paid into the fund. Congress should adopt a minimum 15-year graduat

phaseout schedule for government funding of Social Security for all new 

tirees; continue funding existing and “phase-out” retirees from the employe

6.2 percent (allow up to 15 percent) FICA portion; and allow for the e

ployee’s 6.2 percent FICA portion to be paid into their personal Compulso

IRA/401(k) (CIRA) style account. Require all “CIRAs” to buy disability and s

vivor’s insurance benefits equal to that of Social Security. (Votes received: 81

Human Capital

336. The President and Congress should enact legislation that consolida

the current federal workforce programs into state block grants that:

(a) Provide local control of specific skills training based on local needs.

(b) Require states to allow participation by small businesses with few

than 500 employees for on-the-job training of new and existing workforces.

(c) Provide tax incentives to small businesses that fund their own wo

force training programs.

(d) Encourage public-private partnerships of job training. (Votes 

ceived: 974)

International Trade

115. The President shall direct the U.S. Trade Representative to lead an int

national effort to protect the ownership of intellectual property and to ensu

adoption of reciprocal uniform standards, centralized filing and an efficie

international dispute resolution procedure for registration and enforcement 

trademarks and trade names, working with NAFTA, GATT and other trea

partners. We further recommend that Congress protect international pate

rights in a way that takes into account the needs of small business, includi

retaining the patent term to run for 20 years from date of application or 

56 The Annual Report on Small Business and Competition
International Trade

121. Small business owners are calling for the implementation of glob

“one-stop shopping”/ one-entity access to all government information and 

sources. Congress and the administration should create a pilot program th

leverages private-sector resources to assist associations (private and publ

particularly existing public/private partnerships) in helping their small bu

ness members trade internationally. Examples that would require no ne

funding include model training programs, on-line database services, ele

tronic learning networks, trade incubators (including those in U.S. a

Foreign Commercial Service locations around the world), international tra

ing cooperatives, trade missions, second- and third-tier exporting program

niche market development programs, and marketing-development coope

tive programs.

The Administration should appoint small business representatives to 

advisory or dispute settlement bodies as part of the private-sector represen

tion (example: the World Trade Organization dispute settlement panels.)

Congress and the Administration should maintain effective program

(eliminating ineffective programs) of the U.S. Department of Commer

International Trade Association that assist all American small business in e

tering and/or expanding export sales, emphasizing emerging markets as a p

of public/private partnership efforts to increase U.S. exports, U.S. jobs, a

U.S. economic vitality.

Note: No part of this issue shall be interpreted to be in conflict w

GATT and/or other existing international trade agreements. (Votes receive

1,329)

International Trade

129. Congress and the President shall authorize and encourage the Ex

Bank and the SBA to sponsor revitalized fund programs designed to foster t

financing of international trade (goods and services) including the new Expo

Working Capital Program to:

(a) Provide pre-export financing, unsecured working capital loans, tran

action-based loans and pooled loans, rather than balance sheet and ass

based loans;

(b) Provide educational programs for regional and local banking a

financial institutions on the methods to finance exports of small businesses;

(c) Educate and inform the small business community on available pr

grams to finance exports;

(d) Coordinate the efforts of various federal agencies that attempt to pr

vide financing for exports; and

(e) Provide credits and other incentives for small businesses to devel

and expand into foreign markets. (Votes received: 1,181)

The State of Small Business 
y g , g(

Main Street

134. Congress must remove the barriers imposed on small business people 

their relationship with large national and multi-national corporations, whi

prevent these small business people from mediating, arbitrating, or litigati

in their own home state. (Votes received: 930)

Main Street

139. Congress should legislate the creation of a Small Business Relief Fund 

economically assist small businesses that are displaced by the establishme

of a big business in their localities where the big business will contribute 

annual fee for the fund. (Votes received: 590)

Main Street

140. Congress should introduce and pass the National Disaster Protection A

which would include a private sector “All Risk” Property Insurance Progra

offered through a newly created private non-profit organization to reinsu

catastrophic losses. (Referenced in the Report of the Bipartisan Task Force 

Disasters, Recommendations #1 and #2, U.S. House of Representativ

December 14, 1994.) (Votes received: 841)

Main Street

141. Small business cannot compete with large businesses who use their ec

nomic power to extract unfair competitive pricing from manufacturers a

service providers. Antitrust laws should be strengthened and enforced to p

hibit abuses including unfair vertical integration, tying of pricing and produ

purchases, and predatory pricing tactics. The President should appoint a pre

dential commission on competition to study the enforcement and impact 

the federal antitrust laws on ensuring the survival and diversity of small bu

nesses. (Votes received: 829)

Procurement

144. Support fair competition: Congress should enact legislation that wou

prohibit government agencies, tax- and antitrust-exempt organizations fro

engaging in commercial activities in direct competition with small business

(Votes received: 1,285)

Procurement

153. Congress should enact legislation to designate a national certification 

ganization. This organization will be initially funded by Congress to establ

a database of certified small businesses, small disadvantaged businesses, a

58 The Annual Report on Small Business and Competition
p

(a) Congress will endorse one set of criteria for all local, city, state, a

national agencies, adopted by a task force utilizing purchasing agents a

small businesses owners, for uniform certification of small businesses, sm

disadvantaged businesses, and small businesses owned by women whe

contracts involve federal funds.

(b) All federal agencies must establish standardized monitoring and co

pliance procedures;

(c) Independent, decentralized advisory boards should be established.

(d) States and local communities should be encouraged to recognize th

certification on a reciprocal basis.

(e) All federal agencies should sponsor training to increase contracting/pr

curement officer awareness and use of reciprocal certification and databa

(Votes received: 968)

Procurement

161. The President and Congress should continue to support the Minor

Small Business Capital Ownership and Development Program, SBA 8(a), a

should enact legislation to make improvements with particular emphasis o

(a) Increase length of time.

(b) All federal minority procurement policies and procedures must 

incorporated and applied to any recipient of federal funds and becom

mandatory.

(c) Increase utilization of 8(a) contractors by enforcing accountability 

federal agencies in achieving their 8(a) goals.

(d) The establishment of procedures for immediate relief in the event 

catastrophic circumstances including but not limited to:

(1) total dissolving of government agencies;

(2) natural disasters;

(3) base closures.

(e) Relief to be in the form of extended participation in the 8(a) progra

for a reasonable time to recover from the catastrophic circumstance.

All of the above will follow the intent of the SBA 8(a) program to ra

8(a) businesses to a threshold allowing them to graduate to the open compe

tive market. (Votes received: 806)

Procurement

164. The Davis-Bacon Act of 1931 and the Service Contract Act of 19

should be completely repealed. (Votes received: 1,046)

The State of Small Business 
erated through delayed bill payment. Congress should modify this Act 

include subcontractors. In cases of dispute between the government and 

prime contractor, the subcontractor’s payment must be promptly releas

as long as the subcontractor is not part of the dispute. (Votes received: 84

Procurement

360. Increase Procurement Opportunities: Increase the opportunities for 

small businesses to equitably participate in federal procurement. Require th

(a) Not less than 35 percent of all government procurement monies (

percent of prime and 35 percent of subcontracts) be awarded to small firm

such that at least:

(1) 10 percent of prime and 10 percent of subcontract monies 

awarded to minority businesses;

(2) 5 percent of prime and 5 percent of subcontract monies 

awarded to women-owned businesses; and 

(3) 10 percent of the government’s total R&D budget be awarded 

small businesses;

(b) Small businesses be provided free and easy access to the gove

ment’s electronic commerce system, FACNET, which profiles federal procu

ment opportunities;

(c) Competition not be stifled by permitting federal agencies to “bund

contract requirements beyond the reach and capability of many small firm

and,

(d) Government agencies and tax-exempt entities not be allowed to u

fairly compete with private firms by strengthening and expanding OMB circ

lar A-76 to apply to all federal monies used directly or indirectly in the pro

sion of goods and services and by increasing the scope and improving t

enforcement of the unrelated business income tax (UBIT).

(e) On sole-source purchases above $100,000, a query of PASS must 

done by federal agencies and prime contractors.

(f) The “Rule of Two,” which requires federal agencies to restrict compe

tion when two or more small businesses are capable and available to compe

in price, quality and product/service for contracts of $100,000 or more, 

strictly enforced.

(g) The Department of Defense and the Small Business Administrati

sponsor EDI training through the already established network of small bu

ness procurement assistance centers located nationwide.

(h) The SBA review and revise the size criteria downward to reflect t

“true” small business. (Votes received: 954)

60 The Annual Report on Small Business and Competition
py gp

tion of functions between the three branches of government, we are com

pelled out of an immediate and overwhelming sense of concern to recom

mend the following:

The President and Congress should proactively and aggressively respond 

support the minority and women business community, and not use this decisi

in any way to influence any legislative action that would reduce support for o

country’s long-standing commitment to promote fair and equitable opportun

for all of its citizens regardless of race, color, or gender. (Votes received: 751)

Regulation and Paperwork

183. Congress should amend the Regulatory Flexibility Act, making it appl

able to all federal agencies, including the Internal Revenue Service and t

Department of Defense, to include all of the following:

(a) Require cost/benefit analysis, scientific benefit analysis, and risk a

sessment on all new regulations and Internal Revenue Service interpretation

(b) Grant judicial review of regulations, providing courts the ability 

stay harmful and costly regulations and to require agencies to rewrite them.

(c) Require small business representation on policy-making comm

sions, federal advisory and other federal commissions or boards, whose re

ommendations impact small businesses. Input from small business represe

tatives should be required in any future legislation, policy development, a

regulation-making affecting small business.

(d) With respect to all regulations involving small business, require neg

tiated rulemaking proceedings for adoption of all rules, with small busine

representing 50 percent of the negotiating panel. (Votes received: 1,398)

Regulation and Paperwork

188. Congress shall enact legislation and appropriate enforcement provisio

to include all of the following:

(a) Require all agencies to simplify language and forms required for u

by small business and that only the English language be required.

(b) Require all agencies to sunset and reevaluate all regulations eve

five years, using the same standards required for new regulations, with t

goal of reducing its total paperwork burden by at least 5 percent each year f

the next five years.

(c) Require agencies to assemble information through a single source 

all small business related government programs, regulations, reporting 

quirements, and key federal contacts’ names and phone numbers, with 

much as is feasibly available by on-line computer access.

(d) Eliminate duplicate regulations from multiple government agencie

(Votes received: 1,046)

The State of Small Business 
() qgppg g

environment that follows due process procedures and that the agencies 

less punitive and more solution-oriented in dealing with unintentional regu

tory violations.

(b) Require that fines take into account the severity of the infraction, s

and type of company, past safety record and the frequency and severity of t

violations.

(c) Allow proposed fines to be used toward correcting violations. 

(d) Prohibit fines either for violations identified during a consulting v

requested by the company, or by an agency investigator and brought to the 

tention of the employer for the first-time specific violation. If the company 

found to be in substantial compliance; the employer and inspector should n

gotiate a reasonable timetable for compliance, and fines should be levi

only for failure to comply within that timetable.

(e) Allow small business the option of binding arbitration to resolve a

dispute with any federal agency.

(f) Require that regulatory agencies put the fines that they impose a

collect into the general treasury fund toward retiring the national debt; sa

agencies should be prohibited from receiving credit or usage of such moni

(g) Require that the liability of the employer and the employee be relat

to their respective culpability.

(h) Require enforcement actions to comply with American due proce

concepts: notice and opportunity to be heard, a presumption of innocen

until proven guilty, and an impartial judge. (Votes received: 1,328)

Regulation and Paperwork

200. Congress and the President should propose and enact legislation that 

forms civil justice and product liability legislation to accomplish the follo

ing:

(a) Return to a fault-based standard of liability.

(b) Eliminate joint-and-several liability in cases where the defenda

have not acted in concert.

(c) Limit non-economic damages (such as pain and suffering, and men

anguish) to three times the economic damages or $250,000, whichever 

greater.

(d) Restrict punitive damages to cases of willful and malicious condu

The amount awarded should be split between the plaintiff and a judicial s

tem trust.

(e) Reduce awards in cases where a plaintiff can be compensated by c

lateral sources, to prevent windfall double recovery.

(f) Impose a uniform reasonable statute of limitations and repose in 

civil actions, and hold defendants to the state of the art in existence at t

62 The Annual Report on Small Business and Competition
y pp

(h) The prevailing party in a legal action should have a statutory right 

recover costs and attorney fees from the non-prevailing party (British Cod

(Votes received: 1,332)

Regulation and Paperwork

369. Small business and OSHA must work together in a non-adversarial, su

portive relationship to attain public policy safety goals. To accomplish th

Congress must pass legislation as follows:

(a) Require that voluntary compliance audits be performed within 

days of a request by a small business. Such audits must be educational a

non-threatening with written results and no fines issued.

(b) Businesses which have completed a voluntary inspection and ha

corrected any deficiencies within the time allotted, will not be fined at a su

sequent inspection for deficiencies that were missed or interpreted differen

by the first inspector.

(c) Require that all enforcement inspections, no matter how limited t

scope of the inspection, will result in an overall inspection score or grade 

be issued in writing by the inspector. On the basis of that grade, no fines 

penalties may be issued for deficiencies found if the facility (or that porti

of the facility inspected), has been found to be in substantial compliance. 

addition, in those cases where at least 90 percent of the entire facility h

been inspected and the overall grade indicated that the company is in su

stantial compliance, OSHA will issue a letter of commendation recognizi

the company for its efforts. If needed, a definition of substantial complian

would include:

(1) a limited number of violations/deficiencies found vs. number 

items inspected.

(2) the company has an active safety committee or program a

demonstrates commitment to safety by management. 

(3) major programs (i.e., right-to-know, confined space, lock out/t

out, training, etc.) are in place.

(d) Amend regulations to assign responsibility for regulatory complian

to the employee as well as the employer.

(e) Amend OSHA regulations to require that when an employer and/

employee notifies OSHA officially that compliance has been achieve

OSHA must confirm that compliance has occurred within 72 hours 

notification.

(f) Amend regulations to require OSHA not to make any inspections (u

less voluntary) on any small business workplace and/or worksite unless an a

cident has been recorded and reported. 

The State of Small Business 
Taxation

214. Small businesses typically rely on close personal relationships and c

tomer service to compete for sales rather than expensive advertising ca

paigns. Expenditures for meals and entertainment are often an important p

of this effort. The recent changes in the tax laws to disallow 50 percent 

these expenditures for tax purposes has disproportionately increased the se

ing costs for many small businesses. Accordingly, Congress and the Preside

shall enact legislation which will allow a tax deduction for 100 percent of t

expenditures for meals and entertainment. (Votes received: 1,444)

Taxation

218. Congress should repeal the federal estate, gift and generation-skippi

tax laws. There is currently legislation before the 104th Congress known 

the Family Heritage Preservation Act (H.R.784/S.628) that would accompl

this. The negative effect on small businesses and others far exceeds the net 

come to government when all administrative costs to individuals, business

and the government are considered. (Votes received: 1,385)

Taxation

224. The definition of an independent contractor must be clarified. Congre

should recognize the legitimacy of an independent contractor. 

(a) The 20-factor test is too subjective. The number of relevant facto

should be narrowed with more definition guidelines for implementatio

Realistic and consistent guidelines that require one of four criteria plus a w

ten agreement. The criteria are (1) realization of profit or loss; (2) separa

principal place of business; (3) making services available to the general pu

lic; or (4) paid on a commission basis.

(b) Safe-harbor provisions should be established that would protect t

hiring business from the burdensome penalties currently being assessed by t

IRS. De minimis rules based on dollars paid, hours worked, years in busine

and/or specified closed-end projects should be established.

(c) The IRS should eliminate back taxes for misclassification when Fo

1099s are filed and there is no evidence of fraud.

(d) Congress should specifically allow employers and independent co

tractors to provide joint technical training and to jointly utilize major speci

ized tools without jeopardy of reclassification of the independent contrac

to employee status.

(e) Changes and implementation processes should be formulated by 

joint committee of legislators and small business people. (Votes receive

1,471)

64 The Annual Report on Small Business and Competition
py, ggpp

sent system with a simple tax for individuals and businesses. (Votes receive

801)

Taxation

233. Congress should permit deductions of expenses up to $250,000 ann

ally for the purchase of new or used equipment for use in a small busine

and should remove the cap of $200,000 and have no upper qualifying lim

on the Section 179 election. (Votes received: 990)

Taxation

242. Congress should modify and expand the 50 percent capital gains exc

sion for small business stock passed in the 1993 Revenue Reconciliation A

so that it provides a front-end, as well as a back-end incentive for investme

in small businesses. Specific recommendations:

(a) Allow investors to sell funds in any investment and roll the investme

into a small company, as defined by the current law, within two years. Capi

gains tax on assets sold would be deferred (using the same methods as lik

kind exchanges). Taxes would be payable at the favorable small business ra

if held for the specified period.

(b) Phase in the preferential tax treatment over a five-year holding p

riod. For example, an investor with a three-year holding period would pa

28 percent – (28 percent x 50 percent x 60 percent) = 19.6 percent.

(c) Amend Code Section 1202 to extend its benefits to S Corporation

partnerships, and sole proprietorships by defining a “qualified small busines

to include all such business entities and extend the definition of a qualifi

trade or business under Section 1202 to all types of businesses. (Votes 

ceived: 1,054)

Taxation

250. Congress should enact legislation that would prevent it from raisi

taxes retroactively. (Votes received: 974)

Taxation

252. Congress should enact legislation that requires a two-thirds supermajo

ity vote in both houses of Congress to enact legislation resulting in a tax 

crease. (Votes received: 681)

Taxation

253. Payroll Tax Relief: A cap must be placed on the employer’s portion 

payroll taxes. Congress should reject all proposals to raise payroll taxes in 

The State of Small Business 
385. Tax Equity Now! Congress and the President shall enact legislation th

shall place large and small businesses on a level playing field for tax p

poses—that is, provide tax equity—in situations where small businesses a

currently at a disadvantage. This should be done by uniformly applying t

tax law to all forms of business (e.g. proprietorships, partnerships, 

Corporations, S Corporations, limited liability companies) with regard to t

rates, deductions, and exclusions as follows:

(a) All forms of business entities to take deductions for 100 percent of t

medical insurance premiums, dependent care, and other fringe benefits n

currently deductible by self-employed individuals, partnerships, 

Corporations, and limited liability companies on behalf of all of their emplo

ees who are owners, partners, shareholders, and/or members. As long 

fringe benefits continue to be excluded from the income of employees 

large C Corporations, then such benefits should be excluded from the incom

of employees of all small businesses, regardless of form, as well as from t

income of self-employed individuals.

(b) Pension plan benefits currently available to employees of large bu

nesses to be made available to self-employed and employees of small bu

nesses as provided in Recommendation no. 91.

(c) All C Corporations to be taxed using the same graduated tax ra

schedule. Section 11(b)(2) of the Internal Revenue Code, taxing the income 

qualified personal service corporations at a flat 35 percent tax rate, should 

repealed.

The privilege of deducting legitimate business expenses should no long

be based upon the entity chosen to operate such business. The choice of 

entity within which one will operate a business should be a legal issue, no

tax issue. (Votes received: 1,258)

Taxation

390. Congress should enact a comprehensive policy on capital gains that e

courages long-term investment in productive assets. This policy should 

clude the following provisions.

(a) Indexing of the cost basis of assets held more than one year.

(b) A targeted capital gains exclusion of 50 percent of the indexed ga

for an investment in a qualified small business held more than three years

qualified small business should include all forms of business entities includi

pass-throughs.

(c) A maximum tax of 10 percent on the sale of a majority interest in 

qualified small business held for more than 15 years.

(d) A deferral of the gain on the sale of an interest in a qualified sm

business if the gain is reinvested in another qualified small business with

two years.

66 The Annual Report on Small Business and Competition
g

ation of proceeds from the sale of a business. (Votes received: 944)

Technology and the Information Revolution

265. Congress and the executive branch should promote the rapid p

vate-sector development of the National/Global Information Infrastructu

(NII/GII) and protect all intellectual property transmitted over it. Congress a

the U.S. Patent Office should also implement an enforceable and univers

intellectual property (patent, trademark, and copyright) application with 

members of the World Trade Organization, while maintaining “first to inven

This must also include the ability to police existing laws and treaties more j

diciously, and to update definitions of intellectual property on a continui

basis.

Said branches of government should enact the following:

(a) Ensure that legal protection of intellectual property rights, as well 

fair access, is fully accorded with respect to products over the Nation

Information Infrastructure (NII) and the Global Information Infrastructu

(GII).

(b) Incorporate the responsibility for trademark and copyright appeals 

igation with the federal Circuit Court of Appeals, as was done in the m

1980s with patents.

(c) Prevent premature disclosure through Freedom of Information A

(FOIA) access to proprietary Small Business Innovation Research (SBIR) tec

nologies.

(d) Expeditiously and simultaneously open all telecommunications ma

kets to full and fair competition.

(e) Make it possible for all providers to equally compete in offering on

stop shopping for telecommunications products and services; legislati

should provide universal access.

(f) Ensure privacy to all users from all parties, including the governme

(for example, the Clipper Chip or its successor), and security of the infrastru

ture.

(g) Promote open and affordable access to all small business, includi

underserved communities, rural communities, and minority- and wome

owned businesses.

(h) Provide technology education and training by redirecting existing fe

eral programs through private sector small businesses.

(i) Include small business representation on all NII/GII-related fede

commissions and committees. 

(j) Require government agencies utilizing EC/EDI technology to use 

standard technology accessible and affordable to small businesses.

The State of Small Business 
information.

(l) The Economic Classification Policy Committee should review and 

vise SIC codes every three to five years to reflect economic advancements 

American society, for example the definition of “manufacturer” to inclu

“knowledge-based manufacturing” and “technology consulting.” (Votes 

ceived: 1,358)

Technology and the Information Revolution

406. Congress should enact legislative programs that expand the availabil

of technology commercialization funding and investment capital for sma

rapidly growing innovative companies including, as a minimum:

(a) Expand, improve, and make permanent the SBIR/STTR programs by:

(1) Excluding cost-sharing in proposal evaluation and scoring for 

ther Phase I or Phase II and prohibiting agencies from imposing artific

ceilings on indirect and IR&D expenses.

(2) SBA directives to agencies to budget an appropriate portion 

administrative overhead and committing adequate personnel to mana

ing the SBIR program.

(b) Encourage investment in small companies by:

(1) Retaining and expanding targeted capital gains, including mutu

fund and institutional investments in small business. 

(2) Allowing tax-free rollovers for direct investments by all investo

in small business. 

(3) Providing additional incentives and reducing inhibiting regu

tions for investments in small companies by pension funds, institution

and/or corporate investors. 

(4) Amending tax loss rules for NOL carry forward. 

(5) Expanding and making permanent the R&E tax credit.

(c) Develop new public markets and instruments for small firm securiti

(d) The Congress should support flexible manufacturing through the p

motion of partnerships between small business and existing resources to c

ate more efficient and flexible manufacturing processes, and nurture t

growth of U.S. manufacturing industries.

(e) Direct the establishment of a temporary multi-agency task force 

quickly address and solve the impediments to the above. (Votes receive

1,292)

Unclassified

280. Deficit spending continuing year after year poses a grave threat to o

freedom as the world’s leading economic power and to our free enterpr

system. The President and Congress must take immediate steps to bring t

federal budget into balance by eliminating or reducing appropriate program

68 The Annual Report on Small Business and Competition
286. The U.S. Small Business Administration (SBA) is vital to the growth 

small business in America. Efforts to make the SBA’s programs more cost 

fective and efficient should be continued and encouraged. The SBA’s “ind

pendent” agency role as the primary supporter of small business within t

federal government should be enhanced by:

(a) Elevation of the U.S. Small Business Administration to a congressio

ally approved cabinet level position.

(b) Budget allocations to maintain, increase, and enhance the 7(a) Lo

Guaranty Program. 

(c) Budget allocations to maintain, increase, and enhance the 504 Lo

Program.

(d) Budget allocations to make permanent the Small Busine

Development Center Program, which provides business assistance to sm

businesses nationwide.

(e) Permanent maintenance of the “independent role” of the U.S. Sm

Business Administration’s Office of Advocacy.

(f) All other SBA programs should be reviewed with substantial inp

from the private sector. Any programs deemed to be ineffective should 

eliminated. (Votes received: 1,249)

Unclassified

287. Congress should authorize and the President convene a White Hou

Conference on Small Business every four (4) years to provide a continui

forum for owners and entrepreneurs to promote and work for the betterme

of small business and ensure that they remain a vital part of the Americ

economy. (Votes received: 730)

Unclassified

288. Congress should develop a tangible process for monitoring the imp

mentation progress of the recommendations that emerge from the WHC

National Conference in June 1995. This monitoring process should be dev

oped to make Congress and the President accountable to the WHCSB parti

pants, and should be achieved specifically by doing the following:

(a) Periodic updates to WHCSB participants by SBA’s Office of Advoca

on the progress of implementation; and

(b) Annual summit of state WHCSB chairs, or their representatives, to d

cuss and evaluate the progress of implementation. (Votes received: 916)

The State of Small Business 
Appendix 2.2 White House Conference on Small Business Implem

Issue Area No. Recommendation Executive Activity 

Capital Formation 5 Encourage pension and The IRS is streamlining th

retirement fund investment in obtaining prohibited transmall business exemptions on investme

directed retirement plan 

Capital Formation 9 Bank regulatory reform to The Administration has u

encourage small business lending comprehensive effort to 

regulatory burden on lento increase the credit avabusiness. The ComptrolleCurrency issued streamliand compliance procedunational banks. 

Capital Formation 14 Increase the availability of The SBA’s SBIC Program 

growth capital to small business contracts to examine the 

of its licensing and examThe 105th Congress passsigned into law revisions tax provisions for investmnesses. See recommenda

` 

70 The Annual Report on Small Business and Competition
The State of Small Business 71

Capital Formation 20 Tax code changes to encourage President Clinton signed 

small business investment the Taxpayer Relief Act o

Capital Formation 24 Small Corporate Offering SBA’s Office of Advocacy 

Registration American Securities Adm

tion in the drafting and tModel Accredited Investto facilitate sales of secucompaines. 

Capital Formation 25 Small business loan guarantee The SBA worked with Co

programs overhaul its loan guarant

allow greater availability without increased approAdministratively, SBA haprohibit abuses of the guprograms and has decreatime necessary to procesapplications. 
72 The Annual Report on Small Business and Competition Appendix 2.2 White House Conference on Small Business Implem

Issue Area No. Recommendation Executive Activity 

Capital Formation 28 Community Reinvestment Act The Administration and t

rating includes small business regulators have revised rlending to implement the CRA. T

include greater emphasis business lending and reqfinancial institutions to cbusiness lending data. Imthese new regulations beJanuary 1, 1996. Community 31 Federal measures to address The Administration has p

Development distressed urban and rural areas endorsed policies to sup

rural and urban areas, inDELTA program, the Empand Enterprise CommunSBA’s micro-loan programenforcement, and suppoownership by women anSee also recommendatio

Community 34 Expand the home office deduction The President signed P.LDevelopment Taxpayer Relief Act of 19

Community 41 The Department of Education and The Administration’s SchDevelopment the SBA should create a K-12 Opportunities Initiative c

Entrepreneurship Education partnerships between edprogram businesses and commun

much of this recommend
The State of Small Business 73

Community 44 Congress should prevent the Not applicable—requireDevelopment direct or indirect use of federal 

funds to lure business into a state from another state

Environmental 51 Sound science, risk assessment, The Administration has mPolicy health and cost benefit analysis effort both to make regu

applied to all regulations friendly,” based on the b

available, less punitive in provide compliance assi

Environmental 57 Environmental legislation’s Requires legislative actio

Policy impact on private property, i.e., Administration opposes 

takings, wetlands, brownfields proposals because of the

protections and the budgprotect private property reinventing individual reprograms where consisteenvironmental and other including simplifying we

Environmental 63 Superfund reform The Administration has pPolicy reforms to the Superfund 

address sound science, rlender liability, and de m

micromis settlements.

Environmental 74 Uniform enforcement of The Administration is coPolicy environmental statutes and uniform enforcement of 

regulations statutes and regulations.

Human Capital 78 100 percent health care President Clinton signed 

deduction for all business Taxpayer Relief Act of 19entities deductible for the self-em

percent by 2007.

Human Capital 87 Health care reform President Clinton signed 

Budget Act of 1997 to expilot project to Medicare expand portability and hcoverage to children of p
74 The Annual Report on Small Business and Competition Appendix 2.2 White House Conference on Small Business Implem

Issue Area No. Recommendation Executive Activity 

Human Capital 91 Pension reform President Clinton signed 

Taxpayer Relief Act of 19increased eligibility for IR

Clinton signed the Small Protection Act of 1996. 

Human Capital 103 Ensure small, women- and The Administration has p

minority-owned firms are committed to ensuring tafforded equal opportunities are oriented toward dive

economic opportunity. In with the Adarand decisio

new regulations to expanto increase number of wh

Human Capital 105 Labor law reform Some parts of this recom

current law and are enfouse of the Racketeer InfluCorrupt Organizations Aresponsibility of unions aofficials for criminal actsapplication of civil rights unions. 

Human Capital 203 Reform of the National Labor Current law already prote

Relations Act businesses from abuses a

practices by organized la

Human Capital 324 Privatize Social Security Not applicable – legislati
The State of Small Business 75

Human Capital 336 Consolidate federal work force Legislation required. The 

programs into state block grants proposed the GI Bill for A

Workers. 

International Trade 115 Intellectual property protection The Department of Com

Office of the U.S.Trade Rhave worked actively to intellectual property righof high profile successes Administration supports strengthening patents.

International Trade 121 Export assistance for small The Administration open

business Assistance Centers (joint

supported by the SBA, thBank, and the Departmethat offer one-stop exporsmall businesses. The DeCommerce includes smaits trade advisory commi

International Trade 129 Export finance Legislation required. The 

Export Working Capital pprovides pre-export and The appointment of the Strator to the President’s Efor the first time in historbusiness representation.

Main Street 130 Legal rights of franchisees, The FTC’s franchise rule 

dealers, and product distributors under review; the FTC p

advance notice of propoon disclosure requiremefranchise opportunities. 
76 The Annual Report on Small Business and Competition Appendix 2.2 White House Conference on Small Business Implem

Issue Area No. Recommendation Executive Activity 

Main Street 134 Remove the barriers to small Not applicable—legislat

firms mediating, arbitrating, or litigating in their home states Main Street 139 Create a relief fund to assist Not applicable—legislatsmall businesses displaced by large businesses Main Street 140 Private sector “all risk” Not applicable—legislatproperty insurance program Main Street 141 Antitrust laws should be The FTC has stepped up examined and strengthened investigating antitrust vio

negotiating consent agreDepartment of Justice haits criminal antitrust enfoefforts.

Procurement 144 Prohibit government and tax- The Administration issue

exempt organizations from the A-76 circular to protecompeting with small firms including small business

government competition

Procurement 153 Establish a national organization The Administration is rev

to develop uniform certification possible certification procriteria for small, disadvantaged,and women-owned firms
The State of Small Business 77

Procurement 161 8(a) program reforms The Administration stron

policies oriented toward fair economic opportuniother agencies, initiated Authority” pilot program 8(a) program. The SBA wNet, an Internet-based inand marketing tool for 8SBA published proposed streamline the 8(a) progr

Procurement 164 Repeal the Davis-Bacon and The Administration supp

Service Contract Acts the Davis-Bacon Act, bu

repeal of the Davis-BacoContract Acts.

Procurement 167 Strengthen the Prompt Payment Legislation required. The 

Act is examining options to p

relief to small firms. OMletters to federal agency the importance of the acobligations. The OFPP is policy letter on subcontr

Procurement 360 Increase opportunities for all The SBA and the OFPP a

small businesses to participate small business set-aside equitably in federal procurement service task-order contra

Business Daily automate

opportunities are now avnet. The Administration athe government-wide pro23 percent.
78 The Annual Report on Small Business and Competition Appendix 2.2 White House Conference on Small Business Implem

Issue Area No. Recommendation Executive Activity 

Procurement 437 Congress and the President The Administration stron

should respond to the Adarand v. policies oriented toward 

Pena decision with strong fair economic opportuni

support for women- and Department of Justice is minority-owned firms reviewing all minority pr

programs in order to com

Adarand decision. The P

OFPP support the 8(a) prdiversity in federal contrpolicy statements sent to 

Regulation and 183 Regulatory reform, including President Clinton signed Paperwork judicial review of federal Small Business Regulato

regulations Fairness Act of 1996. It p

judicial review of agency regulatory flexibility ana

Regulation and 188 Periodic review of all Implementation of the SmPaperwork regulations, simplify and latory Enforcement Fairn

eliminate regulations, and taking place throughout provide single source of regulatory information 

Regulation and 194 Change the nature of the federal The Small Business ReguPaperwork government’s enforcement of Enforcement Fairness Ac

regulations small business ombudsm

regional boards to monitfederal rules. The legislatimplemented. 

Regulation and 200 Tort reform The President vetoed the Paperwork legislation submitted in t
The State of Small Business 79

Regulation and 369 Reform of OSHA OSHA has adopted variaPaperwork the proposals in this reco

voluntary compliance auand some companies are relief; if an employer has safety and health prograis eligible for an abbreviwith good faith efforts by OSHA considers employdefense against citationspreparing better guidanccomply with its regulatio

Taxation 214 100-percent tax deduction for Legislation required. The 

meals and entertainment has, however, raised from expenses the amount of expenses 

receipt is needed to clai

Taxation 218 Estate taxes President Clinton signed 

Taxpayer Relief Act of 19includes major estate tax 
80 The Annual Report on Small Business and Competition Appendix 2.2 White House Conference on Small Business Implem

Issue Area No. Recommendation Executive Activity 

Taxation 224 Clarify the tax definition of The IRS has taken severa

independent contractors steps to clarify the rules o

classification and to resoremaining issues more exIRS issued a clarifying trathat equalizes enforcemedecision-ruling procedurthe expeditious resolutioproblems. President ClinSmall Business Jobs Prote

Taxation 229 Replace the present tax system President Clinton signed 

with a simple tax for individuals Taxpayer Relief Act of 19and businesses simplify taxes by cutting 

native minimum tax (AMnesses. Small corporationgross receipts under $5 mlonger need to calculate provision effectively exepercent of all corporation2 million businesses) from complex paperwork.

Taxation 233 Permit tax deductions of up to President Clinton signed 

$250,000 for the purchase of Business Jobs Protection equipment which increases the expe

up to $25,000. 
The State of Small Business 81

Taxation 242 Capital gains tax treatment for President Clinton signed 

small business Taxpayer Relief Act of 19

extensive capital gains re

Taxation 250 Prohibit retroactive increases Not applicable—legislat

in taxes 

Taxation 252 Require 2/3 super-majority Not applicable—legislat

vote of Congress to raise taxes 

Taxation 253 Cap employer’s portion of The Administration has n

payroll taxes raise payroll taxes. 
82 The Annual Report on Small Business and Competition Appendix 2.2 White House Conference on Small Business Implem

Issue Area No. Recommendation Executive Activity 

Taxation 385 Tax equity: uniformly apply tax President Clinton signed 

regard to rates, deductions, and The Administration has exclusions reform, the broadening 

increases in the self-emcare deduction, and a s

form selection process, were enacted as part of Business Jobs Protection 

Taxation 390 Enact a comprehensive capital President Clinton signed 

gains tax policy that encourages Taxpayer Relief Act of 1long-term investment for the rollover of gain f

stock to another. The Ad

economic plan establishpercent capital gains tax tain new investments in and rollovers into SpeciBusiness Investment CoAdministration recently tions to ease redemptio

Technology 265 Development of all telecom- President Clinton signed 

munications markets to full and Telecommunications Acfair competition with increased telecommunications machoices for customer products and tion. The FCC has issued services and the promotion of landmark proceedings tuniversal service. Development law. The Department of of the National/Global Informa- completed a report on Ition InfrastructureNII/GII: Imple- Property and the Nationmention of enforceable and Infrastructure, which wiuniversal measures to protect policy. The Administratiintellectual property rights (patent, legislation to simplify thtrademark, and copyright) over obtaining global intellecthe NII/GII, as well as fair access, protection. with all members of World Trade Organization.
The State of Small Business 83

Technology 406 Expand technology The SBA’s Office of Advo

commercialization funding and cooperation of the Securiinvestment for small innovative Commission and state secompanies regulators, introduced A

national Internet listing business securities. The Ahas dramatically expandManufacturing Extension which assists America’s manufacturing firms. SBthe PRO-Net Internet sebusinesses obtain procuties. The Administration tinuing the Small BusineTransfer program to 200

Unclassified 280 Balance the federal budget President Clinton signed 

anced Budget Act of 199Budget Reconcilliation bprovides for a balanced by 2002.

Unclassified 286 Future of the Small Business The Administration is co

Administration small business commun

has given the SBA Admilevel status. The Presidebudget request for the Smillion—slightly less thato lower loan program s

Unclassified 287 Convene a White Not applicable—legislat

House Conference on Small Administration will suppBusiness every four years introduced to authorize 

Unclassified 288 Monitoring the results of the The SBA and the Office 

White House Conference been directed by the Prerecommendations and report the results of 

Conference. The Office convened a summit of thdelegates in December issues annual implemenSeptember.

p. 84 Blank p. 85 Fols.
Changes in Self-Employment as

Small Business

Synopsis

One important small business development in recent years has been t

increase in the number of people who are self-employed. During t

period from 1970 to 1994, the nonfarm self-employed increased more th

72 percent to 9 million persons. If a broader definition of self-employment 

used, 13.1 percent of all workers consider themselves self-employed on 

full-time or part-time basis.

The businesses owned by the self-employed are usually very small (

though many have employees) and represent a wide variety of endeavors

from part-time efforts of wage-and-salary workers to established indepe

dent firms employing many people. This chapter documents the growth 

self-employment and examines the success of women, minorities and vet

ans in becoming self-employed.

The self-employed—the smallest businesses—are major contributors 

the economy. Nonfarm sole proprietors had receipts of about $757 billion 

1993. Moreover, self-employment opportunities provide flexibility a

adaptability in the economy, generate new services and products, and add 

the nation’s productive capacity. Self-employment also serves as an impo

tant training ground for the nation’s entrepreneurs as they identify new bu

ness areas.

The growth of self-employment is the result of numerous factors: ec

nomic conditions, the availability of opportunities for wage-and-salary e

ployment, the effects of the tax code on business formation, identificati

by entrepreneurs of unexploited opportunities, workers’ dissatisfacti

with wage-and-salary jobs, and entrepreneurs’ desire to supplement oth

income.

The fastest growing segment of the self-employed—the incorporat

self-employed—registered an increase of more than 32 percent betwe

March 1988 and March 1994. “Moonlighters”—wage-and-salary worke

with self-employment on the side—declined by almost 4 percent during t

period. This decline was less than the near 9 percent between 1983 a

1988, but a sharp reversal of the 438 percent increase evident during t

1979–1983 period—a period characterized by a major recession.

The State of Small Business 
gg

Generally, they earn less than their counterparts in paid employment; an e

ception is incorporated business owners, who earn more than their pa

counterparts. About 10 percent of all business owners earn less than t

minimum wage, which suggests that they receive considerable amounts 

implicit income or nonmonetary benefits, expect relatively higher future 

comes, and place a high value on being self-employed.

Between 1988 and 1994, the number of African-American entrep

neurs increased by almost 37 percent, while women had gains of more th

26 percent. Women are much less likely than men to operate a full-tim

business, suggesting that women go into business on a part-time basis b

cause it offers the flexibility and adaptability to combine work and fam

responsibilities.

Introduction

Self-employment continues to be an important alternative to wage-an

salary employment in the United States.1 These smallest businesses a

major contributors to the economy: nonfarm sole proprietors had business 

ceipts of about $757 billion in 1993.2

Self-employment opportunities make the economy more flexible, genera

new services and products, and add to the nation’s productive capacity. Se

employment also serves as a training ground for many of the nation’s entrep

neurs and is an important first step in small business formation and growth.3

Many factors contribute to the growth of self-employment, includi

growth in the labor supply that is not readily accommodated by wage-an

salary employment, the identification by entrepreneurs of unexploited opp

tunities, the perception of opportunities for greater financial return, dissat

faction with wage-and-salary jobs, the need to supplement other income, a

a desire to work independently.4

86 The Annual Report on Small Business and Competition

1 This chapter updates the analysis of self-employment presented in The State of Small Busine

A Report of the President (Washington, D.C: U.S. Government Printing Office, 1986), Chapter 

2 Special tabulations by the U.S. Department of the Treasury, Internal Revenue Service, 

the U.S. Small Business Administration, Office of Advocacy, 1996. 3 Not only do the self-employed create their own jobs as business owners, but they cre

jobs by hiring workers. One estimate is that about 25 percent of workers in nonagricultural 

dustries found employment with a business owner who was self-employed in a sole propriet

ship, partnership, or corporation. See Sheldon E. Haber, Enrique J. Lamas, and Jules 

Lichtenstein, “On Their Own: The Self-Employed and Others in Private Business,” Monthly Lab

Review (May 1987), 21–22. 4 Tax considerations, including differential Social Security tax rates and the deductibility of bu

ness expenses, are an important element of the financial calculation. For a comprehensive discuss

of the determinants of self-employment, see Robert L. Aronson, Self-Employment: A Labor Mar

Approach (Ithaca, N.Y.: ILR Press, 1991).
Growth in Self-Employment

After World War II, the number of nonagricultural self-employed workeactually declined, from 6.1 million in 1948 to 5.2 million in 1970.5 Sin

1970, however, self-employment has increased almost every year, reaching 

million in 1993, an increase of more than 72 percent (Table 3.1).6 This 

crease occurred in the context of a steadily expanding labor force and a flu

tuating supply of wage-and-salary jobs. As a percentage of the civilian lab

force, self-employment increased from 6.3 percent in 1970 to 6.9 percent 

1994.7

The unincorporated self-employed population grew at a fairly stea

pace in the 1983–1988 and 1988–1994 periods, averaging around 9 perce

over each period (Table 3.2). These rates exceeded the growth in the numb

of wage-and-salary workers from 1988 to 1994, but fell short of the wag

and-salary growth rate from 1983 to 1988. Wage-and-salary work may gro

faster than self-employment coming out of a recession (1983) because exi

ing firms are quicker to add workers than individuals are to start new firms.

Broader Measures of Self-Employment: Expanding the

Census Definition

While Census data have documented growth in self-employment over tlast decade and a half, the actual extent of entrepreneurial activity m

have been understated in published data sources.8

The State of Small Business 

5 The trends in agricultural and nonagricultural self-employment have been very differe

Agricultural self-employment, which has been decreasing for decades, continued to decl

through the mid-1970s. Since 1976, it has held steady at about 1.6 million. This chapter focu

on nonagricultural business. 6 Self-employed persons are officially defined in terms of employment status by the Bure

of the Census in its Current Population Survey (CPS) and decennial Census as those who w

full-time or part-time for a profit or fees in their own unincorporated business, profession, 

trade, or operate a farm. The unincorporated self-employed include sole proprietors and partne

7 The civilian labor force consists of the total of all civilians classified as either employed 

unemployed. 8 The Bureau of the Census, in the Current Population Survey (CPS), defines the nonfa

self-employed as those who work full-time or part-time for a profit or fees in their own uninc

porated business, profession, or trade. This official definition is limited in that it:

• includes both sole proprietors and partners, but does not distinguish between them;

• excludes incorporated businesses, which are tabulated as wage-and-salary workers 

cause legally they are employees of the business they operate;

• excludes wage-and-salary workers who report self-employment as a secondary activ

because only one type of employment is recorded per individual;

• does not report multiple businesses operated by one individual; and

• does not distinguish between full-time and part-time self-employment.
j

Annual Annual Unemployme

Number Percentage Number Percentage Rate

Year Thousands) Change (Thousands) Change (Percent)

1994 9,003 0.0 131,056 2.4 6.1

1993 9,003 4.5 128,040 0.8 6.8

1992 8,619 23.1 126,982 1.3 7.4

1991 8,899 1.6 125,303 0.4 6.7

1990 8,760 1.8 124,787 0.7 5.5

1989 8,605 1.0 123,869 1.8 5.3

1988 8,519 3.9 121,669 1.5 5.5

1987 8,201 4.1 119,865 1.7 6.2

1986 7,881 0.9 117,834 2.1 7.0

1985 7,811 0.3 115,461 1.7 7.2

1984 7,785 — 113,544 — 7.5

1980 7,000 — 106,940 — 7.1

1975 5,705 — 93,770 — 8.5

1970 5,221 — 82,771 — 4.9

1Unincorporated self-employed.

Source: Statistical Abstract of the United States, various issues.

88 The Annual Report on Small Business and Competition

Table 3.2 Average Annual Change in Employment in Nonagricultural

Industries, May 1983–March 1988 and March 1988–March 1994 (Percent) 

Class of Worker 1983–1988 1988–199

Unincorporated Self-Employed (USE) 1.68 1.53

Wage-and-Salary Workers (WS) 2.99 1.09

Incorporated Self-Employed (ISE) 3.04 5.92

Wage-and-Salary Workers Only (WSO) 3.1 1.00

Wage-and-Salary Workers with Self-Employment

(WSSE) 21.71 20.59

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the U

Department of Commerce, Bureau of the Census, Current Population Survey, March 1988 a

March 1994. Data for 1983 are taken from The State of Small Business: A Report of the Presid

(Washington, D.C.: U.S. Government Printing Office, 1986).
pygpp

etorships and partnerships. It is possible, however, to obtain information 

incorporated self-employment from unpublished Current Population Surv

(CPS) data.10 Data from the 1994 CPS permit a definition of business owne

ship that includes the incorporated self-employed (ISE) and wage-and-sala

workers with a side business (WSSE or “moonlighters”) along with the un

corporated self-employed (USE).11

Under this broader definition of business ownership, 13.1 percent 

nonagricultural jobholders in March 1994, or 15.4 million persons, engag

in some form of entrepreneurial activity (Table 3.3).12 Total self-employme

as a proportion of total employment increased from 12.5 percent to 13.1 pe

cent between 1988 and 1994 after falling from 13.5 percent in 1983.13

General trends in the growth of self-employment, broadly defined, c

be tracked between 1988 and 1994—a period of economic contraction wh

the unemployment rate rose from about 5.5 percent to 6.1 percent—and b

tween 1983 and 1988—a period marked by a sharp expansion and a decli

in the unemployment rate from about 7 percent to 5.5 percent (Table 3.1).

The State of Small Business 

9 For an analysis of the impact of taxes on the choice of legal form of business, see Geo

A. Plesko, Taxes and the Choice of Entity for Small Business, report no. PB95-239906, prepa

by George A. Plesko for the U.S. Small Business Administration, Office of Advocacy (Springfie

Va.: National Technical Information Service, 1994). 10 Data on businesses by legal form of ownership can be obtained from other sources, 

cluding the Statistics of Income compiled by the Internal Revenue Service. These data are not 

rectly comparable to the Census data on self-employment because of different measurement a

collection techniques. The Internal Revenue Service identifies the legal form of business own

ship and estimates the number of sole proprietorships—that is, the number of unincorporat

one-owner businesses, farms, and professional practices, which range from large enterprises w

many employees and hired managers to part-time operations in which the owner is the only p

son involved. These estimates are derived from a sample of individual income tax returns (Fo

1040) filed with sole proprietorship business schedules (Schedule C) attached. Most self-e

ployed (based on the Census definition) are sole proprietors and file a Schedule C. For a furt

description of the relationship between IRS and Census data, see the appendix to this chapter. 11 The unincorporated self-employed (USE) can be further separated into two categor

those who are self-employed only (SEO), and those who are self-employed and also have wa

and-salary employment (SEWS). The analysis in this chapter is based on recent research and t

ulations of unpublished March 1988 and March 1994 CPS data by Carolyn Looff, Chang

Characteristics of the Self-Employed, report no. PB96-197785, prepared by Carolyn Looff a

Associates for the U.S. Small Business Administration, Office of Advocacy (Springfield, V

National Technical Information Service, 1996). 12“Entrepreneur” or “entrepreneurial activity” refers in this chapter to the self-employed 

self-employment. 13 The Census Bureau’s 1994 estimate of self-employment is 7.6 percent of employment 

8.9 million persons. It does not include wage-and-salary workers who own a side business (

percent of nonagricultural employment and 2.1 percent of business owners in 1994) and the 

corporated self-employed (3.4 percent of nonagricultural employment and 20.1 percent of bu

ness owners). Most of the change reflected here came from growth in the number of incorp

rated self-employed workers. Between 1983 and 1994, the proportion of all workers in the U

and WSSE categories fell, while the proportion of ISE workers grew.
90 The Annual Report on Small Business and Competition Table 3.3 Distribution of Employment in Nonagricultural Industries 

Ma

Number 

Class of Worker (Thousands) 

Total Nonagricultural Employment 109,578 Unincorporated Self-Employed (USE) 8,112 

Self-Employed Only (SEO) 6,757 Self-Employed with Wage-andSalary Employment (SEWS) 1,355 

Wage-and-Salary Workers (WS) 101,215 

Incorporated Self-Employed (ISE) 2,984 Wage-and-Salary Workers Only (WSO) 95,599 Wage-and-Salary Workers with SelfEmployment (WSSE) 2,632 

Unpaid Family Workers 251 Total Self-Employed (SE) 13,728 

Unincorporated Self-Employed (USE) 8,112 Incorporated Self-Employed (ISE) 2,984 Wage-and-Salary Workers with SelfEmployment (WSSE) 2,632 

Source: Tabulation by Carolyn Looff & Associates of unpublished data from th

Survey, March 1988 and March 1994.
The State of Small Business 

ggppp

rated self-employed workers—3 percent compared with 2.7 percent, respe

tively. The incorporated group grew at about the same rate or slightly fas

than wage-and-salary workers between 1983 and 1988, about 15 perce

These rates diverged between 1988 and 1994, with ISEs increasing by 32

percent, while wage-and-salary workers increased by only 6.5 perce

(Table 3.3).15

The number of paid employees with a side business—WSSEs—more th

quadrupled between 1979 and 1983. The depressed state of the econom

during that time may have led some wage-and-salary workers whose ho

had been reduced to establish a business to supplement their earnings fro

paid employment. Employers have also become more receptive to purchasi

services from outside vendors and independent contractors, a cost-effect

means of obtaining labor services given high payroll tax burdens and unio

related costs.16 In contrast to the 1979–1983 trend, the number of WSSEs d

clined over the entire 1983–1994 period.17

Characteristics of the Self-Employed

Self-employed and wage-and-salary workers have significantly different ch

acteristics by age, marital status, veteran status, educational attainment, a

overall business experience, as well as race and gender. 

Age 

On the whole, the self-employed are older than wage-and-salary only (WS

workers. Of full-time workers, more than 41.7 percent of the unincorporat

self-employed were between 45 and 64 years old in 1994, compared w

just 28.8 percent of wage-and-salary workers (Table 3.4). Of part-time wo

ers, a larger proportion—34.4 percent—of unincorporated self-employ

workers are between 45 and 64 years old compared with 20.8 percent 

salaried workers without a second job. 

14 The State of Small Business, 1986. 15 Carolyn Looff and Associates, Changing Characteristics of the Self Employed. 16 Whether a worker is an “employee,” or an “independent contractor” has significant p

roll cost implications for employers. If a worker is an employee, an employer must comply w

the entire range of federal employment laws. Independent contractors, however, are conside

self-employed and, therefore, are responsible for paying Social Security taxes and income ta

levied on their earnings. 17 It is also possible that many wage-and-salary workers with a side business became wa

and-salary workers only (WSO) during this period. This would be the result of an expand

economy creating new jobs, many of which have higher wages. Such a pattern contrasts with 

tremendous growth in WSSEs during the 1979-1983 period—which might have counteracted 

increase in business failures during this period of deep contraction. See The State of Sm

Business, 1986.
92 The Annual Report on Small Business and Competition Table 3.4 Distribution of Employed Nonagricultural Workers by Var

Total Unincorporated 

Self-Employed* Self-Employed 

(TSE) (USE) 

j 

Total Full-Time Full-Time Part-Time 

Age16–24 4.96 3.53 2.78 6.26 

25–44 50.06 52.00 51.64 46.63 45–64 38.65 40.63 41.71 34.44 65 and Over 6.33 3.83 3.87 12.67 

Gender Male 64.18 71.92 69.63 46.71 

Female 35.82 28.08 30.37 53.29 

RaceWhite 91.68 90.90 89.25 93.44 

African-American 4.60 4.83 6.05 4.18 Other 3.72 4.27 4.70 2.39 

Education Less than 4 Years of High School 9.39 7.93 10.82 13.70 

4 Years of High School To 3 

Years of College 57.48 56.32 59.33 59.42 

4 or More Years

of College 33.12 35.76 29.85 26.87 

Marital Status

Married, Spouse

Present 73.41 74.02 72.99 72.12 

Other 26.59 25.98 27.01 27.88 

Veteran Status (Males)

Veteran

Vietnam 7.38 8.60 7.75 4.64 Other 10.98 10.76 11.07 12.04 

Non-Veteran 81.64 80.63 81.18 83.32 

IndustryMining 0.27 0.35 0.23 0.00 Construction 13.37 13.18 16.13 15.20 Manufacturing 7.97 8.82 4.89 4.84 
The State of Small Business 93

Transportation, 

Communications,and Public Utilities 4.58 4.73 4.67 3.64 

Wholesale Trade 5.10 5.62 4.82 3.03 Retail Trade 19.01 19.14 19.18 16.17 Finance, Insurance,

and Real Estate 7.09 7.18 6.79 6.67 

Services 42.62 40.97 43.29 50.45 OccupationExecutive, 

Administrativeand Managerial 21.63 24.68 19.03 12.61 

Professional,

Specialty 17.01 16.99 16.10 18.37 

Technical and

Related Support 1.37 1.43 1.10 1.07 

Sales 20.07 21.08 22.54 17.91 Administrative 

Support,Including Clerical 7.08 4.64 2.44 8.50 

Service, 

Excluding ProtectiveService and Private Household 9.84 7.75 10.97 17.25 

Precision 

Production,Craft, and Repair 14.93 15.25 19.85 16.98 

Operators,

Fabricators, andLaborers 6.99 7.11 7.35 6.67 

Other 1.09 1.07 0.62 0.63 Hispanic Origin

Hispanic 5.05 4.85 5.60 5.63 Non-Hispanic 94.95 95.15 94.40 94.37 

*Total self-employed include the unincorporated self-employed, incorporated self-employe

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the U.S. Dep
94 The Annual Report on Small Business and Competition

after entry into the work force, but that younger workers may not have the 

nancing or skills to start a business that is their sole source of income.

The age distribution of self-employed and wage-and-salary workers fro

the March 1988 CPS closely resembles that from the May 1983 CPS.18 A fe

minor changes occurred between 1988 and 1994. Among full-time U

workers, the proportion between ages 45 and 64 increased from 37 percent 

42 percent (Tables 3.4 and 3.5). There were similar but smaller chang

among wage-and-salary workers. This shift in the age distribution is likely 

tributable to the aging of the baby boom cohort of workers.

Education

The self-employed as a group are better educated than wage-and-salary wo

ers (Tables 3.4 and 3.5). The education patterns among self-employed a

wage-and-salary workers changed little between 1988 and 1994. The high

levels of formal education occur among the ISEs. Well-educated persons a

also well represented among WSSEs. The lowest levels of formal educati

occur among part-time WSO and USE workers. Besides being better ed

cated, the self-employed work more hours per week and more weeks per ye

than those working only in paid employment.

Marital Status

The self-employed are substantially more likely than wage-and salary work

to be married. Among total full-time self-employed workers, almost thre

fourths were married with a spouse present in 1994 (Table 3.4). Among fu

time wage-and-salary-only workers, six out of ten were married with spou

present. The marital status patterns changed very little between 1988 a

1994. It is likely that differences in marital status between business own

and paid employees are related to age and gender differences.19

Veteran Status

Small differences exist between veterans and nonveterans in self-employme

status. Both Vietnam veterans and other veterans are slightly more likely to 

included among the self-employed than among wage-and-salary worke

18 The State of Small Business, 1986. 19 David S. Evans, Entrepreneurial Choice and Success, report no. PB85–235943, prepa

by CERA Economic Consultants, Inc., for the U.S. Small Business Administration, Office 

Advocacy (Springfield, Va.: National Technical Information Service, May 1985), 38–39. Statisti

analysis of 1970 and 1980 Census data found that marital status by itself had little influence 

the probability of self-employment.
The State of Small Business 

y

The ability of entrepreneurs to exploit opportunities varies significantly by 

dustry, in part because of differences in capital requirements. Construction 

tracts a disproportionate amount of self-employment, especially among pa

time and full-time USE workers and full-time ISE workers. 

Self-employment is most common in the services, retail trade, and co

struction industries and less common in mining, manufacturing, transport

tion, and public utilities. The incorporated self-employed are more likely 

work in wholesale trade than either unincorporated owners or paid worke

with a side business; the reverse is true in the service industry (Tables 3

and 3.5). 

Occupation

The self-employed are widely distributed across occupations in a pattern s

nificantly different from wage-and-salary workers. Only 29.4 percent of fu

time WSO workers were classified as managerial or professional in 199

compared with 41.7 percent of full-time self-employed workers (Table 3.4). 

large proportion—more than 38 percent—of full-time ISE workers were in e

ecutive, administrative, and managerial occupations. 

The self-employed are more likely to be in sales occupations than a

wage-and-salary workers, particularly full-time USE and ISE workers. Bo

full-time and part-time USE workers are prominent in precision productio

craft, and repair occupations. Both industry and occupational patterns we

stable between 1988 and 1994 (Tables 3.4 and 3.5).

Self-Employment by Ethnic Group

African Americans

African Americans are considerably less likely than the population at large 

be self-employed (Table 3.6).20 The percentage of total self-employed worke

who are African-American declined between 1983 and 1988, from 5.8 to 4

percent. Between 1988 and 1994, however, the African-American share 

creased again to 5.8 percent (Table 3.7). 

The total number of self-employed African Americans rose from 516,0

in 1988 to 706,000 in 1994, after having fallen from 539,000 to 516,000 b

20 This pattern has been identified in earlier studies. See Sheldon Haber, A New Perspect

on Business Ownership, report no. PB87-115242, prepared by Simon and Company for the U

Small Business Administration, Office of Advocacy (Springfield, Va.: National Techni

Information Service, 1985).
96 The Annual Report on Small Business and Competition Table 3.5 Distribution of Employed Nonagricultural Workers by Var

Total Unincorporated 

Self-Employed* Self-Employed 

(TSE) (USE) 

j 

Total Full-Time Full-Time Part-Time 

Age16-24 4.29 3.51 3.57 5.40 

25-44 52.97 55.32 55.26 46.58 45-64 36.73 37.20 36.94 35.20 65 and Over 6.01 3.97 4.23 12.82 

Gender Male 68.22 75.07 72.66 48.60 

Female 31.78 24.93 27.34 51.40 

RaceWhite 93.02 92.89 92.61 93.71 

African-American 3.76 3.48 3.68 4.47 Other 3.23 3.63 3.71 1.82 

Education Less than 4 years of High School 11.29 10.00 12.78 16.83 

4 Years of High School to 3 

Years of College 55.21 54.58 57.68 55.74 

4 or More Years

of College 33.50 35.43 29.54 27.43 

Marital Status

Married, 

Spouse Present 74.60 75.97 73.74 72.12 

Other 25.40 24.03 26.26 27.88 

Veteran Status (Males)

Veteran

Vietnam 7.44 8.61 8.20 4.28 Other 16.27 16.79 15.96 15.07 

Non-Veteran 76.29 74.60 75.84 80.65 

IndustryMining 0.49 0.50 0.30 0.33 
The State of Small Business 97

Manufacturing 7.94 8.57 4.72 4.64 Transportation, 

Communications, and Public Utilities 4.78 5.25 4.06 3.08 

Wholesale Trade 5.29 5.92 4.92 3.04 Retail Trade 17.63 17.62 17.93 17.69 Finance, Insurance

and Real Estate 7.01 7.42 7.40 6.03 

Services 43.18 40.68 43.95 51.69 OccupationExecutive, 

Administrativeand Managerial 21.46 24.19 21.10 12.24 

Professional,

Specialty 17.69 17.49 15.35 18.45 

Technical and

RelatedSupport 1.25 1.15 0.93 1.27 

Sales 20.53 21.52 22.41 18.96 Administrative 

Support,

Including Clerical 5.70 4.42 2.49 6.01 

Service, 

Excluding ProtectiveService and Private Household 10.07 7.92 11.99 17.45 

Precision 

Production,Craft, and Repair 15.38 15.42 18.21 18.26 

Operators,

Fabricators,and Laborers 7.04 6.96 7.08 7.01 

Other 0.88 0.93 0.43 0.35 Hispanic Origin

Hispanic 4.07 4.11 4.77 4.31 

Non-Hispanic 95.93 95.89 95.23 95.69 

*Total self-employed includes the unincorporated self-employed, incorporated self-employ

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the U.S. Dep
98 The Annual Report on Small Business and Competition

Number of Workers (Thousands) 116,829 55,022 12,205

Unincorporated Self-Employed (USE) 7.6 6.2 3.9

Self-Employed Only (SEO) (6.3) (5.1) (3.0)

Full-Time (4.1) (2.5) (2.1)

Part-Time (2.2) (2.6) (0.9)

Self-Employed with Wage-and-Salary

Employment (SEWS) (1.3) (1.1) (0.9)

Wage-and-Salary Workers (WS) 92.3 93.6 96.0

Incorporated Self-Employed (ISE) (3.4) (2.1) (0.9)

Full-Time (2.7) (1.3) (0.7)

Part-Time (0.7) (0.8) (0.1)

Wage-and-Salary Workers Only (WSO) (86.7) (89.8) (94.1)

Full-Time (64.8) (59.8) (71.8)

Part-Time (22.0) (30.0) (22.3)

Wage-and-Salary with Self-Employment 

(WSSE) (2.2) (1.6) (1.0)

Full-Time (1.7) (1.0) (0.7)

Part-Time (0.5) (0.6) (0.3)

Unpaid Family Workers 0.1 0.2 0.0*

Total Self-Employed (TSE), including the

Unincorporated Self-Employed, 

Incorporated Self-Employed, and

Wage-and-Salary Workers with 

Self-Employment 13.1 10.0 5.8

Full-Time (9.2) (5.5) (4.3)

Part-Time (3.9) (4.5) (1.5)

Note: Numbers in parentheses are subtotals.

* Less than .05 percent. 

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the U

Department of Commerce, Bureau of the Census, Current Population Survey, March 1994.
The State of Small Business 99

Table 3.7 Distribution of African-American Self-Employed Workers 

1988

Number Percent of T

(Thousands) Employed African-

Total Self-Employed 516 4.69 Unincorporated SelfEmployed (USE) 319 2.90 Incorporated SelfEmployed (ISE) 53 0.48 Wage-and-Salary 

with SelfEmployment (WSSE) 144 1.31 Source: Tabulation by Carolyn Looff & Associates of unpublished data from the 

Survey, March 1988 and March 1994.
wage-and-salary workers with a side business actually declined over t

1988-1994 period. In 1994, African Americans were 10.4 percent of the wo

force and 10.9 percent of wage-and-salary workers (Table 3.6).21

Self-employed African Americans are on average younger than self-e

ployed whites (Table 3.8). The number of unincorporated self-employ

African Americans grew by more than 150,000 between 1988 and 1994, a

much of this growth occurred among 25- to 44-year-olds. African-Americ

and white self-employed workers tend to have more formal education th

WSO workers. Self-employed white workers tend to be better educated th

self-employed African-American workers.

The proportion of African-American self-employed workers who are m

ried declined significantly between 1988 and 1994 (Tables 3.8 and 3A.

Industry differences in self-employment patterns by race also are evide

African Americans and whites gravitate toward self-employment in the co

struction industry. African Americans, more than whites, tend to be self-e

ployed in transportation, communications, and public utilities and in the s

vices industry.

African Americans are less likely to be self-employed in the manageri

professional, and sales occupations than white workers, but are more like

to be self-employed in service occupations and as operators, fabricato

and laborers.

Hispanic Americans

Hispanic Americans, like African Americans, are less likely to be self-e

ployed than non-Hispanic whites. However, a higher proportion of Hispan

Americans than African Americans are self-employed. More than 5 percent 

employed Hispanic Americans are in the unincorporated self-employed gro

compared with 3.9 percent of African Americans. A similar ratio exists for 

corporated self-employed workers, 1.5 percent of whom are Hispanic and 0

percent African-American.

Gender Characteristics of the Self-Employed 

Men are more likely than women to be self-employed. Men represent 64

percent of the total self-employed. However, major changes are und

way: between 1988 and 1994, the number of unincorporated self-employ

women increased more than five times faster than the number of self-e

ployed men, and more than three times as fast as women wage-and-sala

100 The Annual Report on Small Business and Competition

21 Carolyn Looff and Associates, Changing Characteristics of the Self-Employed.
pp

self-employed share increased only slightly, from 15.8 percent in 1988 

15.9 percent in 1994.23

Significant differences exist in the distribution of male and female se

employed workers by industry. More than 20 percent of male—but few

than 2 percent of female—unincorporated self-employed workers are in co

struction industries (Table 3.10). These self-employed women are most rep

sented in services and in retail trade: more than 60 percent are in the servi

sector, compared with only 35.6 percent of unincorporated self-employ

men.

Long hours go hand-in-hand with self-employment. Among all full-tim

male self-employed workers, almost 55 percent worked 49 or more hours p

week in 1994, as did more than 41 percent of full-time female self-employ

workers (Table 3.10). Only 28.1 percent of full-time male wage-and-sala

only workers and 15.1 percent of full-time female wage-and-salary worke

put in such long hours.

Age and Education

While there are age differences between self-employed and wage-and-sala

workers, no appreciable differences exist between men and women (Tab

3.10).24

Self-employed and wage-and-salary workers also differ by educati

level, but the only noticeable gender difference occurs among the unincorp

rated self-employed.25 Male USE workers tend to have more formal educati

than female USE workers: this was true in 1988 as well as in 1994 (Tab

3.10 and 3A.3). In 1994, 32.0 percent of men and 24.8 percent of wom

who operated an unincorporated business on a full-time basis had complet

The State of Small Business 1

22 Howard N. Fullerton, Jr., “Employment Outlook: 1994–2005,” Monthly Labor Revi

(November 1995), 39. 23Figures for men are calculated from labor force and self-employment totals in Tables 3

3.5, 3.8, and 3A.2. 24 Age categories may not be fine enough to catch the real pattern and are an imperf

proxy for work experience. There may be gender, age, generational, and educational differ

tials, i.e., older women are more likely to be entrepreneurs or self-employed than youn

women, but less likely than younger women to have a college education. Older women—w

may have dropped out of the labor market for child rearing—are also less likely to have progr

sive work experience, which is a substitute for education and a basis for self-employment. 25 Research analyzing Census data indicates that for men, there is a strong relationship 

tween self-employment earnings and education. This relationship varies by age. For wom

there is a positive relationship between self-employment earnings and education, but it is 

strong. David S. Evans, Entrepreneurial Choice and Success, report no. PB85–235943, prepa

by CERA Economic Consultants for the U.S. Small Business Administration, Office of Advoca

(Springfield, Va.: National Technical Information Service, May 1985).
102 The Annual Report on Small Business and Competition Table 3.8 Distribution of Full-Time African-American, White, and O

March 1994 (Percent) African-American 

Total Unincorporated Wage-andj Total 

Self-Employed Self-Employed Salary Only Self-Employed 

(TSE) (USE) (WSO) (TSE) 

Age

16–24 6.92 4.61 15.68 3.36 25–4 60.30 57.16 57.91 51.25 45–65 29.86 32.77 24.34 41.37 Over 65 2.92 5.46 2.08 4.02 

Education

Less than 4 Years 

of High School 14.36 17.75 14.59 7.71 

4 Yrs High School to 

3 Yrs College 60.16 62.60 69.33 56.73 

4 or More Years of 

College 25.48 19.65 16.08 35.56 

Marital Status

Married, Spouse 

Present 51.80 49.79 38.32 75.19 

Other 48.20 50.21 61.68 24.81 

Number of Children

Zero 56.61 61.20 55.48 56.83 One 21.12 19.53 21.91 16.31 Two 11.55 11.64 14.14 17.40 Three or More 10.72 7.62 8.47 9.47 

Major Industry

Mining 0.00 0.00 0.11 0.39 Construction 11.29 15.86 3.58 13.67 Manufacturing 3.32 1.59 15.56 9.23 Transportation, 

Communications, and Public Utilities 9.01 9.13 9.30 4.64 

Wholesale Trade 2.93 2.95 2.04 5.68 Retail Trade 12.92 9.87 15.08 18.85 
The State of Small Business 103

and Real Estate 4.12 5.64 5.78 7.38 

Services 56.41 54.96 48.54 40.17 

Major Occupation

Executive, 

Administrative,and Managerial 17.31 11.73 7.48 24.84 

Professional, 

Specialty 12.28 12.78 9.85 17.33 

Technical and 

Related Support 1.94 1.91 3.40 1.40 

Sales 15.02 14.87 8.36 21.19 Administrative 

Support, Including Clerical 3.19 1.08 17.63 4.74 

Service, 

Excluding Protective Service andPrivate Household 21.47 24.24 19.32 6.89 

Precision 

Production,Craft, and Repair 16.02 20.83 8.53 15.47 

Operators, 

Fabricators, and Laborers 11.39 12.55 20.45 7.06 

Other 1.38 0.00 4.97 1.08 

Hours Worked in Survey Week

35–40 40.58 40.83 73.62 34.01 41–48 17.21 18.24 11.38 14.55 49 or More 42.21 40.94 15.00 51.43 

Weeks Worked in Previous Year

1–49 25.79 36.34 26.18 14.59 

50–52 74.21 63.66 73.82 85.41 

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the 

Survey, March 1994.
104 The Annual Report on Small Business and Competition Table 3.9 Distribution of Women Self-Employed in Nonagricultural 

1988

Number Percent of T

(Thousands) Employed W

Total Self-Employed 4,363 8.69 Unincorporated SelfEmployed (USE) 2,841 5.66 Incorporated SelfEmployed (ISE) 621 1.24 Wage-and-Salary 

Workers with SelfEmployment (WSSE) 901 1.80 Source: Tabulation by Carolyn Looff & Associates of unpublished data from the 

Survey, March 1988 and March 1994.
Marital Status

Married women are relatively even more likely than married men to be se

employed rather than wage-and-salary workers. More than 70 percent of fu

time women business owners are married compared with about 54.5 perce

of women wage-and-salary workers.26 The comparable figures for men a

75.6 and 63.3 percent respectively (Table 3.10). 

Self-employment appears to offer married women special advantag

that are less available in paid employment. One key advantage is prob

bly the ability to work at home (especially in sales and service occup

tions), which enables women to maintain a business and a household 

the same time. For both men and women, there is a slight tendency to 

self-employed rather than wage-and-salary workers as the number of ch

dren increases. 

Industry/Occupation

Proportionally, more women-owned than men-owned businesses are in ret

trade and service industries: 78.1 percent of women business owners are e

ployed in these industries, compared with 53.1 percent of men (Table 3.1

By occupation, the percentages of self-employed women and men 

sales/services are 39.9 and 24.5 percent, respectively. Only 3.3 percent 

business men are in a service occupation, compared with 19.3 percent 

business women. On the other hand, 42.4 percent of business men are 

higher paid managerial and professional occupations, compared with 39

percent of business women.

Significant differences by gender are evident in occupational group

both among self-employed and wage-and salary workers. Women in both t

self-employed and wage-and-salary groups are much more likely than men 

work in administrative support jobs. That is true for the services occupation

group, and is especially true for unincorporated self-employed women. M

dominate the precision production, craft, and repair occupational group 

both the self-employed and wage-and-salary categories.

Occupational data provide other insights into why a smaller proporti

of women than men own businesses. A large proportion of women emplo

ees, 28.9 percent, work in clerical occupations, which appear to offer re

tively few advantages to working for oneself; these occupations contain on

The State of Small Business 1

26 This may be because the self-employed are older than wage-and-salary workers. Ot

research using Census data indicates that marital and family status has little influence on 

probability of self-employment (unincorporated) for men or women. See Evans, Entrepreneu

Choice, 37–38.
106 The Annual Report on Small Business and Competition Table 3.10 Distribution of Full-Time Male and Female Workers by 

Male

Unincorporated 

Total Self- Self- 

Employed Employed 

(TSE)1 (USE) 

Age

16–24 3.30 2.55 25–44 52.08 52.65 45–64 40.33 40.68 Over 65 4.30 4.12 

Education

Less than 4 Years of 

High School 8.28 11.36 

4 Years of High 

School to 3 Yearsof College 53.57 56.59 

4 or More Years 

of College 38.15 32.04 

Marital Status

Married, Spouse

Present 75.55 73.15 

Other 24.45 26.85 

Number of Children

Zero 54.58 56.79 One 17.06 18.01 Two 17.92 15.52 Three or More 10.44 9.68 

Major Industry

Mining 0.40 0.28 Construction 17.30 22.46 Manufacturing 9.93 5.36 Transportation, 

Communications, and
The State of Small Business 107

Public Utilities 5.54 6.06 

Wholesale Trade 6.66 6.25 Retail Trade 16.83 16.95 Finance, Insurance, and

Real Estate 7.07 7.05 

Services 36.27 35.57 

Major Occupation

Executive, Administrative,

and Managerial 24.86 18.46 

Professional, 

Specialty 17.51 16.07 

Technical and Related

Support 1.63 1.15 

Sales 21.28 22.96 Administrative Support, 

Including Clerical 1.46 0.58 

Service, Excluding 

Protective Service and Private Household 3.25 3.66 

Precision Production, 

Craft, and Repair 20.13 27.22 

Operators, Fabricators, 

and Laborers 8.53 9.05 

Other 1.36 0.86 

Hours Worked in Survey Week

35–40 31.18 34.78 41–48 14.13 12.96 49 or More 54.69 52.26 

Weeks Worked in Previous Year

1–49 13.53 16.48 

50–52 86.47 83.52 

*Total self-employed includes the unincorporated self-employed, incorporate

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the 

Survey, March 1994.
pyy 

combination of factors, including lack of training and insufficient capital.

Entrepreneurial Income

Income data provide an indicator of the relative success of self-employed a

wage-and-salary workers.27 The earnings of self-employed workers differ co

siderably according to whether the worker is incorporated, unincorporated, 

self-employed with wage-and-salary work on the side. The relative differenc

may explain the different growth patterns in small business compared w

wage-and-salary work.

The relative earnings of the different groups have changed little sin

1983. Wage-and-salary work generally pays substantially better than self-e

ployment. At the same time, there are significant numbers of the self-e

ployed in high- and low-income classes. Individuals may be especially 

tracted to self-employment by the income of individual success

entrepreneurs, despite the fact that the unincorporated self-employed, for e

ample, typically earn less than their wage-and-salary counterparts.

The most successful entrepreneurs are incorporated, with median ea

ings of $36,000 per year in 1994 (Table 3.11). Some 63 percent earned mo

than $30,000 per year in 1994, substantially higher than the 35 percent of t

unincorporated self-employed that earned this amount per year.

Wage-and-salary workers without a side business earned $26,000 p

year in 1994, higher than unincorporated self-employed workers but low

than those with incorporated businesses. Wage-and-salary workers with a si

business earned only about $3,000 in the business. However, they tended 

have significantly higher salaries than those without such a business, with m

dian incomes of $30,000 in 1994.

Almost 57 percent of wage-and-salary workers with a side busine

earned more than $30,000, higher than USEs, but lower than ISEs. In 198

relatively more individuals with incomes of $30,000 or more were incorp

108 The Annual Report on Small Business and Competition

27 The business earnings discussed in this section refer to the net income an owner took 

of a business, i.e., receipts minus personal expenses incurred in generating these receipts. A

comparison of income between self-employed individuals and wage-and-salary workers requi

caution. Income of the self-employed does not include implicit income—such as using the bu

ness car for personal travel or the home as a place of work, or feeding or clothing the family fr

a store owner’s own stock. Likewise, the income of wage-and-salary workers does not inclu

employee benefits such as pension and health insurance. Moreover, it is likely that there is sig

icantly more underreporting of self-employment income than of wage-and-salary income, sim

because there are more opportunities to subjectively report self-employment income.
The State of Small Business 109

Table 3.11 Distribution of Full-Time Employed Nonagricultural Wor

March 1994 (Percent)

Median Less t

Earnings $5,0

(Dollars)

Unincorporated Self-Employed (USE)

Business 19,000 22Business and Wage-and-Salary 20,000 20

Incorporated Self-Employed (ISE)

Wage-and-Salary 36,000 1Business and Wage-and-Salary 38,000 1

Unincorporated and IncorporatedSelf-Employed (USE and ISE)

Business 26,000 10Business and Wage-and-Salary 27,000 10

Wage-and-Salary Workers with Self-Employment,(WSSE)

Wage-and-Salary 30,000 6Business and Wage-and-Salary 33,000 6

Wage-and-Salary Workers Only (WSO)

Wage-and-Salary 26,000 0

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the 

Survey, March 1994.
At the lower end of the income scale, in 1994, 22.6 percent of the un

corporated self-employed and 1.9 percent of incorporated self-employ

workers earned less than $5,000 from their business, despite working full tim

and full year. The comparable figure for non-business owners was only 0

percent. Even when wage-and-salary earnings and business income are tak

into account, the percentage of total self-employed workers earning less th

$5,000 falls only to 16.6 percent. In other words, more than one-sixth of t

self-employed earned less than the minimum wage.

The prospective advantages of self-employment must be great enough 

induce such a high proportion of individuals to work for so low a return. T

self-employed appear to find substantial compensation in implicit income, e

pectations of higher future income, tax advantages, and nonmonetary ben

fits, such as opportunity and self-determination. Because of their low ea

ings, self-employed workers might be expected to leave their self-employme

status at a higher rate than wage-and-salary workers leave their current e

ployer. The data from the CPS study, however, cannot be used to determi

whether this is the case.29

Earnings of Men and Women

Typically, the unincorporated self-employed earn less than their counterparts 

paid employment. However, when men and women business owners (USE a

ISE) are compared with their paid counterparts, men owners earn the same 

their wage-and-salary counterparts, while women business owners earn 19

percent less than women wage-and-salary workers (Table 3.12). The rapid 

crease in women business owners suggests that women value highly the fle

bility in work hours and are willing to accept reduced earnings in exchange

In 1994, women business owners earned 59.3 cents for every dollar earned 

their male counterparts.31 In contrast, women wage-and-salary workers earn

73.3 cents for every dollar of their male counterparts’ earnings.

110 The Annual Report on Small Business and Competition

28 The State of Small Business, 1986. 29 The unemployment rate tends to be lower for the self-employed than for wage-and-sal

workers; however, self-employed earnings more nearly reflect the success of the business than 

the earnings of wage-and-salary workers. Rather than give up their businesses and join the ra

of the unemployed, the self-employed are more likely than paid workers to continue work

during a recession but take home less income. T. Scott Fain, “Self-Employed Americans: Th

Number has Increased,” Monthly Labor Review (November 1980), 6. 30 Also, the larger proportion of married women among women owners than wage-an

salary workers suggests that self-employment offers advantages to married women that 

not available in paid employment. A key advantage is that many businesses, especially in 

sales and service occupations, can be conducted in the home. Sheldon Haber, Busin

Ownership, 30. 31 The State of Small Business, 1986.
The State of Small Business 111

Table 3.12 Distribution of Full-Time Employed Nonagricultural Wor

Earnings by Gender, March 1994 (Percent)

Median Less t

Earnings $5,0

(Dollars)

Wage-and-Salary Workers Only (WSO)

Wage-and-Salary 26,000 0Male 30,000 0Female 22,000 1

Unincorporated Self-Employed (USE)

Business and Wage-and-Salary 20,000 20Male 24,000 15Female 10,800 32

Unincorporated and IncorporatedSelf-Employed (USE and ISE)

Business and Wage-and-Salary 27,000 10Male 30,000 7

Female 17,800 18

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the 

Survey, March 1994.
fewer hours per week and fewer weeks per year than their male counterparts

Conclusion

Small businesses play a major role in promoting creativity and entreprene

ship in the American economy and serve as a training ground for the natio

entrepreneurs. The number of self-employed grew substantially between 19

and 1994. The fastest growing segment of self-employment is the incorporat

self-employed, which increased by 32.5 percent between 1988 and 1994.

Characteristics of the self-employed and wage-and-salary workers dif

markedly. Compared with wage-and-salary workers, the self-employed a

substantially older, better educated and, if male, more likely to be vetera

The number of women entrepreneurs increased dramatically, by more than 

percent from 1988 to 1994. African-American entrepreneurs have not ma

similar inroads in self-employment.

Despite their recent gains, women business owners differ substantia

from their male counterparts. For example, women are much less likely th

men to operate a full-time business, suggesting that many women go in

business because of the flexibility and adaptability it offers to combine wo

and family responsibilities.

The self-employed typically earn less than their counterparts in paid e

ployment; however, incorporated business owners, the most successful grou

earn substantially more than paid workers. The fact that about 16.6 percent 

all business owners earn less than the minimum wage suggests that many se

employed workers either receive considerable amounts of implicit income 

value highly the nonmonetary benefits of self-employment such as indepe

dence and flexibility.

112 The Annual Report on Small Business and Competition

32 Differences in labor force attachment, i.e., movement into and out of the labor force 

tween men and women have also been cited as one major reason why women earn less th

men. A study analyzing data from the Income Survey Development Program (ISDP) found t

work interruptions explain only a small proportion of the earnings differential, however. S

Joseph J. Slavo and John M. McNeil, “Lifetime Work Experience and Its Effect on Earning

Current Population Reports, Special Studies, Series P–23, No. 136 (Washington, D.C.: U

Department of Commerce, Bureau of the Census, June 1984), 5. On the other hand, recent 

search shows that years of experience explain a significant share of the male-female gap. S

June O’Neill, “The Trend in the Male-Female Wage-Gap in the United States,” Journal of Lab

Economics (January 1985), S100–S101.
The Current Population Survey (CPS) is a monthly nationwide Survey of a

proximately 60,000 households. It is the source of official government stat

tics on employment and unemployment. An important secondary purpose 

the survey is to collect information on demographic characteristics such 

age, sex, race, marital status, educational attainment, and family structu

Additional questions are included on a regular basis on such subjects 

health, education, income, and previous work experience.

In the past, the CPS made no attempt to distinguish between wage-an

salary workers and those self-employed workers who, because their busine

was incorporated, paid themselves a wage or salary. The CPS basic questio

naire, however, now asks an explicit question about self-employment, and f

workers who identify themselves as self-employed, the survey asks if the bu

ness is incorporated. Thus, for the primary work activity, researchers can d

tinguish among the unincorporated self-employed (USE), the incorporat

self-employed (ISE), and wage-and-salary workers only (WSO) for any mon

Because the CPS focuses on workers’ primary jobs, the CPS basic questio

naire does not provide complete coverage of all people with self-employme

income. Fortunately, each year the March Supplement to the CPS asks worke

detailed questions about their previous year’s income by source. By matchi

the May and March CPSs, researchers have been able to identify those individ

als whose primary work activity was wage-and-salary employment but who h

self-employment income from the previous year (WSSE). Also identifiable a

wage-and-salary workers who have no self-employment income (WSO

Because the CPS replaces one-fourth of its sample each month, only half of t

sample answers both the May and March supplements. The use of this match

sample allows estimation of both the ISE and WSSE workers, but it does so on

by reducing the sample by one-half. Moreover, the Employee Bene

Supplement is irregular, usually occurring only once every four or five yea

Thus, the March CPS basic questionnaire is used to distinguish ISE from WS

workers, and the March Supplement is used to identify the WSSE workers. T

March CPS allows calculation of the number of USE, ISE, WSSE, and WS

workers annually and allows for the maximum sample size for WSSE workers.

While the use of the March Supplement to the CPS does identify tho

WSSE workers who earned some income from self-employment in the pre

ous year, the data set has limitations for examining the WSSE. The CPS pr

vides no information about the industry, occupation, hours of work, number 

employees, or legal form of ownership. In addition, the fact that the data cov

income from the previous year means there is no complete count of those w

are currently engaged in self-employment. To see why, consider the followi

hypothetical example using the March 1993 CPS. Suppose one worker w

self-employed for the months of January through March 1992, but then a

cepted a wage-and-salary position beginning in April 1992. Upon accepti

the wage-and-salary job, this worker closed his business. A second worker w

employed at a wage-and-salary job for all of 1992, but for the months 

January through March 1992, also attempted to start a business. This busine

The State of Small Business 1
that the worker is a WSSE. The first worker, however, is clearly a former se

employed worker (either an ISE or USE worker) who is currently a WS

worker. The third worker is a WSSE worker. The CPS can only provide an es

mate of those workers who had any self-employment in the previous year.

Survey of Income and Program Participation

A complement to the information in the CPS is the Survey of Income a

Program Participation (SIPP) data set. The SIPP is a longitudinal survey d

signed to provide detailed information on the economic situation of hou

holds and individuals. Each SIPP panel contains approximately 20,0

households. The survey has three basic elements. The first records basic s

cial and demographic characteristics for each person in the household. T

second has questions on labor force activity, types and amounts of incom

participation in various cash and noncash benefit programs, attendance 

post-secondary schools, private health insurance coverage, and public ho

ing and other public assistance. The third element consists of various topic

modules that change from one wave to the next.

While the SIPP sample is not as large or as timely as the CPS, it does co

tain certain data that make it ideal to augment the CPS data, especially for 

formation about the WSSE workers. Unlike the CPS, SIPP asks all adult respo

dents about their self-employment activities during the month. As a result, ev

for WSO workers, the SIPP provides detailed information about self-emplo

ment. The SIPP asks for information about the industry, occupation, hours 

work, whether the business is incorporated or not and if it is not, whether t

business is a sole proprietorship or a partnership. If the business is not incorp

rated, SIPP asks if another family member has any ownership rights in the bu

ness. In addition, SIPP provides some detailed information about the earnin

from the business and asks if the businessperson expects to have gross sales 

$1,000 or more in the next 12 months. Because SIPP asks these questions of 

workers, not just individuals who identify their primary job as self-emplo

ment, SIPP allows a more detailed study of WSSE workers. Since SIPP provid

information about the two largest self-employment businesses of a worker

also covers owners of multiple businesses. Wave 1 of the 1993 SIPP match

closely with the period covered by the March 1994 CPS data.

Worker characteristics and worker categories in Table 3A.6 correspo

to those in Table 3.4. The two tables can be compared for differences. The

are no appreciable differences in the age or gender patterns between t

SIPP and CPS. Only slight differences show up in education and marital s

tus patterns. Some minor differences show up in the industry and occup

tional breakdowns between the CPS and SIPP, but the discrepancies are re

tively minor. However, the CPS indicates a higher degree of self-employme

among African-American workers than does the SIPP. The same result occ

for wage-and-salary-only workers in the CPS versus the SIPP.

In summary, the CPS is the primary data source for this chapter. The u

of future March CPSs will allow updating of the self-employment estima

on an annual basis.

114 The Annual Report on Small Business and Competition
Number of Workers (Thousands) 109,551 50,400 10,992

Unincorporated Self-Employed (USE) 7.4 5.6 2.9

Self-Employed Only (SEO) (6.2) (4.6) (2.1)

Full-Time (4.3) (2.5) (1.4)

Part-Time (1.8) (2.0) (0.7)

Self-Employed with Wage-and-Salary

Employment (SEWS) (1.2) (1.0) (0.7)

Wage-and-Salary Workers (WS) 92.4 93.9 97.1

Incorporated Self-Employed (ISE) (2.7) (1.2) (0.5)

Full-Time (2.4) (0.9) (0.4)

Part-Time (0.4) (0.3) (0.1)

Wage-and-Salary Workers Only (WSO) (87.4) (90.9) (95.3)

Full-Time (67.0) (62.1) (74.0)

Part-Time (20.3) (28.8) (21.3)

Wage-and-Salary with Self-Employment 

(WSSE) (2.4) (1.8) (1.3)

Full-Time (1.9) (1.2) (1.0)

Part-Time (0.5) (0.6) (0.4)

Unpaid Family Workers 0.2 0.4 0.0*

Total Self-Employed (TSE), including the

Unincorporated Self-Employed, 

Incorporated Self-Employed, and

Wage-and-Salary Workers with 

Self-Employment 12.5 8.7 4.7

Full-Time (9.3) (5.0) (3.2)

Part-Time (3.2) (3.6) (1.5)

Note: Numbers in parentheses are subtotals.

* Less than .05 percent. 

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the U

Department of Commerce, Bureau of the Census, Current Population Survey, March 1988.

The State of Small Business 1
Table 3A.2 Distribution of Full-Time African-American, White, and 

March 1988 (Percent)

African-American 

Total Unincorporated Wage-andj Total U

Self-Employed Self-Employed Salary Only Self-Employed S

(TSE) (USE) (WSO) (TSE) 

Age

16–24 5.93 7.19 16.91 3.47 25–44 59.10 46.14 57.00 55.19 45–65 30.51 39.16 24.05 37.27 Over 65 4.46 7.51 2.04 4.06 

Education

Less than 4 Years 

of High School 17.09 23.34 19.61 9.76 

4 Years High School 

to 3 Years College 56.29 56.01 64.88 54.92 

4 or More Years of 

College 26.61 20.65 15.51 35.33 

Marital Status

Married, Spouse 

Present 64.79 58.96 42.82 76.16 

Other 35.21 41.04 57.18 23.84 

Number of Children

Zero 50.18 56.62 53.34 54.01 One 27.38 23.40 22.81 18.13 Two 15.75 15.81 14.68 19.00 Three or More 6.69 4.16 9.18 8.86 

Major Industry

Mining 0.00 0.00 0.25 0.54 Construction 9.46 9.94 3.74 14.49 Manufacturing 6.80 0.99 19.46 8.63 Transportation, 

Communications, and Public Utilities 11.55 8.34 9.76 5.08 

Wholesale Trade 1.88 1.30 2.56 6.01 Retail Trade 8.37 8.08 13.51 17.61 

116 The Annual Report on Small Business and Competition
The State of Small Business 117

Finance, Insurance, and 

Real Estate 6.33 4.78 5.71 7.54 

Services 55.61 66.57 44.99 40.10 

Major Occupation

Executive, 

Administrative,and Managerial 21.41 21.86 6.39 24.29 

Professional, 

Specialty 9.06 7.98 9.93 17.69 

Technical and Related 

Support 1.69 0.91 2.91 1.14 

Sales 10.14 9.06 6.68 21.87 Administrative 

Support, Including Clerical 7.14 4.09 18.49 4.32 

Service, Excluding 

Protective Serviceand Private Household 22.80 33.07 19.18 7.27 

Precision Production, 

Craft, and Repair 11.17 11.57 8.49 15.85 

Operators, Fabricators, 

and Laborers 15.96 11.20 23.84 6.60 

Other 0.62 0.26 5.09 0.98 

Hours Worked in Survey Week

35–40 43.59 49.37 76.71 36.65 41–48 14.02 9.91 10.34 12.74 49 or More 42.39 40.71 12.95 50.60 

Weeks Worked in Previous Year

1–49 26.49 39.09 26.95 15.34 50–52 73.51 60.91 73.05 86.44 

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the 

Survey, March 1988.
Table 3A.3 Distribution of Full-Time Male and Female Workers by V

Male

Unincorporated 

Total Self- Self- W

Employed Employed Sa

(TSE)1 (USE) 

Age

16-24 3.26 3.25 25-44 54.64 54.89 45-64 37.90 37.33 Over 65 4.20 4.53 

Education

Less than 4 

Years of High School 10.07 12.75 

4 Years of High 

School to 3 Years of College 52.18 54.43 

4 or More Years of 

College 37.74 32.82 

Marital Status

Married, Spouse 

Present 78.43 75.44 

Other 21.57 24.56 

Number of Children

Zero 52.77 54.91 One 18.21 17.96 Two 19.39 18.66 Three or More 9.63 8.47 

Major Industry

Mining 0.60 .37 Construction 18.00 22.21 Manufacturing 9.56 5.29 Transportation, 

Communications, and

118 The Annual Report on Small Business and Competition
The State of Small Business 119

Public Utilities 5.98 5.11 

Wholesale Trade 6.80 5.96 Retail Trade 16.15 15.56 Finance, Insurance,

and Real Estate 7.03 7.21 

Services 35.87 38.29 

Major Occupation

Executive,

Administrative and Managerial 26.05 23.19 

Professional,

Specialty 17.82 16.77 

Technical and 

Related Support 1.19 1.05 

Sales 21.93 22.37 Administrative Support, 

Including Clerical 1.13 0.51 

Service, Excluding 

Protective Service and Private Household 3.05 3.50 

Precision Production, 

Craft, and Repair 19.63 23.76 

Operators, Fabricators, 

and Laborers 8.12 8.32 

Other 1.08 0.53 

Hours Worked in Survey Week

35–40 33.75 36.57 41–48 12.24 11.54 49 or More 54.01 51.89 

Weeks Worked in Previous Year

1–49 13.11 16.26 

50–52 86.89 83.74 

*Total self-employed includes the unincorporated self-employed, incorporate

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the 

Survey, March 1988.
Table 3A.4 Distribution of Full-Time Employed Nonagricultural Wor

March 1988 (Percent)

Median Less t

Earnings $5,0

(Dollars)

Unincorporated Self-Employed (USE)

Business 17,000 20.Business and Wage-and-Salary 17,500 18.

Incorporated Self-Employed (ISE)

Wage-and-Salary 31,000 1.Business and Wage-and-Salary 32,000 1.

Unincorporated and Incorporated Self-Employed (USE and ISE)

Business 23,000 9.Business and Wage-and-Salary 24,000 9.

Wage-and-Salary Workers with Self-Employment (WSSE)

Wage-and-Salary 24,000 9.Business and Wage-and-Salary 26,000 8.

Wage-and-Salary Workers Only (WSO)

Wage-and-Salary 21,000 1.

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the 

Survey, March 1988.

120 The Annual Report on Small Business and Competition
The State of Small Business 121

Table 3A.5 Distribution of Full-Time Employed Nonagricultural Wor

1988 (Percent)

Median Less t

Earnings $5,0

(Dollars)

Wage-and-Salary Workers Only (WSO)

Wage-and-Salary 21,000 1.Male 26,000 0.Female 17,000 1.

Unincorporated Self-Employed (USE)

Business and Wage-and-Salary 17,500 18.Male 20,000 14.Female 9,800 32.

Unincorporated and IncorporatedSelf-Employed (USE and ISE)

Business and Wage-and-Salary 24,000 9.Male 27,000 6.

Female 12,800 19.

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the 

Survey, March 1988.
Table 3A.6 Distribution of Employed Nonagricultural Workers by Va

Self- 

Total Self- Employed Wage-and- 

Employed* Only Salary Only 

Full Time 75.26 73.73 79.79 Part Time 24.74 26.27 20.21 Age

16–24 3.92 3.54 18.48 25–44 51.01 49.34 55.63 45–64 38.42 39.70 23.78 Over 65 6.65 7.42 2.10 

Gender

Male 66.59 67.25 54.10 Female 33.41 32.75 45.90 

Race

White 92.45 92.45 87.45 African-American 3.21 3.07 8.65 Other 4.33 4.48 3.90 

Education

Less than 4 Years

of High School 12.18 12.88 15.86 

4 Years of High 

School to 3 Years of College 55.64 55.74 63.73 

4 or More Years 

of College 32.17 31.39 20.41 

Marital Status

Married, 

Spouse Present 76.23 76.80 58.40 

Other 23.77 23.20 41.60 

122 The Annual Report on Small Business and Competition
The State of Small Business 123

Veteran

Veteran 20.22 20.90 12.73 Non-Veteran 79.78 79.10 87.27 

Major Industry

Mining 0.19 0.21 0.82 Construction 13.27 14.88 5.70 Manufacturing 6.80 6.99 24.65 Transportation 4.52 4.52 7.42 Wholesale Trade 4.97 5.20 5.54 Retail Trade 18.54 18.76 22.28 Finance, Insurance, 

and Real Estate 7.81 7.68 8.15 Services 43.91 41.75 25.45 

Major Occupation

Executive, 

Administrative and Managerial 27.35 30.49 12.49 

Professional, 

Specialty 15.88 15.69 8.96 

Technical 1.08 0.60 4.23 Sales 20.81 21.02 14.48 Administrative 

Support, IncludingClerical 5.23 4.09 15.78 

Service, Excluding 

Protective Service and Private Household 11.29 11.00 12.33 

Precision Production, 

Craft, and Repair 16.78 16.89 12.81 

Operators 1.57 0.21 18.92 

Source: Tabulation by Carolyn Looff & Associates of unpublished data from th

and Program Participation, 1993 Wave 1.
Table 3A.7 Nonagricultural Employment by Class of Worker and SB

Self-Em

Wage-and-Salary Unincorporated 

Region Only (Thousands) Self-Employed SUnited States1988 95,600 8,112 1994 101,300 8,856 Region I1988 5,711 442 1994 5,527 493 Region II1988 10,410 718 1994 10,070 809 Region III1988 10,370 776 1994 10,730 817 Region IV1988 16,960 1,333 1994 18,310 1,399 Region V

124 The Annual Report on Small Business and Competition
The State of Small Business 125

1988 18,230 1,415 1994 19,790 1,328 Region VI1988 10,090 950 1994 11,170 1,109 Region VII1988 4,673 435 1994 4,733 453 Region VIII1988 2,725 321 1994 3,241 353 Region IX1988 13,210 1,356 1994 14,000 1,615 Region X1988 3,221 367 1994 3,785 480 

Source: Tabulation by Carolyn Looff & Associates of unpublished data from the 

Survey, March 1988 and March 1994.
United States

1988 84,808 8,520 93,328

1993 87,967 9,065 97,032

Percent Change 23.7 6.4 4.0

Region I

Connecticut

1988 1,358 118 1,476

1993 1,335 123 1,458

Percent Change 21.7 4.2 21.2

Maine

1988 424 59 483

1993 422 62 484

Percent Change 20.5 5.1 0.2

Massachusetts

1988 2,422 185 2,607

1993 2,343 196 2,539

Percent Change 3.3 5.9 2.6

New Hampshire

1988 463 54 517

1993 452 46 458

Percent Change 22.4 214.8 211.4

Rhode Island

1988 409 27 436

1993 373 32 405

Percent Change -8.8 18.5 -7.1

Vermont

1988 207 31 238

1993 211 34 245

Percent Change 1.9 9.7 2.9

Region II

New Jersey

1988 3,003 218 3,221

1993 2,892 212 3,104

Percent Change 23.7 22.8 23.6

New York

1988 6,095 565 6,660

1993 5,775 565 6,340

Percent Change 25.3 0.0 24.8

Region III

Delaware

1988 269 15 284

1993 282 17 299

Percent Change 4.8 13.3 5.3

District of Columbia

1988 183 19 202

1993 169 18 187

Percent Change 27.7 -5.3 27.4

Maryland

1988 1,616 129 1,745

1993 1,698 161 1,859

Percent Change 5.1 24.8 6.5

126 The Annual Report on Small Business and Competition
Pennsylvania

1988 4,295 383 4,678

1993 4,318 361 4,671

Percent Change 0.5 25.7 20.1

Virginia

1988 2,104 176 2,280

1993 2,310 196 2,506

Percent Change 10.0 11.4 9.9

West Virginia

1988 471 48 519

1993 506 41 547

Percent Change 7.4 214.6 5.4

Region IV

Alabama

1988 1,225 128 1,353

1993 1,364 137 1,501

Percent Change 12.4 7.0 10.9

Florida

1988 4,380 428 4,808

1993 4,588 428 5,016

Percent Change 4.7 0.0 4.3

Georgia

1988 2,283 187 2,470

1993 2,363 237 2,600

Percent Change 3.5 26.7 5.3

Kentucky

1988 1,146 127 1,273

1993 1,211 148 1,359

Percent Change 5.7 16.5 6.8

Mississippi

1988 734 82 816

1993 801 86 887

Percent Change 9.1 4.9 8.7

North Carolina

1988 2,470 210 2,680

1993 2,538 235 2,773

Percent Change 2.8 11.9 3.5

South Carolina

1988 1,183 109 1,292

1993 1,258 111 1,369

Percent Change 6.3 1.8 6.0

Tennessee

1988 1,636 181 1,817

1993 1,757 188 1,945

Percent Change 7.4 3.9 7.0

Region V

Illinois

1988 4,170 331 4,501

1993 4,295 350 4,645

Percent Change 3.0 5.7 3.2

Indiana

1988 2,034 183 2,217

1993 2,158 179 2,337

Percent Change 6.1 22.2 5.4

The State of Small Business 1
Michigan

1988 3,276 249 3,525

1993 3,390 232 3,622

Percent Change 3.5 26.8 2.8

Minnesota

1988 1,575 167 1,742

1993 1,672 177 1,849

Percent Change 6.2 6.0 6.1

Ohio

1988 3,887 288 4,175

1993 3,996 282 4,278

Percent Change 2.8 22.1 2.5

Wisconsin

1988 1,800 181 1,981

1993 1,927 161 2,088

Percent Change 7.1 -11.0 5.4

Region VI

Arkansas

1988 723 86 809

1993 785 90 875

Percent Change 8.6 4.6 8.2

Louisiana

1988 1,241 109 1,350

1993 1,214 134 1,348

Percent Change 22.2 22.9 20.1

New Mexico

1988 378 70 448

1993 442 79 521

Percent Change 16.9 12.9 16.3

Oklahoma

1988 969 142 1,111

1993 953 135 1,088

Percent Change 21.4 24.9 22.1

Texas

1988 5,558 601 6,159 

1993 6,131 639 6,770

Percent Change 10.3 6.3 9.9

1988 1,575 167 1,742

Region VII

Iowa 

1988 948 111 1,059

1993 1,018 113 1,131

Percent Change 7.4 1.8 6.8

Kansas

1988 839 92 931

1993 869 95 964

Percent Change 3.6 3.3 3.5

Missouri

1988 1,815 185 2,000

1993 1,870 175 2,045

Percent Change 3.0 5.4 2.3

128 The Annual Report on Small Business and Competition
Nebraska

1988 531 57 588

1993 566 63 629

Percent Change 6.6 10.5 7.0

Region VIII

Colorado

1988 1,141 137 1,278

1993 1,326 154 1,480 

Percent Change 16.5 12.4 15.8 

Montana

1988 210 43 253

1993 228 46 274

Percent Change 8.6 7.0 8.3

North Dakota

1988 181 28 209

1993 183 20 203 

Percent Change 1.1 228.6 22.9

South Dakota

1988 196 36 232 

1993 217 27 244

Percent Change 10.7 225.0 5.2

Utah

1988 486 63 549 

1993 611 61 672

Percent Change 25.7 23.2 22.4

Wyoming

1988 128 22 150

1993 141 18 159

Percent Change 10.2 218.2 6.0

Region IX

Arizona

1988 1,132 140 1,272 

1993 1,217 151 1,368

Percent Change 7.5 7.9 7.5

California

1988 9,598 1,240 10,838

1993 9,639 1,497 11,136

Percent Change 0.4 20.7 2.7

Hawaii

1988 336 39 375

1993 389 38 427

Percent Change 15.8 -2.6 13.9

Nevada

1988 440 39 479

1993 540 47 587

Percent Change 22.7 20.5 22.5

Region X

Alaska

1988 128 27 155

1993 167 28 195

Percent Change 30.5 3.7 25.8

The State of Small Business 1
Idaho

1988 210 41 251

1993 342 49 391

Percent Change 62.9 19.5 55.8

Oregon

1988 921 147 1,068

1993 996 155 1,151

Percent Change 8.1 5.4 7.8

Washington

1988 1,497 187 1,684

1993 1,720 230 1,958

Percent Change 14.9 27.3 16.3

1 Private non-agricultural wage-and-salary workers.

2Nonfarm self-employed. Does not include the incorporated self-employed.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from U

Department of Labor, Bureau of Labor Statistics, Current Population Survey.

130 The Annual Report on Small Business and Competition
Regulatory Relief for Small Business

Synopsis

On March 29, 1996, President Clinton signed groundbreaking legislationthat opens new doors for small businesses. The Small Business

Regulatory Enforcement Fairness Act of 1996 (P.L. 104–121) provides small

businesses with more opportunities to participate in the federal regulatory

process.

The new law represents a major small business victory because it reinforces and strengthens the Regulatory Flexibility Act (5 U.S.C. §§601–612)

and codifies some of the administration’s small business initiatives. 

The Regulatory Flexibility Act (RFA), originally passed in 1980, requires

federal agencies to evaluate the impact of their regulations on small business

and to offer flexible regulatory alternatives when a rule is being developed.

The 1996 amendments allow small businesses to challenge new agency actions in court when the company is adversely affected or aggrieved because

the agency has not complied with the Regulatory Flexibility Act. In addition,

the 1996 amendments extend the act to cover Internal Revenue Service (IRS)

interpretative rulemakings to the extent that the rulemakings have paperwork requirements.

Beyond amending the Regulatory Flexibility Act, the 1996 legislation

provides regulatory compliance assistance for small businesses and new

mechanisms for addressing enforcement actions by agencies. Many provisions in the new law reflect the administration’s efforts in support of small

business, including requirements that federal agencies reduce the penalties

against small businesses in enforcement actions, perform better economic

analyses when evaluating the impact of regulations, work with industry to

develop and enforce regulations, and simplify regulations overall.

In recent years, America’s small businesses have been concerned that

governments do not fully understand and appreciate the cost and burden of

regulations on small business. Congress, through passage of the Small

Business Regulatory Enforcement Fairness Act, and the administration,

through presidential directives, have made progress in addressing regulatory

and paperwork concerns. The 1996 legislation, coupled with early administrative efforts, has shifted federal agencies’ attention to the disproportionate

regulatory burdens shouldered by small businesses.

The State of Small Business 131
spending nearly 20 cents of every revenue dollar to pay for the paperwork

and operating costs attributable to regulations. These costs do not include the

additional capital investments needed as a result of regulation. In fact, the

burden of compliance is as much as 50 percent more for small businesses

than for their larger counterparts.2

Taken together, the costs of obtaining information about regulations and

the true costs of complying fully with all regulations are daunting to small

firms. Among the problems small businesses identify in complying with regulations are the following:

• An unclear understanding of what is required to comply;

• Frequent changes in regulations;

• High true costs (both direct and indirect) to fully comply; and

• Difficulties in obtaining clear answers to questions about compliance.

The SBA’s Office of Advocacy, in cooperation with the White House

Conference on Small Business, held a series of 15 focus groups between

October 1994 and January 1995 to assess the future of small business and entrepreneurship in the 21st century.3 The focus groups identified regulations as

one of the major barriers to small business market entry and an inhibitor of

company growth. Every panel cited the extent, complexity, and uncertainty

associated with regulations at all levels of government as impeding the establishment and growth of businesses. Participants agreed that policymakers

should employ better cost-benefit analyses and risk assessment methods to

develop simpler and more flexible regulations.

The Regulatory Flexibility Act

Small businesses’ most significant mechanism for influencing the development of federal regulations is the Regulatory Flexibility Act. The law was originally passed in 1980 to ensure that federal agencies fit regulations to the scale

of the affected businesses. Agencies are required to perform economic and

132 The Annual Report on Small Business and Competition

1 Thomas D. Hopkins, A Survey of Regulatory Burdens, report mo. PB95-263190 prepared

by Diversified Research, Inc., for the U.S. Small Business Administration, Office of Advocacy

(Springfield, Va.: National Technical Information Service, June 1995). 2 U.S. Small Business Administration, Office of Advocacy, The Changing Burden of Regulation, Paperwork, and Tax Compliance on Small Business: A Report to Congress, report no. PB96-

113642 (Springfield, Va.: National Technical Information Service, October 1995). 3 U.S. Small Business Administration, Office of Advocacy, The Third Millennium: Small

Business and Entrepreneurship in the 21st Century, report no. PB95-241196 (Springfield, Va.:

National Technical Information Service, 1995).
gpgg

in the scale and resources of regulated entities has in many cases discouraged

innovation that leads to beneficial products and processes, restricted improvements to productivity, adversely affected competition in the marketplace, and created barriers to entry in many industries.

Many regulations have been applied uniformly to small and large businesses alike, even though the problems that gave rise to the government action may not have been caused by small firms. Uniform federal regulatory

and reporting requirements have in many instances imposed unnecessary and

disproportionately burdensome demands on small businesses with limited resources. The Regulatory Flexibility Act sets out specific processes for federal

agencies to use in analyzing the impact of regulations on small businesses. 

General Requirements

The Regulatory Flexibility Act requires agencies to take steps to collect input

from small entities on proposed rulemakings and to determine whether a regulation is expected to have a significant economic impact on a substantial

number of small entities. This evaluation must produce an economic analysis

that substantiates an agency’s actions. Moreover, federal agencies are required to identify alternative, flexible regulatory approaches for regulations

affecting small businesses.

As agencies proceed through the administrative steps required by the act,

the SBA’s Office of Advocacy monitors regulatory development, reviews the

agency’s compliance with requirements for seeking small business advice,

submits public comments on proposed rules and initial economic findings,

and evaluates final rules and analyses.

The RFA also requires agencies to perform a periodic review of existing

regulations. If a regulation has a significant economic impact on a substantial

number of small entities, the agency must evaluate the rule every 10 years.

Through a public review process, the agency must seek the comments of

small businesses and the others in the public and must consider alternatives

to minimize the impacts on small businesses.

Strengthening the RFA: 

The Small Business Regulatory Enforcement Fairness Act

What happened in 1996? The small business community was successful in

persuading Congress and the administration that a new law was needed to

ensure full agency compliance with the RFA. The Office of Advocacy reports

The State of Small Business 133
y g y 

fected or aggrieved by an agency’s final action to seek judicial review. The

court may evaluate the merits of a small business’s case by reviewing an

agency’s compliance with the RFA. The new judicial review provisions

demonstrate that the recommendations of small businesses and the Office of

Advocacy are a serious consideration in regulatory decision making.

The amendments to the Regulatory Flexibility Act also include an important provision that expands the coverage of the law to IRS paperwork regulations, which generally were exempted in the original act. The paperwork burden of the Internal Revenue Service is a primary concern of small businesses,

and the process of preparing a regular payroll is a constant reminder of the

numerous regulations dealing with tax withholding and reporting. 

Beyond amending the Regulatory Flexibility Act, the 1996 legislation

provides regulatory compliance assistance for small businesses and new

mechanisms for addressing enforcement actions by agencies. The law requires

that federal agencies work with industry to develop and enforce regulations,

reduce the penalties against small businesses in enforcement actions, perform

better economic analyses when evaluating the impact of regulations, and simplify regulations overall.

Judicial Review

Under the amended RFA, a small business that is adversely affected or aggrieved by an agency’s failure to comply with the act during the rulemaking

process may seek review of the rule in court. 

While not all provisions in the Regulatory Flexibility Act are subject to judicial review, the main elements can be scrutinized by the courts. The most

important element of an agency’s action is its economic analysis. If an agency

determines that a rule will not have a significant economic impact on a substantial number of small entities, it must so certify and be able to justify its

conclusion with a fact-based, quantitative analysis. The agency must request

public comment on its certification, and the certification can be reviewed by

the court.

If an agency determines that a rule will have a significant impact, it is

mandated to complete a full regulatory and economic analysis and solicit

small business review of its conclusions. Part of the analysis must be a serious

consideration of alternative regulatory approaches that would relieve the burdens on small business. These analyses and conclusions, included in a final

regulatory flexibility analysis, also are subject to judicial review.

One of the key questions that an agency must answer is: will a regulation

have a significant economic impact on a substantial number of small entities?

134 The Annual Report on Small Business and Competition
, gpgy 

small business community.

The court may review 1) an agency’s proper use of the definition of small

business; 2) the final regulatory flexibility analysis, including the agency’s efforts to evaluate alternative regulatory approaches and reasons for rejecting or

accepting them; 3) the agency’s effort to collect comments from small entities

through a variety of mechanisms; 4) any decision to certify that a rule will not

have an impact on small businesses and the factual basis for such certification; 5) a decision to delay the completion of a final regulatory flexibility

analysis in the event of an emergency rulemaking; and 6) compliance with a

requirement for periodic reviews of rulemakings at the 10-year anniversary of

every rule or the enactment of the 1980 law, whichever is first.

Analysis

Small businesses, along with other Americans, enjoy the benefits that regulations help to create, among them a cleaner environment, fair market practices, and safer workplaces, roadways, and food. Agencies have an obligation

to fulfill their missions to protect and advance American society. 

At the same time, the benefits of regulation often are distributed broadly,

while the costs tend to fall on specific businesses or people. As the

Regulatory Flexibility Act highlights, these costs can be hard hitting for small

firms. Agencies can advance the effectiveness of regulations by performing

comprehensive economic analyses that include small business impacts and

by developing flexible regulatory approaches. Under the Regulatory

Flexibility Act, agencies are required to publish a small business analysis during regulation development. 

Determining a rule’s impact on small businesses and other small entities

is an important part of the rulemaking process, and the validity of the RFA

analysis will be a critical factor in decisions about an agency’s compliance.

President Clinton in 1993 directed executive agencies to restore the integrity

and legitimacy of regulatory review and oversight and to make the process

more accessible and open to the public.4 The Regulatory Flexibility Act extends these requirements to all federal agencies, requiring them to submit

their analysis for public review and comment. With small business scrutiny,

the analysis should be legitimate and defensible.

As the basis for new rules, an agency must establish a record of small

businesses’ contribution to the problem that is to be solved. The agency is

The State of Small Business 135

4 Executive Order 12866, September 30, 1993.
g

their competitive position with larger firms.

One common mistake in economic analysis is using the aggregate or

mathematical average to determine the impact of a regulation on small business. The objectives of the Regulatory Flexibility Act will be achieved only if

agencies complete thorough detailed analyses that isolate affected small business sectors. Variables should include different business size and industry

classifications. In addition, the definitions used in an economic analysis also

must withstand critical review. For example, agencies are compelled to use

definitions for small business established by the U.S. Small Business

Administration in their analyses for most cases. If an economic analysis uses

alternative definitions, the agency must solicit the consultation of the Office of

Advocacy and public review. This critical definition question and the analytical methodology are linchpins in an agency’s demonstration of compliance

with the Regulatory Flexibility Act.

Influence in Regulation Development

Participating in the development of regulations is an important right of small

businesses. The administration has encouraged federal agencies to develop

regulation in a cooperative environment. The passage of the Small Business

Regulatory Enforcement Fairness Act has cemented the important role of small

businesses in the regulation development process. 

The RFA explicitly requires agencies to ensure that small businesses are

engaged in the process. Agencies must solicit small business participation in

rulemakings through industry publications, direct mail, public meetings, and

electronic means.

EPA and OSHA Regulatory Review Panels

The amended Regulatory Flexibility Act requires an extra step for the

Environmental Protection Agency (EPA) and the Occupational Safety and

Health Administration (OSHA) in the development of regulations. Specifically,

the act requires that the agencies receive input from affected small businesses

before proposed rules are published. 

For each significant proposal, EPA or OSHA convenes a Small Business

Advocacy Review Panel. The interagency panel—including employees of the

agency, the SBA’s Office of Advocacy, and the Office of Management and

Budget—review the draft proposed rule and economic or scientific analyses

developed by the agency. 

136 The Annual Report on Small Business and Competition
process and the panel report becomes a part of the public record.

Congressional Review

The Small Business Regulatory Enforcement Fairness Act has another provision that provides small businesses with an avenue for involvement in the

regulatory approval process. 

The 1996 law provides for congressional review of rulemakings by federal agencies. Before any rule goes into effect, agencies are required to give

the Congress an opportunity to review the rule. Small businesses may use this

as an opportunity to discuss the regulation with lawmakers. Major rules—

those with a $100 million impact on the economy or a major impact on an

industry, government, or consumers; or those affecting competition, productivity, or international trade—cannot go into effect until congressional review

is complete. 

Compliance Assistance

The 1996 act also sets new objectives for agencies’ compliance assistance efforts. While some federal agencies engage in cooperative programs or publish

compliance manuals to assist regulated businesses, the Small Business

Regulatory Enforcement Fairness Act goes further.

Federal agencies must publish compliance guides for all newly published rules with a significant small business impact. These guides must explain in plain language how the firms can comply with the regulations. If a

small business is charged with noncompliance in an enforcement action, the

court review may include the content of the small business compliance guide

in assessing the reasonableness of the proposed penalty. 

Small businesses that are confused by a regulation or need clarification

often ask agencies for explanation. Under the new law, agencies also are required to establish a system for addressing compliance inquiries from small

businesses. Any guidance provided by an agency will be considered as evidence of the reasonableness of proposed penalties, fines, or damages assessed against a small entity.

Finally, to step up compliance assistance, agencies are required to use

the small business development centers as a point of distribution for compliance assistance. The centers are located in every state and offer one-stop assistance to small businesses. They are administered by the U.S. Small

Business Administration as a cooperative program effort of the private sector,

the educational community, and federal, state, and local governments.

The State of Small Business 137
ecee coets osabusesses coceg eoceeteated ac

tivities conducted by agency personnel. In addition, regional small business

regulatory fairness boards are established in each SBA region to advise the

ombudsman on matters of concern to small business relating to the enforcement activities of agencies. 

The law provides small businesses with a new venue for registering complaints about excessive enforcement actions by federal agencies. Because

board members will be small business owners and operators, they will offer a

less intimidating, but powerful process.

Penalty Policy

Under the new law, each agency must establish a policy to provide for the reduction and, under appropriate circumstances, waiver of civil penalties for violations of statutory or regulatory requirements by a small business. This provision codifies a directive issued by President Clinton in March 1995 for small

business relief.

Equal Access to Justice

Small businesses are granted more opportunity to recover attorney fees under

the 1980 Equal Access to Justice Act in litigation with the government. In administrative and judicial proceedings, if the government’s demand is unreasonable when compared with the judgment or decision, then the small business can be awarded attorney fees and other expenses related to defending

against the action. Allowable attorney fees were increased from $75 to $125

per hour. 

Conclusion

While small businesses have been given new avenues to participate in the

regulatory process, they must aggressively pursue their rights. Regulations will

improve only when small businesses critique proposed regulations and agencies extend invitations to small businesses. Compliance will be achieved

when both agencies and small businesses seek to work cooperatively. If their

grievances about enforcement actions are to be addressed, small businesses

must understand their rights and obligations in administrative and legal proceedings and use the processes wisely.

Only through vigilant efforts to participate in the process of governance

will small businesses fully enjoy their rights.

138 The Annual Report on Small Business and Competition
Innovation and Small Firms

Synopsis

Many of the technologies and industries seen as critical to the nation’s ture economic growth are closely identified with new technolog

based firms (NTBFs). For example, biotechnology and computer software a

industries built around new technologies that were largely commercializ

by small businesses. The role of NTBFs as commercializers of new techno

gies is largely a U.S. phenomenon. Small businesses retain certain adva

tages over large businesses in the American commercial environment chara

terized by fast-moving technologies and rapidly changing consumer needs. 

Since 1980, the federal government has instituted active policies in su

port of these dynamic NTBFs. Building on experiences in the stat

Congress and the executive branch created new programs in which gover

ment and the private sector are partners in developing and deploying ne

technologies. These programs include the Small Business Innovati

Research (SBIR) program, the Small Business Technology Transfer (STTR) p

gram, the Advanced Technology Program (ATP), the Manufacturing Extensi

Partnership (MEP) program, and several financing programs for high techn

ogy companies administered by the U.S. Small Business Administration.

These programs stress commercialization potential, nonfinancial ass

tance, and better intellectual property rights protection. They represent on

a small fraction of America’s total investment in research and developme

(R&D), but in leveraging money to the public and private sectors, they ha

an economic impact far greater than that suggested by the program budg

alone. Taken together, the programs represent an important commitment 

the process that allows small technology-based businesses to use th

unique competencies to address federal research needs, create new produ

and processes, and bring them to commercial markets.

New Technology-Based Firms’ Contributions to the

Economy

Most of the giant corporations that dominate the economic landscape beg

as small businesses whose founders developed radical new skills, knowledg

and information. In the early part of the 20th century, Henry Ford made t

automobile an affordable consumer good with his use of the assembly lin

The State of Small Business 1
largely an American phenomenon.1 The continual creation and marketing of ne

ideas by innovative new start-up companies steadily destroys the position of sta

nant firms. This process is now thought by many economists to be fundamen

to the prosperity of a capitalist economy. The continued ability of start-up comp

nies to challenge industry leaders is thus of critical public policy concern. 

One of the salient features of the U.S. innovation system is its enormo

size. For a substantial portion of the post-World War II period, the nation

R&D investment of the United States was larger than the combined inve

ment of all other member nations of the Organization for Econom

Cooperation and Development. 

The U.S. innovation system is unique also in that it has three key comp

nents: industry, universities, and the federal government. In 1995, U.S. expe

ditures on R&D totaled $171 billion. Companies accounted for 59.4 perce

the federal government for 35.5 percent, universities for 3.2 percent, and no

profits for 1.8 percent.2 Total R&D expenditures have grown steadily in t

post-war period. However, since the end of the Cold War, the federal share 

R&D has been declining, while the industrial share has grown to 2 percent 

gross domestic product. 

The share of industrial R&D performed by small firms increased from 5

percent in 1980 to 14.5 percent in 1995. Company-funded industrial R&

going to small firms has increased, but the corresponding federal share has 

mained at about the same level over the past decade. In 1993, of the $60

billion the federal government spent on R&D, small firms received 3.8 p

cent, up very little from the 3.5 percent they won in 1978 (Chart 5.1).

Despite their small share of federal R&D, new technology-based fir

and individuals received 38 percent of all domestic utility patents granted 

the United States in 1991. Given small businesses’ small percentage of fede

research funds, this output measure reflects a high rate of accomplishment.

In fact, in the modern economy, innovation remains largely the work 

smaller firms. Though in the aggregate, NTBFs spend only a fraction of wh

large firms spend on total R&D, they produce more than half of the innov

tions. One study undertaken for the SBA identified a total of 8,074 innov

tions in 362 industries from 46 technical, engineering, and trade journa

Small firms were estimated to be responsible for 55 percent of the innov

tions, which included innovations at different levels of significance. A sa

pling of the most innovative industries reveals widely different patterns 

small and large firm contributions (Table 5.1).

140 The Annual Report on Small Business and Competition

1 Richard Nelson, National Innovation Systems (Oxford, England: Oxford University Pre

1993).2 U.S. National Science Foundation, Science and Engineering Indicators (Washington, D.

U.S. Government Printing Office, 1996), 4–6, Table 4.1. 
How can small firms’ innovative activity be explained? While many exp

nations have been offered for the innovative prowess of small firms, one that 

consistent with both entrepreneurship and fundamental U.S. American values 

the role of property rights.3 Small firms’ greater innovative capacity may be e

plained by their relatively more generous property rights.4 People must be ab

to keep a portion of the fruits of their labor or they will not innovate. An innov

tor in a large company often has very limited property rights protection: the ne

product generally belongs to the firm, not the employee who invented 

Creative employees have less incentive to work hard for the company. The le

than-perfect incentive structure in many large corporations can allow burea

cratic inertia to drive corporate decisions. Managers’ and employees’ interests 

in protecting their claims on the firm’s cash flow. Small firms are better able 

protect their property rights, which means there is more incentive to work har

The State of Small Business 1

3 David B. Audretsch, Innovation and Industry Evolution (Cambridge, Mass.: The MIT Press, 199

4 In firms that concern themselves with basic scientific research, which includes ma

biotech firms, scientists have an incentive to innovate that goes beyond property rights. It 

known as the priority of discovery that arises because of the recognition awarded by the sci

tific community for being first. In this milieu, the larger the investment in R&D, the more inno

tions that investment will tend to produce. 5 See F.M. Scherer, testimony before the U.S. Senate, Committee on the Judicia

Subcommittee on Monopolies and Commercial Law, February 21, 1988.

* Includes federally funded research and development centers.

Source: U.S. Small Business Administration, Office of Advocacy, based upon data fro

the National Science Foundation. Billions of Current Dollars

Year

0

10

20

30

40

50

60

70

80

Federal Research Labs*

Academic Institutions

Nonprofit

Large Business

Non-SBIR Small Business

SBIR

1960 1965 1970 1975 1980 1985 1990 199

1.1 Non-SBIR Small Business

26.5

5.7

34.4

27.6

 4.7 SBIR

Academic

Large Business

Research Labs

Nonprofit
Electronic computer

equipment 395 227 158 

Process control instruments 165 93 68

Radio and TV communication

equipment 157 72 83

Pharmaceutical preparations 133 13 120

Electronic components 128 73 54

Engineering and scientific

instruments 126 83 43

Semiconductors 122 29 91

Plastics products 107 82 22

Photographic equipment 88 9 79

Office machinery 77 10 67

*Large and small firm innovations do not always sum to total innovations because seve

innovations could not be classified according to firm size.

Source: Keith L. Edwards and Theodore Gordon, Characterization of Innovations Introduc

in the U.S. Market in 1982, report no. PB84-212067, prepared by The Futures Group under c

tract with the U.S. Small Business Administration, Office of Advocacy (Springfield, VA: Natio

Technical Information Service, 1984). As reported in Zoltan Acs and David Audretsch, Innovat

and Small Firms (Cambridge, MA: The MIT Press, 1996), table 2.1.

There are many incentives to work in addition to property righ

Corporate culture also affects motivation and incentives for hard work. For e

ample, employees of Sun Microsystems (a large firm) have a commitment 

succeed that is enhanced by the large number of people sharing it; that m

be inspirational to the point of making people want to work harder. A sm

firm may not provide the commonly shared culture of a large organizati

and may threfore require more self-motivation to get new ideas out.

NTBFs gain their comparative innovative advantage by exploring ne

technological spaces that may have been overlooked by larger firms. In ma

industries small firms receive funding for such efforts. Regional networking 

cilitates this process and permits small firms to obtain and use knowled

more efficiently in order to make radical innovations. Because their resear

is closely tied to that of other institutions and firms, it diffuses quickly.6

142 The Annual Report on Small Business and Competition

6 Larger firms may not explore new technological spaces, not because of neglect, but 

cause of fear of “cannibalization”—having one’s own new products steal market share away fr

one’s established ones.
gg

occurs, large firms must get knowledge inputs internally. 

Both small and large firms play important roles in innovative activi

Small firms tend to have the innovative advantage in industries with hi

technological opportunity and where large firms dominate. This suggests a d

vision of labor between large and small firms. Small firms are superior 

commercializing new knowledge; large firms are superior in their ability 

appropriate returns from these innovations, either by buying property rights 

acquiring the small firms.7

Thus, the greatest synergy might be achieved through continual merge

of new small firms with innovative products into large firms with internation

market access. For example, highly innovative small pharmaceutical comp

nies are continuously absorbed into larger multinational firms as the indus

is forced to become more efficient.

In the global economy, the fundamental driving force behind rising l

ing standards is the ability to innovate. Radical innovations are just as like

to take place in small firms as in large firms because of the advantages th

small firms offer in protecting property rights. Therefore, the continu

entry of new technology-based start-ups into the economy is a crucial pu

lic policy issue. 

Government plays an important role in small firm innovation by increa

ing small business access to the R&D infrastructure, diffusing risk, and pr

viding capital. The SBIR and STTR programs help to ensure that NTBFs ha

access to the huge federal R&D infrastructure. The advanced technology a

manufacturing extension programs help integrate the research into small fi

networks. And Small Business Administration programs increase the pool 

equity and lending capital. By strengthening the innovative capabilities of t

small firm sector, these programs foster America’s global competitiveness a

technology-based economic growth.8 

SBA Management and Financial Support for NTBFs

The federal government has played an active role in financing new high tec

nology firms since the Soviet Union launched the Sputnik satellite in the la

1950s. In recent years, European and Asian nations and many U.S. stat

have adopted similar incentives. While these programs’ precise structur

have differed, the efforts have been predicated on two shared assumption

that the private sector provides insufficient capital to NTBFs and that the go

The State of Small Business 1

7 Wesley M. Cohen and Steven Klepper, “A Reprise of Size and R&D,” Economic Journ

vol. 106, 1996, 925-951. 8 Lee Preston and Charles O. Heller, Small Business Economics, Special Issue on Small a

Medium-Sized Enterprises in the Global Economy, vol. 9(1), 1997.
p

Congress created the Small Business Development Center (SBDC) program 

1980 to provide some of the management, technical, and research assistan

needed to aid the start-up, expansion and successful operation of small bu

nesses. The program fosters economic growth through job creation and gen

ation of tax revenues. The SBDC network has grown over the last decade 

include about 950 service delivery locations meeting the counseling a

training needs of more than 550,000 clients annually throughout the 

states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands.

In addition to providing basic management, technical, and research ass

tance to pre-venture entrepreneurs and existing small businesses, a number 

SBDCs are emphasizing assistance to technology companies. Specialized s

vices include commercialization help, assistance to inventors and manufa

turers, SBIR application assistance, and services to NTBFs. SBDCs have p

vided counseling to more than 100,000 small manufacturing firms over t

last five years, including 23,000 in 1995 alone. 

The SBA has also established an agreement with the U.S. Department 

Commerce to establish SBDC field offices at manufacturing extension cent

to improve the competitiveness of small and medium-sized manufacturers 

providing management and marketing consulting and guidance. To date, fie

offices have been established at manufacturing extension centers in New Yo

Ohio, South Carolina, California, Minnesota, Michigan, and Kansas.

The following are examples of SBDCs working with technology-bas

firms.

ACCELERATE Technology SBDC, California

California’s ACCELERATE Technology SBDC is one example of an SBDC th

focuses on high technology businesses. The California SBDC has grown fro

one “technology center” to a variety of jointly funded activities around the sta

The SBDC assembled potential investors, sales leads, venture capitalists, rep

sentatives of government and high technology industries, and SBDC clients at 

Technology Showcase. The showcase was one of several innovative strateg

that included a venture capital forum, coaching clients for investor presen

tions, co-sponsoring workshops on preparing successful SBIR/STTR applic

tions, and introducing clients to potential investors and partners. 

144 The Annual Report on Small Business and Competition

9 The rationale for such programs is discussed in depth in U.S. Congressional Budget Offi

Federal Financial Support for High-Technology Industries (Washington, D.C.: U.S. Governm

Printing Office, 1985). For a review of the literature, see Glenn R. Hubbard, “Capital Mar

Imperfections and Investment,” Journal of Economic Literature, 1995. For the long-run impact 

these programs, see Josh Lerner, The Government as Venture Capitalist: The Long Run Impact 

the SBIR Program, working paper 96-038 (Boston, Mass.: Harvard Business School, 1996).
pgpp

cent went on to face-to-face meetings. ACCELERATE helped five clients s

cure more than $10 million in equity funding. 

For example, ISCHEM Corporation, a manufacturer of neural netwo

computers for medical diagnostics, closed on a $5 million equity financin

With ACCELERATE’s assistance the firm gained valuable introductions to 

vestors, consultants, and strategic allies. 

Another ACCELERATE client, XCORP, was featured in a recent issue 

Technology Transfer Week, a showcase of global business opportunities in d

fense conversion and dual-use technology. With assistance from the SBD

XCORP has developed alliances with the National Aeronautics and Spa

Administration (NASA) and the Department of Energy to manufacture XCA

parts in a new rapid prototyping plant.

South Carolina State University SBDC, South Carolina. 

The South Carolina State University SBDC has worked with Westinghou

Savannah River Company in Aiken, South Carolina, to inform regional bu

nesses of the technologies available from the Savannah River Site Laborato

The SBDC continues to work with five technologies, three of which are nea

ing marketability. One is the “bone growth stimulator” that is currently goi

through the FDA approval process. When approved, it will be manufactur

by a South Carolina firm, CTM Technology, and marketed by a Florida fir

This product is being evaluated in several overseas markets includi

Canada, Australia, and Asia. The product will reduce the time required for 

broken bone to heal by 20 to 30 percent.

Financial Support for NTBFs

The U.S. Small Business Administration (SBA) has several loan programs th

assist small businesses whose primary activity is in the high technology indu

try. Two programs that currently assist some 2,000 high technology business

annually are the Section 7(a) and 504 loan programs (Table 5.2).

The Section 7(a) loan program authorizes the SBA to guarantee loa

made by lenders to small businesses that cannot obtain financing on reaso

able terms through normal lending channels. The SBA can guarantee 75 pe

cent of the loan amount up to $750,000. For loans of $100,000 or less, t

guaranty rate is 80 percent. The interest rate is not to exceed 2.75 over t

prime lending rate.

Through certified development companies (CDCs), the 504 loan pr

gram provides long-term, fixed-rate financing to small businesses to acqu

or construct facilities for their operations or to purchase machinery a

equipment with a useful life of 10 years or more. Typically, project procee

are provided as follows: 50 percent of the project cost is financed by an u

The State of Small Business 1
guaranteed bank loan, 40 percent by an SBA-guaranteed debenture that 

sold to investors at a fixed rate, and 10 percent by the small business. T

maximum SBA debenture is $750,000, except under certain circumstanc

when it can be up to $1 million. Job creation and retention is the main p

pose of the program.

In addition to these established loan programs, the two-year pilot capi

access program was conceived to help direct the SBA’s limited loan resourc

to businesses that may have a greater impact on the nation’s overall econom

well-being. It is based in part on a proprietary computer-based market se

mentation program developed by Citibank that identifies and targets bu

nesses involved in the development and utilization of newer technologies, p

tential job creators, and prospective exporters. Minority-, women-, a

veteran-owned firms are also targeted under this program. The program 

cludes a mutually agreed upon set of credit standards and a streamlined lo

application process. So far, nine loans for a total of $1,663,000 have be

made to high technology firms under the program.

An SBA financing success story is that of Biosource International.

Biosource International, Inc., Camarillo, California. 

Biosource International, formed in 1989, is engaged in the licensing, develo

ment, manufacture, marketing, and distribution of immunological reagents a

test kits used in biomedical research. The company focuses its sales efforts 

academic, industrial, and government laboratories. As of 1996, employme

was at 53 with projections that another 18 employees would be needed with

two years. Revenues for the 11 months ending November 30, 1995, exceed

$7 million. The project cost is $1.51 million to purchase a 27,000-square-fo

building in which to locate this expanding business. The financing will 

$745,000 from a non-guaranteed lender secured by a first trust on the buildin

an SBA-guaranteed debenture of $616,000 secured by a second deed of tru

and a $149,000 injection by the small business. This combination of pub

146 The Annual Report on Small Business and Competition

Fiscal Firms Assisted 

Year 7(a) 504 Total Total (Dolla

1993 1,031 151 1,182 361,687,29

1994 1,374 163 1,537 434,007,37

1995 2,068 187 2,255 431,595,74

1996* 1,383 213 1,596 342,512,60

* First 10 months of the year.

Source: U.S. Small Business Administration, Office of Financial Assistance, 1996. 
gp

A series of nine focus groups sponsored by the SBA’s Office of Advocacy b

tween September 1995 and March 1996 confirmed the existence of a sign

cant gap in equity capital for rapidly growing firms needing betwe

$500,000 and $1.5 million. Entrepreneurs can often raise amounts und

$500,000 from their personal resources (investments, second mortgage

credit cards, families, friends, and colleagues). For amounts up to $1.5 m

lion, however, it is very difficult to raise the third-party patient equity capi

so essential to the success of rapidly growing high technology businesses.

Popular mythology has it that the organized venture capital industry h

sufficient capital to meet the needs of high-potential small businesses, th

the shortage is not of capital but of “good deals.” The myth is both popu

and false: the organized venture capital industry has always been a limit

market. Fewer than 1,000 deals are consummated in a year and fewer th

100 are starting or seed deals. As the amount of funding flowing into the 

dustry has increased, the number of deals has remain essentially static. T

average size of a deal has increased dramatically: organized venture capit

ists rarely fund deals under $3 million.

Many of the NTBFs with promising technologies, products, and marke

need relatively small amounts of patient capital to commercialize and pr

duce their products. These firms have traditionally turned to the informal p

vate equity capital that goes under the name “angel capital.” This market h

been estimated at 30 times the size of the venture capital market.

Because angel capital is both informal and private, knowledge about t

nature and extent of the market is limited. The Office of Advocacy’s ni

focus groups examined the problems associated with angel capital and its p

tential to meet the needs of rapidly growing small businesses. The foc

groups confirmed that despite the essential role angel financing plays, t

market has inefficiencies associated with a lack of organization and hi

transaction costs. 

SBA’s Office of Advocacy, in cooperation with the University of Ne

Hampshire’s Center for Venture Research, recently examined how the proce

could be improved. Clearly, the market would work better if the angel 

vestors had access to more potential deals and the entrepreneurs had exp

sure to more potential investors. The trick was to design a system that wou

provide greater dissemination of information without notably increasing t

potential for fraud and abuse.

The new system, unveiled in October 1996, is ACE-Net, the Ang

Capital Electronic Network. ACE-Net covers eight of the most successful 

gional angel capital networks with a password-controlled, secured Intern

network. The network will serve as a locator for serious investors and ent

preneurs interested in finding each other. A series of carefully crafted secur

mechanisms will help protect the process from fraud and abuse. 

The State of Small Business 1
pgg pp

tential angels and entrepreneurs. As the network begins to operate, it shou

increase the number of angels, the potential amount of angel financing ava

able, and the efficiency of the process.

The Small Business Innovation Research Program

Federal research and development that strengthens the national defense, p

motes health and safety, and improves the nation’s highways and airports, 

vital to the long-term interests of the United States and its citizens. The SB

through the Small Business Innovation Research (SBIR) program and 

smaller companion program, the Small Business Technology Transfer (STT

program, helps ensure that innovative ideas developed by quality small bu

nesses are a part of these efforts. These programs ensure that some $1 billi

in federal R&D projects goes to small businesses each year. SBIR is an integ

component of a national technology strategy and the primary access point 

NTBFs to participate in federal R&D efforts.

In 1982 Congress passed the Small Business Innovation Developme

Act, authorizing the SBIR program. The nation had just undergone a long p

riod of economic stagnation and policymakers were looking for new ec

nomic answers. International competition, particularly in producing and m

keting technology, was growing more intense. The United States had t

largest R&D effort in the world—a scale of scientific enterprise unequaled 

history—and America’s international competitors were becoming more su

cessful at producing and marketing innovations derived from that research.

The SBIR program was designed to address these perceived problems 

several ways. It increased the competition for federal R&D work by opening 

to small businesses. The scope and funding of each project was designed 

attract talented entrepreneurs. Projects were chosen to fulfill each governme

agency’s requirements for innovative solutions to their technology-orient

problems. To improve the nation’s economic competitiveness, the progra

was designed to encourage entrepreneurs to bring innovations derived fro

federal R&D into the marketplace.

Today’s SBIR program is a competitive procurement activity designed 

meet the R&D needs of the federal government. Each federal agency with 

extramural R&D budget in excess of $100 million must designate a certa

percentage of this budget for small business. The percentage increased fro

2.0 percent to 2.5 percent in October 1996.

Ten federal agencies participate in the program currently: t

Departments of Defense, Agriculture, Commerce, Education, Health a

Human Services, Transportation, and Energy, the Environmental Protecti

148 The Annual Report on Small Business and Competition
pp p

private sector for funding. Successful bidders can be awarded up to $100,0

to perform a feasibility study as phase I. If the small firm and the agency th

agree, the firm can be awarded a phase II contract or grant for actual R&D 

sulting in a model or prototype. In the third phase—commercialization—t

small firm is encouraged to bring the innovation to market. 

At the completion of the second phase the government has the rights 

the innovation for its own use only; that is, the government will never pay t

firm a royalty. But the small firm keeps all other rights to the innovation and 

encouraged to patent, copyright, or take other measures to protect its po

tion. The firm can then bring the innovation to the marketplace, produci

the product or service directly or working out co-venturing or licensi

arrangements. 

By some measures the SBIR program has been highly successful. Sin

its inception in FY 1983, small high technology firms have submitted mo

than 220,000 proposals resulting in more than 33,000 awards. Although t

program’s primary purpose is to meet the government’s R&D requiremen

the side benefit is substantial: more than 25 percent of SBIR projects have b

come products or services sold in the marketplace. The public reaps the be

efits of the government research and the business participants improve th

competitive positions and profitability.

The SBIR program is meeting not only the research goals of the fundi

agencies, but also a special need for high-risk seed and start-up capital. T

current level of almost $1 billion in SBIR funding each year is more than 

times the funding provided by the institutional venture capital organizatio

to these small technology firms (Chart 5.2).10 

SBIR at the Department of Defense

The Defense Department’s (DOD) SBIR program funds early-stage R&D pr

jects that serve a DOD need and also have the potential for commercializ

tion in military and/or private sector markets. Three military services and fo

defense agencies participate in the DOD SBIR program: the Departments 

the Army, Navy and Air Force, the Defense Advanced Research Projec

Agency, the Ballistic Missile Defense Organization, the Defense Spec

Weapons Agency, and the U.S. Special Operations Command. The magnitu

of the DOD SBIR program has grown from $240 million in FY 1992 to $4

million in FY 1995 (Chart 5.3). 

The State of Small Business 1

10 Josh Lerner, “The Government as Venture Capitalist: The Long-Run Impact of the SB

Program,” working paper 96-038 (Boston, Mass.: Harvard Business School, 1996). For an alter

tive view, see Scott Wallsten, “The Small Business Innovation Research Program: Encourag

Innovation in Small Firms?” Stanford University unpublished paper, August 1995. 
150 The Annual Report on Small Business and Competition

Source: U.S. Small Business Administration, Office of Innovation.

Dollars in Millions

Year

0

200

400

600

800

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

45

108

199

297

350

389

431 460 483 508

698 717

933

Chart 5.3 Department of Defense Small Business Innovation Research, 

Fiscal Years 1983–1995.

Source: U.S. Department of Defense.

Dollars in Millions

Year

0

100

200

300

400

500

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995

17

43

79

153

202

222 234 239 231 242

385

336

445
sional recommendations in the 1992 Small Business Innovation Developme

Act. In particular, Congress expressed concerns about reducing unnecessa

delays in the SBIR contracting and payment process, and about increasing t

focus of the SBIR program on commercialization of the research in milita

and private sector markets. Among the steps taken were the following:

• Establishment of the SBIR Fast Track. Under the Fast Track policy, DO

gives its highest priority for phase II awards, and for continuous fundi

between phases I and II, to those SBIR projects that attract matchi

cash from an independent third-party investor in phase II. That an ind

pendent third party is willing to make such a cash investment is 

strong indication that: (1) there is a significant market (military and/

private sector) for the technology, and (2) the small company has n

only the technical expertise, but also the business and marketing expe

tise, to bring the technology to market. 

• Reduction of delays in the SBIR process. The DOD has set a goal of 

ducing the time between proposal receipt and award to four months 

phase I and six months in phase II. In previous years, delays have ave

aged 6.5 months in phase I and 12 months between the end of phas

and the beginning of phase II. Such delays tend to bias the progra

against successful commercialization by making it difficult for start-

companies to keep their research teams intact and by lengthening t

time to market.

• Enabling NTBFs to talk by telephone with the authors of SBIR solici

tion topics. In both FY 1996 solicitations, DOD implemented a ne

“pre-release” policy enabling companies, before submitting a propos

to talk by telephone with the author of the SBIR solicitation topic. T

small business community greatly appreciates the new policy, becau

it enables companies to gain a greater understanding of DOD nee

before they submit a proposal. DOD topic authors also support th

policy: they anticipate that it will result in higher-quality SBIR proposa

and fewer misguided proposals.

• Systematic measurement of the SBIR program’s effectiveness in stim

lating the development of successful new products. Starting in Octob

1996, all companies submitting phase I proposals are asked to co

plete an appendix showing, for each previous phase II award that t

company has won: (a) the amount of non-SBIR funding received f

commercialization of the research in military and/or private sect

markets, and (b) the revenue from sales of new products resulting fro

the previous research. All companies winning phase II awards in fisc

year FY 1997 and thereafter will be asked to provide a brief annual 

port that also shows non-SBIR funding and sales revenues from ne

products. 

The State of Small Business 1
of funded to unfunded phase I SBIR proposals at DOD has remained relative

steady at roughly 12 percent since FY 1992 and, indeed, since the incepti

of the program. The increase in program expenditures has been offset by a s

nificant rise in the number of SBIR proposals and an increase in the dol

value of the average SBIR award. This suggests that the SBIR proposal sele

tion process at DOD remains highly competitive and that DOD has a lar

pool of proposals from which to select those with the highest technical a

commercial merit.

DOD continues to have a large reserve of projects deemed worthy 

funding by evaluation panels but receiving no award because of funding co

straints. DOD scientists and engineers report that the overall quality of t

SBIR research they monitor equals, and in some cases exceeds, the quality 

the other agency research they monitor and that SBIR projects are substa

tially more likely than non-SBIR projects to lead to inventing and commerci

izing new products, processes, or services. 

SBIR technology has made a major contribution to U.S. military and ec

nomic capabilities. While research quality is an important measure of succe

of the SBIR program, the ultimate measure is whether the program stimula

the development of new products that make a significant contribution to t

mission of the funding agencies. A 1992 GAO study of commercialization 

SBIR research found that DOD SBIR projects resulted in a number of affo

able, high-performance new products of significant benefit to both DOD a

the private sector (with commercial sales and additional funding of $410 m

lion as of July 1991).11 

DOD has several examples of SBIR-developed technologies that have 

sulted in significant improvements in U.S. military capabilities and major sa

ings to the taxpayer. One example is the development of the “SaviTag.”12

Savi Technology, Inc., Mountain View, California

Savi Technology recently developed the industry’s first radio computer ta

the “SaviTag,” using a combination of Navy SBIR funding and private ve

ture capital. The SaviTag can be attached to military cargo containers or a

other crate or container used for transport and will automatically track t

container’s location and contents. The SaviTag was developed with just $2

million in SBIR funding (three awards). It is a central element in DOD’s To

152 The Annual Report on Small Business and Competition

11 U.S. General Accounting Office, Small Business Innovation Research Shows Success 

Can Be Strengthened, RCEB-92-37 (Washington, D.C.: U.S. General Accounting Office, Ma

1992).12 Another example is the “multipurpose processor” by Digital Systems Resources, Inc

number of other examples are available at the DoD SBIR and STTR programs home page 

http://www.acq.osd.mil/sadbu/sbir/.
g gggp

including almost all shipments into Bosnia.

During Operation Desert Storm in 1991, more than one-half of t

40,000 cargo containers shipped to the desert, including $2.7 billion wo

of spare parts, went unused, according to a GAO report. The Army has es

mated that if an effective way of tracking the location and content of t

cargo containers, such as the SaviTag, had existed at that time, DOD wou

have saved roughly $2 billion. That is an enormous savings—far more th

the entire annual SBIR budget. The SaviTag has already resulted in major ef

ciencies in U.S. logistical operations in Bosnia, although a precise estimate 

the savings has not yet been made. 

The SaviTag also has major applications in the private sector, particula

in the commercial trucking, rail, and shipping industries. Savi’s sales to t

private sector are projected to be between $5 million and $6 million in 

1996, and they are increasing rapidly.

The National Science Foundation’s SBIR Program 

The National Science Foundation’s (NSF) SBIR program offers opportun

and incentive for small and creative engineering, science, education, a

technology-related firms to conduct innovative, high-risk research on impo

tant scientific and technical problems—work that could have significant pu

lic benefit if the research is successful. The NSF’s SBIR program has received 

good return on its investment in the small business community. 

For both start-up and existing firms the receipt of an SBIR award was 

lated to the firm’s success in terms of sales, investment, employment, a

patents. For example, a sample of 25 companies that received NSF SB

awards after their founding had total employment of 490 at the time of t

first award (Table 5.3). By 1995 total employment had increased to 7,9

jobs. More than 500 patents had been issued and 579 research collaboratio

related to SBIR had taken place. The following are examples of NSF’s succe

ful SBIR companies.

Relational Technology, Inc., Alameda, California

Relational Technology had a goal of providing distributed database techno

ogy for local area networks. The company (which later became Ingr

Corporation) received a phase I award in 1981 and a phase II award in 198

The NSF’s SBIR support contributed to a major technology breakthrou

and commercial success. The research supported was the first distributed re

tional database software. The SBIR phase I results led to $1 million in ventu

capital in 1982, another $2.5 million in 1984, and $8 million in 1986 af

Ingres proved a success in the marketplace; the company’s success led to 

$30 million initial public offering (IPO).

The State of Small Business 1
154 The Annual Report on Small Business and Competition

Company State Founded Award Field Start-up Factor Direct Indirect 

1 Relational Technology\Ingres CA 1980 1981 Software X 500 2065 

2 Symantec Corporation CA 1982 1979 Software X X 50 1950 

3 Flow Research Quest

Integrated WA 1979 1981 Machinery X X 250 

4 RF Monolithics, Inc. TX 1979 1981 Electronics X X 127 

5 Aquatic Systems, Inc./Kent 

SeaFarms, Inc. CA 1972 1982 Aquaculture X 33 

6 Collaborative Res., Inc./Gerome X 50 60 

Therapeutics MA 1961 1977 Genetics

7 Advanced Technology Materials CT 1986 1988 Materials X 10 40 

8 Aurora Flight Sciences VA 1989 1989 Unmanned Aircraft X X 10 

9 Browning Engineering Co. NH 1979 1980 Materials Coatings X 50 

10 Nova Automation Corp./DTM TX 1987 1988 Rapid/Prototyping X X 40 

11 Spire Corp. MA 1969 1979 Artificial Joints X 32 10 

12 Scientific Measurements Tomographic

Systems, Inc. TX 1979 1981 Measurement X X 18 

13 IDM Corp TX 1988 19812 Tomographic Measurement X 16 

14 Bend Research, Inc. OR 1975 1977 Membrane Chemistry X 23 

15 Integrated Systems, Inc. CA 1980 1981 Embedded Software X X 250 

16 Lakeshore Cryotronics, Inc. OH 1967 1981 Cryogenic Instruments 20 10 

17 BioMetric Systems, Inc./BSI MN 1979 1979 Bio Materials X X 1 200 

18 Decision Science Corporation VA 1978 1983 Decision Management X 20 10 

19 Charles Evans & Associates CA 1980 1981 Instrumentation X 45 

20 Pritsher & Associates, Inc. IN 1973 1981 Software X 25 45 

21 Helisys, Inc. CA 1988 1989 Rapid Prototyping X X 33 

22 Scientific Computing Associates CT 1980 1985 Software X 21 

23 EPITAXX, Inc. NJ 1984 1986 Optoelectronics X 19 19 

24 Crystal Systems, Inc. MA 1971 1979 Crystals X 5 100 

25 Weidlinger Associates CA 1949 1980 Mathematical Modeling X 5 1 

Total 9 24 1653 4510 

1 The National Science Foundation had a pilot SBIR program prior to passage of the Small Business Innovation Development Act 

2 Spinoff of Scientific Measurements Systems from same NSF Project.

Source: U.S. National Science Foundation.
Export Direct Indirect Total Award Now License Jobs U.S. Foreign Total Industrial Univ. National Lab Oth

50 42 30 72 6 2000 525 2519 2 1 7 

10 14 164 178 6 2000 1994 1

27

20 27 27 50 96 792 838 3 3 9 18 5 3 

50 26 26 5 470 465 28 50 78 1 3 1 

5 9 9 7 70 63 6 6 2 5 

10 36 36 33 100 160 227 10 25 35 18 2 1 

1 46 47 22 170 146 12 12 24 50 100 

3 3 3 94 91 1 6 6 

30 8 1 7 10 24 34 2 1 

40 43 43 4 100 96 26 1 27 1 1 1 

5 90 150 60 7 7 30 30 25 24 

20 8 8 13 18 5 4 1 5 4 2 4 1 

4 4 28 28 6 72 78 1 1 

10 2 2 10 70 160 220 55 62 117 4 7 1 

33 13 13 18 450 439 4 4 8 2 3 1 

45 45 110 65 3 3 2 6 2 1 

20 6 7 13 3 70 67 10 49 59 40 28 2 

8 35 27 6 8 

50 5 5 10 130 120 4 4 8 2 3 1 

30 1 1 33 50 17 2 3 

45 7 7 1 102 101 2 3 5 2 

15 1 1 8 15 7 9 8 3 

60 13 13 5 182 177 1 1 2 3 

10 4 4 12 25 13 2 8 10 12 12 6 

15 90 200 110 10 6 2 

27 265 247 512 490 6736 1637 7904 187 316 503 210 256 77 36 

The State of Small Business 1
gp

100 Fortune 500 firms, such as Boeing, General Motors, British Airwa

NASA, DOD, and all the national laboratories. Ingres also played a major ro

in the success of Boeing’s AWACS aircraft and its considerable contribution 

airborne surveillance during the Gulf War.

Cumulative sales directly and indirectly attributable to the SBIR progra

total $1.8 billion, and employment has grown from six to 1,440 employe

The company, which was acquired in 1990 by ASK Computer Systems, c

laborated in its research with the University of California at Berkeley.

Flow Technology, Inc., Kent, Washington 

Flow Technology, Inc., which became Quest Integrated, Inc., sought to crea

an abrasive-waterjet cutting system. The company received 1981 phase I a

1982 phase II SBIR awards. 

Quest Integrated, Inc. is now the world leader in high-pressure water

cutting tools and it attributes this leadership to NSF and other agency-fund

SBIR research. NSF’s Research Applied to National Needs (RANN) progra

funded the company’s early research on ultra high-pressure waterjet cutti

tools prior to the SBIR program.

In 1981, NSF SBIR funding resulted in Flow Research’s major improv

ment in waterjet cutting tools with the addition of carbide bits and other ab

sives to the waterjet cutting stream, which allowed the cutting of steel, cera

ics, and glass. The firm quickly became market leaders in the high-pressu

waterjet cutting-tool field with about 70 percent of the market. Sales from t

new technology, mostly from precision, metal and composite-cutting machi

tools, total $250 million; exports represent 20 percent.

Major clients include GE, Corning, Kodak, Lockheed, Rockwell, a

Allied Signal. Quest attracted $35 million in private capital, and 838 new jo

have been created directly from the new technology the SBIR program su

ported. The firm has research collaborations with 18 universities, four nation

laboratories, and four major U.S. industrial companies.

Intellitools, Inc., Novato, California 

Intellitools applied for SBIR funding to adapt software and curricula for s

dents with disabilities. The company received a 1992 phase I SBIR award a

a 1994 phase II award.

The NSF’s SBIR award has resulted in the creation of several products th

meet the needs of students with disabilities in improving their science a

math skills. As a result of the SBIR support, a commercial product h

emerged. “Click-It” allows users to point and click on the computer scre

without having to manipulate a mouse. More than 250 of the product we

sold in the first month after its introduction. 

156 The Annual Report on Small Business and Competition
py

The Small Business Technology Transfer Program

The Small Business Technology Transfer Program (STTR) is a three-year pi

program, funded in 1994 through a small allocation from five federal age

cies’ extramural R&D budgets. 

The purpose of STTR is to tap research institutions for the enormo

reservoir of ideas that have not yet been deployed effectively for the natio

economic benefit. These research institutions employ one in four R&D scie

tists and engineers in the United States and perform more than $40 billion 

R&D each year. They have helped position the United States as undisput

world leader in basic research and many areas of applied research. 

The one-quarter million scientists and engineers in these institutio

often recognize that their research has important commercial application

but few have efficient mechanisms to pursue these applications. 

STTR is an important step toward harnessing this research for Americ

economic advancement. By merging the innovative ideas of the researcher 

the research institution with the entrepreneurial skills of a small technolo

company, STTR creates an efficient vehicle for moving the ideas to mark

University collaboration with new technology-based firms has the potential 

stimulate innovation more than R&D performed solely in a company lab

Route 128 in Massachusetts and Silicon Valley in California are centers 

high-tech economic development precisely because of university interacti

with small, innovative companies.14

Both STTR and SBIR programs serve the purpose of transforming innov

tive research into commercial reality. STTR uses the approach established 

the SBIR program, which has proven remarkably efficient in stimulating tec

nological innovation. But whereas SBIR funds R&D projects at small firm

and limits the participation of research institutions to a subcontracting or co

sulting role, STTR funds cooperative R&D projects between an NTBF and 

research institution. STTR enables a researcher at a university to spin off 

commercially promising idea by joining forces with a small technology co

pany. Thus, STTR is a mechanism for small businesses to tap into the va

reservoir of ideas in the nation’s research institutions.

The State of Small Business 1

13 Paul Almeida and Bruce Kogut, “The Exploration of Technological Diversity a

Geographical Localization in Innovation: Start-up Firms in the Semiconductor Industry,” Sm

Business Economics, Special Issue on Small and Medium-Sized Enterprises in the Glo

Economy, edited by L. Preston and C. Heller, vol. 9(1), 1997. 14 Luc Anselin, Attila Varga, Zoltan Acs, “Local Geographic Spillovers between Univers

Research and High Technology Innovations,” Journal of Urban Economics, forthcoming.
Department of Commerce’s National Institute of Standards and Technolo

(NIST). Of the 280 awards made by the ATP from 1990 to 1996, nearly h

went to individual NTBFs or to joint ventures led by a small business. T

awards are valued at $970 million in ATP funds and more than $1 billion 

industry cost-share. Many more NTBFs are participating in or benefiting fro

the program as members of ATP-funded joint ventures, and as subcontracto

suppliers, and customers of ATP awardees. 

And small means small in the ATP. Many of the awardees have be

start-ups or still in the early development stages. More than half of the 1

small, single-company awardees had fewer than 25 employees and mo

than 85 had fewer than 100 employees at the time they received the A

award (Chart 5.4). 

In partnership with the ATP, these NTBFs are developing high-risk, e

abling technologies that they can translate into new business opportuniti

new industrial processes to improve their productivity and the productivity 

other U.S. producers, and new products and services for the world’s marke

Some of these technologies are pathbreaking in that they will revolution

existing ways of doing things or create whole new industry sectors. Som

provide the technical infrastructure critical to productivity advances with

an industry sector. And some have many different uses across a variety of 

dustry sectors.

Aastrom Biosciences, Inc., Ann Arbor, Michigan 

Aastrom Biosciences has developed new pathbreaking technology that m

provide dramatically improved therapies for patients with cancer, AIDS, a

genetic blood diseases. The company has completed a two-year ATP co

shared project to develop a bioreactor that grows human bone marrow tra

plantable into human beings and is currently in clinical trials with t

process. 

When the company received its ATP award in 1992, it had about 15 e

ployees and a laboratory process developed at the University of Michigan 

growing human stem cells outside the body. Today, Aastrom Biosciences h

60 employees with another 30 on contract services, a clinical system that w

allow hospitals to produce therapeutic bone marrow, blood, and immune s

tem cells sufficient for patient treatment, and more than $36 million in ad

tional investment capital raised from private investors to develop the biorea

tor system into a commercial product.

Moreover, Aastrom Biosciences recently signed a $25 million allian

with a larger global pharmaceutical company to use the bioreactor system 

produce human T-cells for treatment of cancer and infectious diseases. T

firm has received patents for its bioreactor system, the first for replicati

stem cells.

158 The Annual Report on Small Business and Competition
Diamond Semiconductor Group, Gloucester, Massachusetts

Diamond Semiconductor Group (DSG) was a two-partner start-up in a co

verted barn when it applied for an ATP grant in 1992. The company has d

veloped new process technology for the semiconductor industry that offe

increased productivity and reduced cost as the industry advances to larg

wafer sizes to accommodate increasingly complex integrated circuits. W

the ATP award in hand, the tiny company attracted the attention of Vari

Associates, one of the world’s largest suppliers of ion-implantation equ

ment. 

With ATP funding, DSG was able to demonstrate technical feasibility 

its approach to ion implantation. With Varian Associates’ subsequent fun

ing for product development, DSG built a prototype ion-implant machin

As a result, DSG and Varian Associates announced, early in 1996, an “

dustry first”—successful ion implantation of a 300-millimeter wafer that o

fers two and one-half times the yield of the current industry standard 20

millimeter substrate, using DSG’s new serial-process, high-current i

implanter technology. 

The State of Small Business 1

Note: Chart refers to a total of 100 small single-applicant companies funded by t

Advanced Technology Program from 1990 to 1996.

Source: U.S. Department of Commerce, National Institute of Standards and Technology

Number of Companies

0

10

20

30

40

50

60

1–24 25–49 50–99 100–199 200–299 300–399 400–499

Firm Employment Size
multiwavelength multiplexing system that would increase the capacity of 

single optical fiber many times over current practice. The company succe

fully completed its ATP research project and has developed early spinoff pro

ucts for sale to major telecommunications companies while it continues 

develop the switching system based on the core results of the ATP project. T

market for multiwavelength multiplexing was valued at $50 million in 19

and is expected to grow to $2 billion by 2000. 

These are just a few of the many examples of how small company recipie

of ATP awards are developing the enabling technologies of the future, impro

ing the productivity and competitiveness of U.S. industry, contributing to t

quality of life, and creating many new, exciting business opportunities—n

just for themselves, but for others as well. 

Based on the evidence to date, without ATP funding, the companies 

ther would not have developed the new technology at all or would have d

veloped it at a substantially slower pace.15 A recent survey of 125 compan

that participated in ATP projects during the first three years of the progra

found that 64 percent of the small companies said chances were slim to no

existent that they would have pursued the technology development at 

without the ATP. Of the 36 percent of small companies that said they wou

have gone ahead anyway, 90 percent said their progress would have been s

nificantly slower and 95 percent said their goals and level of effort wou

have been scaled back significantly without the ATP award (Chart 5.5).16 

Acceleration of technology development by NTBFs is an important effe

of the ATP. According to the survey, 94 percent of small-company award 

cipients believe they are further along as a result of their award. Seventy p

cent of these estimated that their work had been accelerated by at least tw

years.17 Bringing the new technologies to fruition faster can be important 

capturing world markets and realizing the benefits. 

Many of the smallest companies are unknown at the time they receive 

ATP award. Winning an award in ATP’s stiff competition involving rigoro

160 The Annual Report on Small Business and Competition

15 Silber & Associates, Survey of Advanced Technology Program 1990-92 Awardees: Co

pany Opinion about the ATP and its Early Effects, January 30, 1996; U.S. General Account

Office, Report to the Ranking Minority Member, Committee on Science, House 

Representatives, Measuring Performance, The Advanced Technology Program and Private-Sec

Funding, GAO/RCED-96-47, (Washington, D.C.: General Accounting Office, January 1996); a

Solomon Associates, The Advanced Technology Program; An Assessment of Short-Term Impac

First Competition Participants. 16 Silber & Associates, memo report to the ATP showing a breakout of percentages for sm

business based on the survey data reported in Survey of Advanced Technology Program 1990

Awardees: Company Opinion about the ATP and its Early Effects, January 30, 1996. 17 Silber & Associates, acceleration reported by small businesses in the original survey a

broken out in a memo to the ATP, August 14, 1996.
scientific and business review serves to validate the potential worth of t

technologies. Ninety-one percent of small companies in the recent survey b

lieved that they had benefited to a “great” or “moderate” extent from e

hanced credibility as a result of their ATP award. Most often they cited gai

in credibility within their industry and business community, among their cu

tomers, investors, and scientific peers.18

Small-company recipients of ATP awards have also reported significa

benefits from engaging in new collaborative relationships fostered by parti

pation in ATP projects. These benefits extend not just to those companies e

gaged in formal joint research ventures, but also to the many single-compa

awardees that collaborate through subcontractor arrangements and inform

alliances. Ninety-six percent of all those reporting collaborations rated the

as being of “great” or “moderate” benefit. Some of the alliances were w

other small companies, some were with universities, and some were w

The State of Small Business 1

Source: U.S. Department of Commerce, National Institute of Standards and Technology

0

10

20

30

40

50

60

70

80

Very/Fairly Likely Not Very/Not Likely At All

36% 64%

18 Silber & Associates, credibility gains reported by small businesses in the original surv

and broken out in a memo to the ATP, August 14, 1996.
the participants, including the small companies, have begun to report prom

ing results. The ATP awards are enabling these companies to pursue challen

ing research projects that otherwise would have been delayed, scaled dow

or not done at all. As a result, many of the companies now have importa

new technical capabilities that enable them to attract other sources of capi

and pursue new commercial opportunities. Some are growing rapidly. Ne

and improved processes, products, and services are emerging that benefit n

just the award-recipient companies but also other researchers, produce

consumers, and, ultimately, the nation.

The Manufacturing Extension Partnership

The Manufacturing Extension Partnership (MEP) is a growing nationwide s

tem that gives smaller manufacturers unprecedented access to new techno

gies, resources, and expertise. At the heart of the system is a network of aff

ated, locally based manufacturing extension centers. Each center is 

partnership, typically involving federal, state, and local governments; ind

try; educational institutions; and other sources of expertise, information, a

funding support.

Centers are private, nonprofit organizations rather than offices of the fe

eral government. The program began with three extension centers in 198

Today, nearly all states and Puerto Rico have or are planning centers affiliat

with MEP, linking firms with engineers and other specialists with manufact

ing or business experience to address specific needs (Table 5.4). Through t

network, MEP is putting hard-to-find technical assistance and the newest bu

ness practices within the reach of the nation’s 381,000 small and mediu

sized manufacturing establishments.

What Does NIST/MEP Do?

In 1988, Congress directed the National Institute of Standards and Technolo

(NIST) to begin helping the nation’s smaller manufacturers adopt and app

performance-improving technologies as needed to meet intensifying domes

and global competition in manufacturing. An agency of the U.S. Departme

of Commerce Technology Administration, NIST was selected for this role b

cause of its expertise in manufacturing engineering and its longstanding tra

tion of productive partnerships forged with public and private organizations 

the national, state, and local levels.

162 The Annual Report on Small Business and Competition

19 Silber & Associates, Survey of Advanced Technology Program 1990-92 Awardees, 26.
To carry out this role, NIST/MEP conducts a variety of regional, nation

and program development activities. Regionally, MEP works with the states 

local organizations to establish manufacturing extension centers or expand e

isting services that assist smaller manufacturers. Many centers were cultivat

through MEP’s State Technology Extension Program (STEP). Beginning in 199

STEP supported 32 states in building manufacturing extension programs.

MEP’s activities also include helping foster a more unified network 

working with centers to identify and coordinate the services, technology, a

information needed at a national scale. MEP is developing a uniform syste

to help centers evaluate and continuously improve the success of servic

they deliver. To increase the breadth and depth of capabilities at each cen

and of the entire network—always with the goal of improving access f

smaller manufacturers to public and private-sector resources—MEP and t

individual centers have developed relationships with nearly 700 organiz

tions. Among these partners are nonprofit technology or business assistan

centers, nontechnical schools, private consultants, universities and four-ye

colleges, and federal agencies. To date, about half of the centers have ties 

industry associations.

Developing working linkages with other organizations in support of t

entire extension network also is a high MEP priority. For example, with t

U.S. Environmental Protection Agency, MEP recently launched a progra

aimed at helping smaller manufacturers solve environmental concerns in t

most cost-effective manner before they become problems requiring regu

tory or compliance action. Other strategic partners include the Nation

The State of Small Business 1

State planning grants to date More than 40

Extension service partnerships 78 cooperative agreements

Geographical accessibility 100 percent of small

manufacturers

State penetration 50 states and Puerto Rico

Average annual market penetration 7 to 10 percent

Total clients served since 1989 44,762

Median firm size 48 employees

Source: Silber and Associates, 1996.
yjpy g

tension center coverage and the effectiveness of services delivered to comp

nies as they upgrade their equipment, processes, and practices to improve c

pabilities, performance, and prospects for growth.

This effort will require enhancing and augmenting network and cen

core competencies in service categories responsive to the most pressing ch

lenges confronting significant numbers of smaller manufacturers. For exa

ple, MEP is strengthening ties with the NIST Baldrige National Qual

Program and state-based quality outreach efforts to foster continual produ

and process improvement through the adoption of quality management co

cepts by smaller firms.

Extending the network’s reach is also critical. Currently, established ce

ters and field offices provide assistance to between 7 and 10 percent of pote

tial manufacturing customers in their service areas. The program’s five-ye

goal is to reach 15 percent, so that each year more than 55,000 smaller U

manufacturers are capitalizing on the resources and capabilities of MEP.

In consultation with manufacturers and center managers, MEP has iden

fied three major programmatic priorities requiring sustained, concerted eff

throughout the network—areas that will determine whether smaller manufa

turers will be able to perform up to the standards of 21st century competitio

The three themes—information technology, supply-chain optimization, a

infusion of advanced technology—are integrally related. Increasing the inf

mation technology acumen of smaller manufacturers, for example, is essent

if these companies are to be full participants in the dynamically integrate

yet reconfigurable, networks of suppliers, factories, distributors, and retail

that will characterize manufacturing enterprises of the future. Whether in t

form of intelligent controllers, real-time sensors, or process-planning softwa

information technology also will be a fundamental ingredient of the sho

floor equipment that smaller manufacturers will be investing in to enhan

their manufacturing and business performance.

What Services Do MEP Centers Provide? 

MEP extension centers are designed to help link sources of improved man

facturing technology with the small and mid-sized companies that need the

Center staff work with individual companies or with groups of companies 

ganized around common needs, industries, or technologies.

While each center tailors its services to meet the needs dictated by its 

cation and manufacturing client base, most extension centers offer some co

mon services. These include helping manufacturers to assess their curre

technology and business needs, define avenues for change, and impleme

improvements. Working with other federal, state, or local organizations, ma

164 The Annual Report on Small Business and Competition
pgp

working just to solve an immediate problem. All centers rely on experienc

field agents and private consultants who provide the companies with on-s

advice and practical assistance. Since 1989, MEP centers have provided se

vices to more than 44,762 companies. Most of the MEP clientele are sm

companies with fewer than 100 employees (Table 5.5) 

MEP Success Stories

MEP’s locally managed centers have worked with thousands of smaller man

facturers, providing the technical and business assistance the compan

needed to turn their businesses around. The following examples show ho

companies have benefited by working with a MEP center.

TECSTAR, Inc., City of Industry, California

A producer of space solar arrays and power subassemblies used in satellite

TECSTAR, Inc., wanted to cut down on solar cell breakage and reduce co

while increasing production and yields to keep up with increased sales. TE

STAR requested the assistance of the California Manufacturing Technolo

Center (CMTC) to improve its process. With CMTC’s help, TECSTAR was ab

to save $3 million annually, increase staffing by 56 employees, reduce react

downtime by 15 percent, and improve cycle time by 10 percent. “CMTC

recommendations to reduce solar cell mechanical breakage cycle time ma

us realize where the major dollar losses were occurring within our produ

tion processes,” said Mark Shumaker, director of quality and production su

port. The $3 million savings equals the amount the CMTC received in 

1995 from NIST.

Chicago Metal Rolled Products, Chicago, Illinois

Chicago Metal Rolled Products (CMRP) bends, rolls, and coils metal, produ

ing structural elements for such major projects as the International Terminal 

O’Hare Airport, the McCormick Place expansion, and the Navy Pier renov

tion. The Chicago Manufacturing Center (CMC) helped Chicago Me

President George Wendt institute a company-wide learning program invo

ing basic reading, language and math skills, and job training. Wendt believ

his investment in work force development is key to the company’s grow

Over the past two years, CMRP has seen a 30 percent increase in sales a

20 percent growth in employment.

Technology Policy and the Information Revolution 

One area having as much impact on NTBFs as the new global marketplace 

technology and how it is thoroughly changing the way small firms do bu

The State of Small Business 1
ness. The small business community has been in the forefront of innovati

and has created a new generation of high-skill, high-wage jobs.

The 1995 White House Conference on Small Business attendees reco

mended that development of the National Information Infrastructure (NII) 

accelerated, that intellectual property rights be protected, and that technolo

commercialization investment for NTBFs be expanded.

To further these goals, the Clinton Administration has proposed a numb

of initiatives. For example, the National Institute of Standards and Technolo

and the Environmental Protection Agency have developed and funded p

grams to encourage private sector technology education and training. A

there have been other administration and congressional initiatives:

SBIR Program Expansion

The Small Business Innovation Research (SBIR) program has nearly doubl

its awards to NTBFs under the Clinton Administration, up from $508 milli

in 1992 to more than $900 million in 1995. By law, the percentage of fede

research and development contracts going to small firms increased from 2

percent to 2.5 percent in 1996.

Intellectual Property and U.S. Trading Partners

The administration has taken aggressive action in international trade negot

tions by the U.S. Trade Representative and by the Department of Commerce 

ensure that the intellectual property rights of U.S. companies are adequate

protected by America’s foreign trading partners.

SBIR Proprietary Information

The SBA’s Office of Technology is developing procedures in conjunction w

the Small Business Innovation Research funding agencies to provide unifo

protection of proprietary information provided under the SBIR program.

166 The Annual Report on Small Business and Competition

1 to 20 32

21 to 50 22

51 to 100 18

101 to 200 14

> 200 14

Based on 26 centers reporting in semi-annual report activity data logs, July–Decemb

1995.

Source: Silber and Associates, 1996.
able commercialization evaluation criteria. The office is also working to d

velop consistent standards of indirect rate applications and to ensure that a

equate administrative resources are provided for the SBIR program.

Manufacturing Extension Partnership

The Clinton Administration has expanded the Manufacturing Extensi

Partnerships (MEP) at the National Institute of Standards and Technology fro

seven to coverage in all 50 states in the last three years. The MEP progra

was included in the budget authorized by Congress for fiscal year 1996.

National Angel Capital Network

The SBA’s Office of Advocacy has led an effort to develop an angel capi

network. For more detail, see the section on SBA programs.

Conclusion

America’s future economic growth is expected to be closely tied to t

growth of new technology-based firms. Since 1980, the federal governme

has instituted a number of policies in support of these NTBFs, including t

Small Business Innovation Research, Small Business Technology Transfer, a

Advanced Technology programs, the Manufacturing Extension Partnersh

and several U.S. Small Business Administration financing programs for hi

technology companies.

While these programs represent only a small fraction of America’s to

investment in research and development, they have a significant impact. Th

represent a national commitment to encourage small technology-based bu

nesses to address federal research needs and to create and commerciali

new products and processes.

The State of Small Business 1

p. 168 Blank—p. 169 Fols.
Supplementary Tables

Table A.1 Sources of GDP Growth, 1994 and 1995 1

Table A.2 Business Income Tax Returns by Receipt Size of 

Business, 1985–1993 1

Table A.3 Enterprises, Establishments, Employment, Annual 

Payroll, and Receipts by Major Industrial Sector 

and Firm Size, 1993 1

Table A.4 Enterprises, Employment, and Annual Payroll by 

Firm Size, SBA Region, and State, 1993 1

Table A.5 Various Statistics by Industry (Two-Digit SIC Code) 

and Firm Size, 1993 1

Table A.6 Employment Share by Firm Size, SBA Region, and 

State, 1988–1993 2

Table A.7 Enterprises by Firm Size and Major Industrial Sector,

1988–1993 2

Table A.8 New Firms by SBA Region and State, 1994 and 1995 2

Table A.9 New Business Incorporations by SBA Region and 

State, 1994 and 1995 2

Table A.10 Self-Employment by SBA Region and State, 

1994 and 1995 2

Table A.11 Business Bankruptcies by SBA Region and State, 

1994 and 1995 2

Table A.12 Business Failures by SBA Region and State, 

1994 and 1995 2

Table A.13 Business Terminations by SBA Region and State, 

1994 and 1995 2

Table A.14 Business Dissolution Rates by Firm Size and 

Number of Jobs Created 2

Table A.15 Employment in Selected Small-Business-Dominated 

Industries, December 1994 and December 1995 2

page 169 = no fol
Table A.17 Employment in Selected Indeterminate Industries, 

December 1994 and December 1995 2

Table A.18 Change in Employment in Small-Business-Dominated,

Large-Business-Dominated, and Indeterminate 

Industries, 1982–1995 2

Table A.19 Wage-and-Salary and Nonfarm Proprietors’ Income 

by SBA Region and State, 1994 and 1995 2

Table A.20 Nonfarm Personal Income by SBA Region and State,

1994 and 1995 2

Table A.21 Nonfarm Sole Proprietorships by Gender of 

Ownership and SBA Region, 1980 and 1993 2

Table A.22 Receipts of Nonfarm Sole Proprietorships by Gender 

of Ownership and SBA Region, 1980 and 1993 2

Table A.23 Nonfarm Sole Proprietorships by Gender of 

Ownership and Industry Group, 1980 and 1993 2

Table A.24 Receipts of Nonfarm Sole Proprietorships by Gender 

of Ownership and Industry Group, 1980 and 1993 2

Table A.25 Women-Owned Businesses by SBA Region and 

State, 1987 and 1992 2

Table A.26 African-American-Owned Businesses by SBA 

Region and State, 1987 and 1992 2

Table A.27 Hispanic-Owned Businesses by SBA Region and 

State, 1987 and 1992 2

Table A.28 Exports by SBA Region and State, 1994 and 1995 2

Table A.29 Twenty Small-Business-Dominated Industries 

Generating the Most New Jobs, December 1994 

and December 1995 2

Table A.30 Twenty Fastest Growing Small-Business-Dominated 

Industries, December 1994 and December 1995 2

Table A.31 Twenty Large-Business-Dominated Industries 

Generating the Most New Jobs, December 1994 

and December 1995 2

Table A.32 Twenty Fastest Growing Large-Business-Dominated 

Industries, December 1994 and December 1995 2

170 The Annual Report on Small Business and Competition
Table A.34 Twenty Fastest Growing Indeterminate Industries, 

December 1994 and December 1995 2

Supplementary Tables 1

p. 172 Blank
Supplementary Tables 1

Change Change

1994 1995 1994–1995 1994–199

Gross Domestic Product 6,608.7 6,742.9 134.2 2.0

Personal Consumption 4,473.2 4,577.8 104.6 2.3 

Gross Private Domestic Investment 979.6 1,010.2 30.6 3.1 

Nonresidential Construction 652.1 714.3 62.2 9.5 

Residential Construction 268.9 262.8 26.1 22.3 

Change in Business Inventories 58.9 33.1 225.8 243.8 

Net Exports (Exports Minus Imports) 2105.7 2107.6 21.9 1.8 

Exports 712.0 775.4 63.4 8.9 

Imports 817.6 883.0 65.4 8.0 

Government Consumption

Expenditures and Gross

Investments 1,260.0 1,260.2 0.2 0.1 

Federal 489.8 472.3 217.5 23.6 

State and Local 770.5 788.6 18.1 2.3 

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from U

Department of Commerce, Bureau of Economic Analysis, January 1997.
174 The Annual Report on Small Business and Competition Table A.2 Business Income Tax Returns by Receipt Size of Business 

Thou

Receipt Size of Business (Dollars) 1 1985 1986 1987 1988 

Total Returns 16,919.4 17,525.2 18,351.4 18,619.Corporations, Total 3,277.3 3,428.6 3,612.2 3,346.Under 25,0002 710.8 765.3 788.1 818

25,000–49,999 236.6 244.2 267.3 22750,000–99,999 330.2 345.4 369.5 330100,000–249,999 620.5 630.6 659.4 620250,000–499,999 489.2 510.5 531.6 459500,000–999,999 352.4 370.4 391.3 3521,000,000 or more 537.6 562.2 605.0 537Partnerships, Total3 1,713.6 1,702.9 1,648.1 1,593.

Under 25,0002 840.1 836.6 853.6 829

25,000–49,999 195.5 182.9 163.0 11750,000–99,999 199.5 204.5 184.2 183100,000–249,999 190.1 184.0 165.8 160250,000–499,999 165.5 165.1 157.4 159500,000–999,999 66.9 69.1 64.7 731,000,000 or more 56.0 60.7 59.4 69Nonfarm Sole Proprietorships, Total 11,928.5 12,393.7 13,091.1 13,679.Under 2,5002 3,067.5 3,178.4 3,299.4 3,364

2,500–4,999 1,444.6 1,495.1 1,553.5 1,5095,000–9,999 1,633.6 1,666.0 1,846.5 1,96210,000–24,999 2,104.6 2,175.3 2,284.2 2,50925,000–49,999 1,393.9 1,466.6 1,559.0 1,60150,000–99,999 1,094.1 1,138.3 1,172.0 1,225100,000–499,999 1,060.2 1,140.9 1,232.1 1,337500,000–999,999 89.3 95.4 101.6 118

1,000,000 or more 40.7 37.7 42.8 49
Supplementary Tables 175

1Size classes are based on the sum of business receipts—that is, gross amounts fr

nance, insurance, and real estate industries. For the latter industries, positive net rentaand investment income. For partnerships, see also note below.

2Includes returns with no receipts as defined above.3In 1981, the method of calculating total receipts for partnerships was changed 

the net income or loss from farming and rentals. Previously, total receipts included the principal source of total receipts, they were treated as “business receipts” for thchange in statistical treatment of farm and rental income, an effort was made starting used for the size distribution.

Source: U.S. Department of the Treasury, Internal Revenue Service, SOI Bulletin, 
176 The Annual Report on Small Business and Competition Table A.3 Enterprises, Establishments, Employment, Annual Payroll, 

1993 (Payroll and Receipts in Thousands of Dollars) 

Industry Total 0 1–4 5–9 10All Industries Firms 5,193,642 671,306 2,468,212 962,481 55

Establishments 6,401,233 673,408 2,474,583 980,865 60Employment 94,773,913 0 5,258,195 6,313,651 7,49Annual Payroll 2,363,208,106 22,361,727 106,606,380 127,133,193 159,15

Estimated Receipts 14,098,572,034 116,064,572 730,747,567 730,360,041 891,63Receipts per Firm 2,714.583 172.894 296.064 758.831 1,59Receipts per Employee 148.760 NA 138.973 115.680 11Payroll per Employee 24.935 NA 20.274 20.136 2

Agricultural Services, Forestry, and Fishing Firms 99,397 22,678 44,721 17,705 

Establishments 100,685 22,678 44,731 17,728 Employment 588,556 0 95,371 116,703 12Annual Payroll 10,255,107 405,908 1,566,553 1,819,044 2,02Estimated Receipts 31,537,012 1,288,363 5,024,855 5,057,118 5,29Receipts per Firm 317.283 56.811 112.360 285.632 55Receipts per Employee 53.584 NA 52.687 43.333 4Payroll per Employee 17.424 NA 16.426 15.587 1

Mining

Firms 22,486 2,348 10,415 3,685 Establishments 28,570 2,348 10,445 3,743 Employment 608,309 0 21,321 24,273 3Annual Payroll 24,620,409 156,778 517,552 617,025 94Estimated Receipts 156,155,475 800,004 5,001,608 5,257,503 5,99Receipts per Firm 6,944.564 340.717 480.231 1,426.731 2,34Receipts per Employee 256.704 NA 234.586 216.599 17Payroll per Employee 40.474 NA 24.274 25.420 2
Supplementary Tables 177

Construction

Firms 594,187 100,192 288,276 105,170 5Establishments 600,299 100,205 288,312 105,232 5Employment 4,525,346 0 607,641 687,931 77Annual Payroll 125,518,445 2,673,042 12,671,404 14,965,979 18,98Estimated Receipts 573,697,679 12,447,915 73,616,689 69,130,260 81,74Receipts per Firm 965.517 124.241 255.369 657.319 1,41Receipts per Employee 126.774 NA 121.152 100.490 10Payroll per Employee 27.737 NA 20.853 21.755 2

Manufacturing

Firms 328,167 29,672 99,789 60,944 5Establishments 387,337 29,712 99,824 61,043 5Employment 18,183,981 0 227,896 408,462 70Annual Payroll 575,961,849 1,783,680 4,621,818 8,719,410 16,76Estimated Receipts 3,143,374,173 9,278,243 23,497,217 39,089,737 71,74Receipts per Firm 9,578.581 312.694 235.469 641.404 1,37Receipts per Employee 172.865 NA 103.105 95.700 10Payroll per Employee 31.674 NA 20.280 21.347 2

Transportation

Firms 193,203 26,905 87,446 32,399 2Establishments 267,175 26,978 87,611 32,952 2Employment 5,621,889 0 184,084 212,779 28Annual Payroll 182,117,612 952,911 3,409,898 4,150,642 5,90Estimated Receipts 947,892,983 3,940,717 20,455,292 18,810,235 24,72Receipts per Firm 4,906.202 146.468 233.919 580.581 1,15Receipts per Employee 168.608 NA 111.119 88.403 8Payroll per Employee 32.394 NA 18.524 19.507 2

Wholesale Trade

Firms 397,233 40,098 166,476 78,616 5Establishments 509,604 40,228 167,082 80,621 6Employment 6,258,484 0 363,436 520,017 73Annual Payroll 200,757,826 1,608,425 9,776,697 13,785,304 20,08Estimated Receipts 3,403,745,666 28,408,831 227,683,539 248,704,211 323,38

Receipts per Firm 8,568.638 708.485 1,367.666 3,163.532 5,89
178 The Annual Report on Small Business and Competition Table A.3 Enterprises, Establishments, Employment, Annual Payroll, 

1993 (Payroll and Receipts in Thousands of Dollars)—Continued 

Industry Total 0 1–4 5–9 1Receipts per Employee 543.861 NA 626.475 478.262 44Payroll per Employee 32.078 NA 26.901 26.509 2Retail Trade Firms 1,090,076 133,846 466,311 224,416 13Establishments 1,554,437 134,716 468,263 230,128 15Employment 19,778,588 0 1,049,947 1,479,083 1,85Annual Payroll 265,297,525 3,158,098 12,174,679 17,035,912 21,75Estimated Receipts 2,029,104,606 21,250,963 122,989,810 139,672,590 166,78Receipts per Firm 1,861.434 158.772 263.751 622.382 1,19Receipts per Employee 102.591 NA 117.139 94.432 9Payroll per Employee 13.413 NA 11.596 11.518 1Finance, Insurance, and Real Estate Firms 426,778 54,392 251,495 58,210 2Establishments 609,492 54,644 252,286 60,284 3Employment 6,891,117 0 488,223 374,215 38Annual Payroll 232,099,601 2,202,704 10,397,258 9,749,904 10,98Estimated Receipts 1,903,897,876 11,484,175 69,381,663 46,996,699 52,00Receipts per Firm 4,461.097 211.137 275.877 807.365 1,80Receipts per Employee 276.283 NA 142.111 125.587 13Payroll per Employee 33.681 NA 21.296 26.054 2ServicesFirms 2,030,895 230,004 1,039,341 380,465 19Establishments 2,294,559 230,671 1,041,481 386,848 21Employment 32,262,429 0 2,196,422 2,475,411 2,60Annual Payroll 745,774,734 8,999,723 51,274,343 56,204,293 61,64Estimated Receipts 1,904,405,317 24,781,917 181,816,183 157,129,927 159,65
Supplementary Tables 179

Receipts per Firm 937.717 107.746 174.934 412.994 81Receipts per Employee 59.029 NA 82.778 63.476 6Payroll per Employee 23.116 NA 23.344 22.705 2UnclassifiedFirms 49,070 31,228 14,548 2,286 Establishments 49,075 31,228 14,548 2,286 Employment 55,214 0 23,854 14,777 Annual Payroll 804,998 420,458 196,178 85,680 5Estimated Receipts 4,761,247 2,383,444 1,280,711 511,761 30Receipts per Firm 97.030 76.324 88.033 223.867 38Receipts per Employee 86.233 NA 53.690 34.632 3Payroll per Employee 14.580 NA 8.224 5.798 

NA = not availableNote: A firm is defined as an aggregation of all establishments owned by a parent compan

sidiaries of other branch establishments under the same ownership and control. A firm is also defin

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from data p
180 The Annual Report on Small Business and Competition Table A.4 Enterprises, Employment, and Annual Payroll by Firm Siz

Thousands of Dollars) 

SBA Region/State Total 0 1–4 5–9 10–United States

Number of Firms 5,193,642 671,306 2,468,212 962,481 55Employment 94,773,913 0 5,258,195 6,313,651 7,49Annual Payroll 2,363,208,106 22,361,727 106,606,380 127,133,193 159,15

Region I

Number of Firms 311,983 40,663 144,109 54,773 3Employment 5,465,166 0 308,226 356,364 42Annual Payroll 150,016,132 1,357,374 6,962,034 8,073,156 9,91

Connecticut

Number of Firms 78,084 9,347 36,657 13,979 Employment 1,406,055 0 77,489 90,995 10Annual Payroll 43,035,438 363,846 2,013,870 2,347,430 2,85

Maine

Number of Firms 30,631 4,917 13,980 5,325 Employment 411,964 0 29,761 34,943 3Annual Payroll 8,888,734 105,420 503,143 604,785 69

Massachusetts

Number of Firms 131,812 16,627 60,205 23,335 1Employment 2,632,691 0 130,277 151,775 18Annual Payroll 74,537,645 630,039 3,083,087 3,577,108 4,45

New Hampshire

Number of Firms 28,751 4,021 12,830 5,073 Employment 426,624 0 27,516 32,910 3Annual Payroll 10,323,279 109,530 561,055 671,743 83

Rhode Island

Number of Firms 24,649 3,327 11,750 3,956 Employment 372,150 0 24,834 25,595 3Annual Payroll 8,688,763 102,202 498,264 528,860 65
Supplementary Tables 181

Vermont

Number of Firms 18,056 2,424 8,687 3,105 Employment 215,682 0 18,349 20,146 2Annual Payroll 4,542,273 46,337 302,615 343,230 41

Region II

Number of Firms 588,776 76,717 296,531 97,763 5Employment 9,732,371 0 613,376 636,673 72Annual Payroll 297,524,758 2,963,898 14,792,802 15,868,036 19,25

New Jersey

Number of Firms 187,037 24,757 91,163 31,666 1Employment 3,099,870 0 190,416 206,188 23Annual Payroll 93,574,310 940,923 4,764,432 5,303,315 6,46

New York

Number of Firms 401,739 51,960 205,368 66,097 3Employment 6,632,501 0 422,960 430,485 49Annual Payroll 203,950,448 2,022,975 10,028,370 10,564,721 12,79

Region III

Number of Firms 520,664 58,734 237,112 96,676 5Employment 9,835,894 0 510,656 633,362 75Annual Payroll 244,662,382 1,932,641 9,832,724 12,769,407 16,18

Delaware

Number of Firms 17,066 2,344 7,104 2,897 Employment 305,021 0 15,019 18,956 2Annual Payroll 8,559,231 69,491 293,624 391,771 48

District of Columbia

Number of Firms 16,285 1,473 6,482 2,675 Employment 413,740 0 13,501 17,441 2Annual Payroll 13,566,512 89,912 483,207 554,244 73

Maryland

Number of Firms 98,606 12,864 42,843 18,352 1Employment 1,726,770 0 92,271 120,586 14Annual Payroll 43,974,698 422,394 2,053,886 2,573,180 3,16

Pennsylvania

Number of Firms 230,543 23,262 108,251 43,364 2Employment 4,561,247 0 233,988 284,019 33Annual Payroll 111,888,855 863,485 4,264,467 5,589,481 7,32
182 The Annual Report on Small Business and Competition Table A.4 Enterprises, Employment, and Annual Payroll by Firm Siz

Thousands of Dollars)—Continued 

SBA Region/State Total 0 1–4 5–9 10–Virginia

Number of Firms 125,151 15,145 56,882 23,289 1Employment 2,329,111 0 122,570 152,604 17Annual Payroll 55,915,757 410,707 2,278,192 3,015,889 3,70

West Virginia

Number of Firms 33,013 3,646 15,550 6,099 Employment 500,005 0 33,307 39,756 4Annual Payroll 10,757,329 76,652 459,348 644,842 77

Region IV

Number of Firms 954,720 119,993 447,663 172,992 9Employment 16,994,418 0 957,305 1,130,165 1,28Annual Payroll 371,814,230 3,722,568 17,159,931 20,962,163 25,38

Alabama

Number of Firms 75,349 8,734 33,763 14,402 Employment 1,447,134 0 73,063 94,249 10Annual Payroll 30,707,709 236,881 1,120,427 1,601,472 2,02

Florida

Number of Firms 322,467 45,235 157,971 56,403 3Employment 4,805,651 0 333,255 368,028 40Annual Payroll 104,101,893 1,434,959 6,762,808 7,419,188 8,34

Georgia

Number of Firms 136,658 17,576 61,699 24,764 1Employment 2,648,435 0 131,871 161,678 18Annual Payroll 63,027,901 609,173 2,609,755 3,195,526 3,95

Kentucky

Number of Firms 68,485 7,477 30,653 12,800 Employment 1,259,544 0 66,391 83,848 10Annual Payroll 26,636,389 228,726 1,018,915 1,405,992 1,79
Supplementary Tables 183

Mississippi

Number of Firms 46,240 5,209 22,318 8,205 Employment 796,551 0 47,638 53,620 6Annual Payroll 15,203,494 160,800 647,909 800,093 1,04

North Carolina

Number of Firms 139,921 16,732 65,013 26,001 1Employment 2,759,270 0 139,987 169,672 19Annual Payroll 60,631,617 468,874 2,293,291 3,067,637 3,72

South Carolina

Number of Firms 68,738 8,042 31,758 12,759 Employment 1,307,776 0 69,403 83,485 9Annual Payroll 27,589,242 229,594 1,099,231 1,396,051 1,74

Tennessee

Number of Firms 96,862 10,988 44,488 17,658 1Employment 1,970,057 0 95,697 115,585 13Annual Payroll 43,915,985 353,561 1,607,595 2,076,204 2,73

Region V

Number of Firms 945,912 114,969 415,008 178,037 10Employment 18,668,075 0 896,950 1,168,858 1,44Annual Payroll 471,625,070 3,539,670 17,649,440 23,180,523 30,44

Illinois

Number of Firms 238,362 29,200 107,618 42,836 2Employment 4,696,332 0 227,631 280,956 35Annual Payroll 127,223,868 1,116,948 5,188,904 6,281,746 8,25

Indiana

Number of Firms 110,675 12,226 48,246 21,376 1Employment 2,258,311 0 105,408 140,223 16Annual Payroll 52,689,146 341,262 1,782,280 2,448,939 3,17

Michigan

Number of Firms 181,162 23,577 78,262 35,194 2Employment 3,448,372 0 171,534 230,915 28Annual Payroll 92,498,672 691,784 3,506,726 4,699,938 6,16

Minnesota

Number of Firms 101,436 13,573 43,208 18,629 1Employment 1,944,204 0 92,944 122,433 15Annual Payroll 47,813,841 398,182 1,758,410 2,285,290 3,09
Table A.4 Enterprises, Employment, and Annual Payroll by Firm Siz

Thousands of Dollars)—Continued

SBA Region/State Total 0 1–4 5–9 10–Ohio

Number of Firms 205,355 23,532 90,288 39,540 2Employment 4,262,358 0 197,461 259,341 31Annual Payroll 104,086,981 672,449 3,622,653 5,037,223 6,52

Wisconsin

Number of Firms 108,922 12,861 47,386 20,462 1Employment 2,058,498 0 101,972 134,990 17Annual Payroll 47,312,562 319,045 1,790,467 2,427,387 3,22

Region VI

Number of Firms 562,395 67,477 261,915 103,042 5Employment 9,950,775 0 560,800 674,415 79Annual Payroll 228,488,746 2,245,162 10,667,925 12,553,784 15,38

Arkansas

Number of Firms 48,954 5,825 23,053 8,756 Employment 817,939 0 49,051 57,468 6Annual Payroll 15,694,996 134,826 754,945 911,948 1,16

Louisiana

Number of Firms 76,906 8,357 34,586 14,573 Employment 1,376,196 0 74,487 95,510 11Annual Payroll 29,711,024 289,439 1,333,078 1,652,869 2,07

New Mexico

Number of Firms 33,214 4,222 14,776 5,960 Employment 468,996 0 31,514 38,941 4Annual Payroll 9,672,348 95,925 491,078 637,162 78

Oklahoma

Number of Firms 66,654 7,716 31,910 12,089 Employment 1,002,623 0 67,891 78,883 8Annual Payroll 21,297,522 207,429 1,098,609 1,329,438 1,56

184 The Annual Report on Small Business and Competition
Supplementary Tables 185

Texas

Number of Firms 336,667 41,357 157,590 61,664 3Employment 6,285,021 0 337,857 403,613 48Annual Payroll 152,112,856 1,517,543 6,990,215 8,022,367 9,79

Region VII

Number of Firms 274,219 31,799 127,153 49,576 2Employment 4,673,837 0 270,542 324,823 38Annual Payroll 101,322,216 745,649 4,226,142 5,525,387 7,18

Iowa

Number of Firms 63,824 7,120 29,578 11,704 Employment 1,071,993 0 63,408 76,697 9Annual Payroll 21,918,196 138,314 913,076 1,190,288 1,61

Kansas

Number of Firms 57,780 6,548 26,718 10,431 Employment 927,666 0 56,525 68,094 8Annual Payroll 20,082,386 149,083 865,877 1,163,391 1,50

Missouri

Number of Firms 113,526 13,792 52,860 20,175 1Employment 2,040,272 0 112,226 132,383 15Annual Payroll 46,752,543 367,343 1,899,135 2,426,039 3,06

Nebraska

Number of Firms 39,089 4,339 17,997 7,266 Employment 633,906 0 38,383 47,649 5Annual Payroll 12,569,091 90,909 548,054 745,669 1,00

Region VIII

Number of Firms 203,218 29,508 90,581 35,880 2Employment 2,936,365 0 193,076 234,638 27Annual Payroll 64,351,704 741,550 3,399,990 4,143,965 5,07

Colorado

Number of Firms 93,354 13,925 42,136 16,253 Employment 1,421,178 0 89,220 106,226 12Annual Payroll 34,312,923 397,977 1,789,701 2,128,116 2,55

Montana

Number of Firms 24,132 3,633 11,311 4,307 Employment 245,753 0 24,041 28,158 3Annual Payroll 4,521,099 61,428 354,568 420,504 46
186 The Annual Report on Small Business and Competition Table A.4 Enterprises, Employment, and Annual Payroll by Firm Siz

Thousands of Dollars)—Continued 

SBA Region/State Total 0 1–4 5–9 10–North Dakota

Number of Firms 16,989 2,037 7,884 2,944 Employment 216,020 0 16,692 19,273 2Annual Payroll 3,955,863 37,016 221,248 293,218 38

South Dakota

Number of Firms 19,184 2,528 8,820 3,352 Employment 247,829 0 18,562 21,922 2Annual Payroll 4,335,957 45,983 255,043 321,853 41

Utah

Number of Firms 35,297 5,261 13,920 6,499 Employment 660,301 0 30,604 42,751 5Annual Payroll 14,146,962 154,898 568,111 725,324 94

Wyoming

Number of Firms 14,262 2,124 6,510 2,525 Employment 145,284 0 13,957 16,308 1Annual Payroll 3,078,900 44,248 211,319 254,950 29

Region IX

Number of Firms 741,357 96,257 343,178 132,314 8Employment 13,067,429 0 722,369 867,547 1,06Annual Payroll 348,879,498 4,228,804 17,698,991 18,620,491 23,53

Arizona

Number of Firms 77,280 10,885 33,787 13,806 Employment 1,325,469 0 72,149 90,639 10Annual Payroll 29,710,792 351,383 1,489,647 1,723,373 2,06

California

Number of Firms 610,659 78,447 286,708 108,915 6Employment 10,725,128 0 601,258 713,775 88Annual Payroll 295,173,268 3,526,580 15,060,419 15,547,521 19,68
Supplementary Tables 187

Hawaii

Number of Firms 24,429 2,594 10,692 4,618 Employment 435,904 0 23,250 30,351 3Annual Payroll 10,551,898 91,223 531,300 642,624 86

Nevada

Number of Firms 28,989 4,331 11,991 4,975 Employment 580,928 0 25,712 32,782 4Annual Payroll 13,443,540 259,618 617,625 706,973 92

Region X

Number of Firms 240,118 35,544 105,791 43,655 2Employment 3,449,583 0 224,895 286,806 33Annual Payroll 84,523,370 884,411 4,216,401 5,436,281 6,79

Alaska

Number of Firms 14,128 2,706 5,770 2,563 Employment 172,423 0 12,451 16,815 1Annual Payroll 5,483,210 77,849 330,707 426,332 47

Idaho

Number of Firms 26,362 4,151 11,245 4,838 Employment 344,209 0 24,445 31,718 3Annual Payroll 7,127,376 90,682 393,172 510,397 62

Oregon

Number of Firms 75,493 10,731 33,586 13,791 Employment 1,073,896 0 71,606 90,563 10Annual Payroll 24,852,194 255,413 1,300,813 1,626,675 2,04

Washington

Number of Firms 124,135 17,956 55,190 22,463 1Employment 1,859,055 0 116,393 147,710 17

Annual Payroll 47,060,590 460,467 2,191,709 2,872,877 3,64

Note: A firm is defined as an aggregation of all establishments owned by a parent compan

sidiaries or other branch establishments under the same ownership and control. A firm is also defin

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from data p
188 The Annual Report on Small Business and Competition Table A.5 Various Statistics by Industry (Two-Digit SIC Code) and Fi

of Dollars) 

Industry Total 0 1–4 5–9 10–U.S. TotalFirms 5,193,642 671,306 2,468,212 962,481 55Establishments 6,401,233 673,408 2,474,583 980,865 60Employment 94,773,913 0 5,258,195 6,313,651 7,49Annual Payroll 2,363,208,106 22,361,727 106,606,380 127,133,193 159,15Estimated Receipts 14,098,572,034 116,064,572 730,747,567 730,360,041 891,63Receipts per Firm 2,714.6 172.9 296.1 758.8 1,Receipts per Employee 148.8 NA 139.0 115.7 Payroll per Employee 24.9 NA 20.3 20.1 Agricultural Services,

Forestry, and Fishing

Firms 99,397 22,678 44,721 17,705 Establishments 100,685 22,678 44,731 17,728 Employment 588,556 0 95,371 116,703 12Annual Payroll 10,255,107 405,908 1,566,553 1,819,044 2,02Estimated Receipts 31,537,012 1,288,363 5,024,855 5,057,118 5,29Receipts per Firm 317.3 56.8 112.4 285.6 Receipts per Employee 53.6 NA 52.7 43.3 Payroll per Employee 17.4 NA 16.4 15.6 ForestryFirms 2,203 544 963 295 Establishments 2,272 544 963 301 Employment 17,762 0 1,954 1,911 Annual Payroll 350,242 12,320 39,373 38,667 5Estimated Receipts 1,550,752 58,322 186,074 156,885 24Receipts per Firm 703.9 107.2 193.2 531.8 1,Receipts per Employee 87.3 NA 95.2 82.1 Payroll per Employee 19.7 NA 20.1 20.2 
Supplementary Tables 189

Fishing, Hunting, and

Trapping

Firms 2,093 639 1,027 173 Establishments 2,118 639 1,028 175 Employment 12,738 0 1,817 1,143 Annual Payroll 321,233 17,484 41,260 22,634 2Estimated Receipts 1,415,399 79,896 242,667 90,010 9Receipts per Firm 676.3 125.0 236.3 520.3 Receipts per Employee 111.1 NA 133.6 78.7 Payroll per Employee 25.2 NA 22.7 19.8 All MiningFirms 22,486 2,348 10,415 3,685 Establishments 28,570 2,348 10,445 3,743 Employment 608,309 0 21,321 24,273 3Annual Payroll 24,620,409 156,778 517,552 617,025 94Estimated Receipts 156,155,475 800,004 5,001,608 5,257,503 5,99Receipts per Firm 6,944.6 340.7 480.2 1,426.7 2,Receipts per Employee 256.7 NA 234.6 216.6 Payroll per Employee 40.5 NA 24.3 25.4 Metal MiningFirms 609 119 237 67 Establishments 998 119 237 67 Employment 52,799 0 445 431 Annual Payroll 2,182,101 5,362 14,366 14,223 1Estimated Receipts 10,416,796 31,830 45,039 34,500 5Receipts per Firm 17,104.8 267.5 190.0 514.9 1,Receipts per Employee 197.3 NA 101.2 80.0 Payroll per Employee 41.3 NA 32.3 33.0 Coal MiningFirms 1,954 226 394 278 Establishments 2,759 226 402 282 Employment 122,209 0 894 1,890 Annual Payroll 4,828,932 33,759 24,189 46,844 12Estimated Receipts 24,875,555 173,549 232,975 299,674 96Receipts per Firm 12,730.6 767.9 591.3 1,078.0 2,Receipts per Employee 203.5 NA 260.6 158.6 Payroll per Employee 39.5 NA 27.1 24.8 
190 The Annual Report on Small Business and Competition Table A.5 Various Statistics by Industry (Two-Digit SIC Code) and Fi

Dollars) 

Industry Total 0 1–4 5–9 10–Food and Kindred ProductsFirms 16,389 1,551 3,853 2,688 Establishments 22,256 1,551 3,854 2,695 Employment 1,621,565 0 9,099 18,074 3Annual Payroll 44,456,189 86,489 152,037 294,961 61Estimated Receipts 417,568,199 912,141 1,690,030 3,265,633 5,88Receipts per Firm 25,478.6 588.1 438.6 1,214.9 2,Receipts per Employee 257.5 NA 185.7 180.7 Payroll per Employee 27.4 NA 16.7 16.3 Tobacco ProductsFirms 84 10 21 6 Establishments 169 10 21 6 Employment 57,371 0 54 36 Annual Payroll 2,453,794 159 1,011 358 Estimated Receipts 28,964,746 1,868 18,527 4,409 Receipts per Firm 344,818.4 186.8 882.2 734.8 1,Receipts per Employee 504.9 NA 343.1 122.5 Payroll per Employee 42.8 NA 18.7 9.9 Textile Mill ProductsFirms 5,109 535 1,023 665 Establishments 6,534 535 1,023 668 Employment 642,073 0 2,371 4,510 Annual Payroll 14,372,069 47,437 52,972 95,470 19Estimated Receipts 74,171,106 266,692 277,952 503,210 1,00Receipts per Firm 14,517.7 498.5 271.7 756.7 1,Receipts per Employee 115.5 NA 117.2 111.6 Payroll per Employee 22.4 NA 22.3 21.2 
Supplementary Tables 191

ApparelFirms 22,773 3,333 5,595 3,393 Establishments 24,794 3,335 5,597 3,395 Employment 1,005,706 0 12,837 22,843 4Annual Payroll 16,789,590 191,864 219,111 336,197 71Estimated Receipts 70,572,287 875,123 1,211,433 1,568,433 3,22Receipts per Firm 3,098.9 262.6 216.5 462.3 Receipts per Employee 70.2 NA 94.4 68.7 Payroll per Employee 16.7 NA 17.1 14.7 Lumber and Wood Products,

except Furniture

Firms 35,325 4,377 12,903 7,059 Establishments 37,677 4,381 12,903 7,065 Employment 690,710 0 28,872 46,970 7Annual Payroll 15,781,846 148,281 487,205 788,786 1,28Estimated Receipts 87,510,229 944,011 3,270,049 4,763,588 6,81Receipts per Firm 2,477.3 215.7 253.4 674.8 1,Receipts per Employee 126.7 NA 113.3 101.4 Payroll per Employee 22.8 NA 16.9 16.8 Furniture and FixturesFirms 10,790 961 3,189 1,840 Establishments 11,721 961 3,190 1,841 Employment 486,426 0 7,245 12,421 2Annual Payroll 11,042,245 60,087 122,783 223,376 44Estimated Receipts 45,919,533 260,172 526,855 903,740 1,68Receipts per Firm 4,255.7 270.7 165.2 491.2 1,Receipts per Employee 94.4 NA 72.7 72.8 Payroll per Employee 22.7 NA 16.9 18.0 Paper and Allied ProductsFirms 4,332 201 546 520 Establishments 6,857 201 546 520 Employment 674,953 0 1,302 3,596 Annual Payroll 23,544,152 38,695 29,341 80,954 23Estimated Receipts 136,721,026 239,606 181,436 459,950 1,24Receipts per Firm 31,560.7 1,192.1 332.3 884.5 1,Receipts per Employee 202.6 NA 139.4 127.9 Payroll per Employee 34.9 NA 22.5 22.5 
192 The Annual Report on Small Business and Competition Table A.5 Various Statistics by Industry (Two-Digit SIC Code) and Fi

Dollars)—Continued 

Industry Total 0 1–4 5–9 10–Printing, Publishing, and

Allied Industries

Firms 60,530 5,160 24,208 13,005 Establishments 66,745 5,161 24,213 13,029 Employment 1,580,596 0 55,398 85,520 11Annual Payroll 45,563,779 219,452 1,037,010 1,707,423 2,57Estimated Receipts 170,985,498 911,123 4,432,933 6,131,977 8,71Receipts per Firm 2,824.8 176.6 183.1 471.5 1,Receipts per Employee 108.2 NA 80.0 71.7 Payroll per Employee 28.8 NA 18.7 20.0 Chemicals and Allied

Products

Firms 8,660 625 2,218 1,458 Establishments 13,757 626 2,218 1,462 Employment 1,105,631 0 5,107 9,812 1Annual Payroll 48,561,687 62,239 142,339 281,127 52Estimated Receipts 338,168,503 565,953 1,423,730 2,472,556 4,74Receipts per Firm 39,049.5 905.5 641.9 1,695.9 3,Receipts per Employee 305.9 NA 278.8 252.0 Payroll per Employee 43.9 NA 27.9 28.7 Petroleum Refining and

Related Industries

Firms 1,193 65 249 174 Establishments 2,435 65 251 177 Employment 149,497 0 561 1,156 Annual Payroll 7,415,518 5,920 22,447 46,047 7Estimated Receipts 154,756,626 109,596 356,360 591,630 87Receipts per Firm 129,720.6 1,686.1 1,431.2 3,400.2 6,Receipts per Employee 1,035.2 NA 635.2 511.8 Payroll per Employee 49.6 NA 40.0 39.8 
Supplementary Tables 193

Rubber and Miscellaneous

Plastics Products

Firms 13,319 930 2,389 1,876 Establishments 16,551 933 2,389 1,876 Employment 951,566 0 5,655 12,827 3Annual Payroll 26,444,039 68,555 147,402 295,516 72Estimated Receipts 120,581,438 330,157 767,752 1,345,317 3,25Receipts per Firm 9,053.3 355.0 321.4 717.1 1,Receipts per Employee 126.7 NA 135.8 104.9 Payroll per Employee 27.8 NA 26.1 23.0 Leather and Leather

Products

Firms 1,845 148 564 275 Establishments 2,094 148 565 275 Employment 109,185 0 1,205 1,834 Annual Payroll 2,030,620 5,264 24,532 29,885 5Estimated Receipts 10,028,241 26,774 127,313 145,290 25Receipts per Firm 5,435.4 180.9 225.7 528.3 1,Receipts per Employee 91.8 NA 105.7 79.2 Payroll per Employee 18.6 NA 20.4 16.3 Stone, Clay, Glass, and

Concrete Products

Firms 12,341 957 3,464 2,226 Establishments 16,806 971 3,468 2,232 Employment 497,575 0 7,813 15,044 2Annual Payroll 15,032,561 48,388 161,009 317,238 74Estimated Receipts 65,457,963 220,218 919,903 1,567,693 3,51Receipts per Firm 5,304.1 230.1 265.6 704.3 1,Receipts per Employee 131.6 NA 117.7 104.2 Payroll per Employee 30.2 NA 20.6 21.1 Primary Metal IndustriesFirms 5,502 323 940 713 Establishments 7,162 323 943 714 Employment 679,993 0 2,188 4,878 1Annual Payroll 24,066,685 44,543 53,685 119,336 29Estimated Receipts 147,254,724 227,105 328,498 611,418 1,44
194 The Annual Report on Small Business and Competition Table A.5 Various Statistics by Industry (Two-Digit SIC Code) and Fi

Dollars)—Continued 

Industry Total 0 1–4 5–9 10–Receipts per Firm 26,763.9 703.1 349.5 857.5 1,Receipts per Employee 216.6 NA 150.1 125.3 Payroll per Employee 35.4 NA 24.5 24.5 Fabricated Metal Products

except Machinery

Firms 33,130 2,205 7,604 5,902 Establishments 37,119 2,211 7,605 5,917 Employment 1,410,515 0 17,840 40,074 8Annual Payroll 42,577,916 174,602 394,230 947,556 2,11Estimated Receipts 174,521,388 731,714 1,751,153 3,552,353 7,77Receipts per Firm 5,267.8 331.8 230.3 601.9 1,Receipts per Employee 123.7 NA 98.2 88.6 Payroll per Employee 30.2 NA 22.1 23.6 Industrial and Commercial

Machinery and ComputerEquipment

Firms 51,552 3,577 15,646 10,476 Establishments 55,411 3,578 15,651 10,477 Employment 1,882,621 0 35,962 70,443 12Annual Payroll 66,562,240 215,700 831,020 1,794,408 3,60Estimated Receipts 267,498,106 790,786 2,786,230 5,494,984 10,93Receipts per Firm 5,188.9 221.1 178.1 524.5 1,Receipts per Employee 142.1 NA 77.5 78.0 Payroll per Employee 35.4 NA 23.1 25.5 Electronic and Electrical

Equipment and Componentsexcept Computer

Firms 14,948 1,329 3,420 2,251 Establishments 18,033 1,329 3,421 2,256 
Supplementary Tables 195

Employment 1,570,317 0 7,659 15,339 2Annual Payroll 53,751,876 124,435 198,443 407,000 77Estimated Receipts 223,678,089 597,041 909,957 1,649,233 3,00Receipts per Firm 14,963.7 449.2 266.1 732.7 1,Receipts per Employee 142.4 NA 118.8 107.5 Payroll per Employee 34.2 NA 25.9 26.5 Transportation EquipmentFirms 10,061 920 2,896 1,613 Establishments 11,948 922 2,897 1,616 Employment 1,726,020 0 6,509 10,879 1Annual Payroll 69,016,692 106,168 130,967 229,194 47Estimated Receipts 434,298,831 673,716 671,120 1,109,044 2,17Receipts per Firm 43,166.6 732.3 231.7 687.6 1,Receipts per Employee 251.6 NA 103.1 101.9 Payroll per Employee 40.0 NA 20.1 21.1 Measuring, Analyzing, Controlling

Instruments and Photographic,Medical and Optical Goods,Watches and Clocks

Firms 10,213 692 2,852 1,738 Establishments 11,854 693 2,853 1,741 Employment 951,313 0 6,536 11,660 2Annual Payroll 36,909,867 76,100 176,011 336,738 64Estimated Receipts 133,679,270 321,195 706,795 1,319,275 2,33Receipts per Firm 13,089.1 464.2 247.8 759.1 1,Receipts per Employee 140.5 NA 108.1 113.1 Payroll per Employee 38.8 NA 26.9 28.9 Miscellaneous Manufacturing

Industries

Firms 16,789 1,778 6,213 3,077 Establishments 17,414 1,778 6,216 3,081 Employment 390,348 0 13,683 20,546 3Annual Payroll 9,588,484 59,302 238,263 387,840 67Estimated Receipts 41,038,370 273,252 1,139,191 1,630,004 2,84Receipts per Firm 2,444.4 153.7 183.4 529.7 1,Receipts per Employee 105.1 NA 83.3 79.3 Payroll per Employee 24.6 NA 17.4 18.9 
196 The Annual Report on Small Business and Competition Table A.5 Various Statistics by Industry (Two-Digit SIC Code) and Fi

Dollars)—Continued 

Industry Total 0 1–4 5–9 10–Transportation, Communications,

and Public Utilities

Firms 193,203 26,905 87,446 32,399 2Establishments 267,175 26,978 87,611 32,952 2Employment 5,621,889 0 184,084 212,779 28Annual Payroll 182,117,612 952,911 3,409,898 4,150,642 5,90Estimated Receipts 947,892,983 3,940,717 20,455,292 18,810,235 24,72Receipts per Firm 4,906.2 146.5 233.9 580.6 1,Receipts per Employee 168.6 NA 111.1 88.4 Payroll per Employee 32.4 NA 18.5 19.5 Local and Suburban Transit and

Interurban Highway PassengerTransportation

Firms 16,090 1,979 6,003 2,400 Establishments 18,888 1,983 6,013 2,412 Employment 375,632 NA NA NA 3Annual Payroll 5,849,269 NA NA NA 33Estimated Receipts 14,195,918 NA NA NA 96Receipts per Firm 882.3 0.0 0.0 0.0 Receipts per Employee 37.8 NA NA NA Payroll per Employee 15.6 NA NA NA Motor Freight Transportation

and Warehousing

Firms 100,744 14,880 47,485 15,764 1Establishments 116,506 14,908 47,542 15,863 1Employment 1,665,026 0 95,607 103,779 14Annual Payroll 43,573,496 374,358 1,741,569 2,047,401 3,12Estimated Receipts 149,502,634 1,372,082 11,325,504 9,735,629 12,90Receipts per Firm 1,484.0 92.2 238.5 617.6 1,Receipts per Employee 89.8 NA 118.5 93.8 Payroll per Employee 26.2 NA 18.2 19.7 
Supplementary Tables 197

Water TransportationFirms 7,366 1,341 2,959 1,236 Establishments 8,548 1,344 2,962 1,255 Employment 169,195 0 6,269 8,101 1Annual Payroll 5,562,425 70,187 168,751 186,355 24Estimated Receipts 31,369,716 329,843 1,088,704 1,140,395 1,29Receipts per Firm 4,258.7 246.0 367.9 922.6 1,Receipts per Employee 185.4 NA 173.7 140.8 Payroll per Employee 32.9 NA 26.9 23.0 Transportation by AirFirms 5,607 809 2,207 867 Establishments 12,153 809 2,215 883 Employment 776,324 0 4,659 5,676 Annual Payroll 26,117,220 79,301 100,822 120,520 19Estimated Receipts 137,808,101 354,127 714,743 652,855 96Receipts per Firm 24,577.9 437.7 323.9 753.0 1,Receipts per Employee 177.5 NA 153.4 115.0 Payroll per Employee 33.6 NA 21.6 21.2 Pipelines, except Natural GasFirms 95 6 12 9 Establishments 811 6 12 10 Employment 17,143 NA NA NA Annual Payroll 845,091 NA NA NA Estimated Receipts 9,040,157 NA NA NA 4Receipts per Firm 95,159.5 0.0 0.0 0.0 8,Receipts per Employee 527.3 NA NA NA Payroll per Employee 49.3 NA NA NA Transportation ServicesFirms 38,444 4,505 20,003 7,983 Establishments 48,149 4,517 20,057 8,281 Employment 371,862 0 46,454 51,285 4Annual Payroll 9,378,609 122,941 882,854 1,049,851 98Estimated Receipts 26,947,416 345,204 3,093,071 2,999,924 2,73Receipts per Firm 701.0 76.6 154.6 375.8 Receipts per Employee 72.5 NA 66.6 58.5 Payroll per Employee 25.2 NA 19.0 20.5 
198 The Annual Report on Small Business and Competition Table A.5 Various Statistics by Industry (Two-Digit SIC Code) and Fi

Dollars)—Continued 

Industry Total 0 1–4 5–9 10–CommunicationsFirms 15,022 2,255 3,953 2,577 Establishments 40,888 2,279 3,966 2,657 Employment 1,312,845 0 8,725 17,609 3Annual Payroll 49,320,110 170,233 209,260 346,984 67Estimated Receipts 241,772,015 829,430 1,248,409 1,792,941 3,07Receipts per Firm 16,094.5 367.8 315.8 695.7 1,Receipts per Employee 184.2 NA 143.1 101.8 Payroll per Employee 37.6 NA 24.0 19.7 Electric, Gas, and Sanitary

Services

Firms 10,619 1,130 4,829 1,571 Establishments 21,232 1,132 4,844 1,591 Employment 933,862 0 10,647 10,179 1Annual Payroll 41,471,392 83,722 177,731 229,520 34Estimated Receipts 337,257,026 567,875 2,306,609 1,872,610 2,74Receipts per Firm 31,759.8 502.5 477.7 1,192.0 2,Receipts per Employee 361.1 NA 216.6 184.0 Payroll per Employee 44.4 NA 16.7 22.5 Wholesale TradeFirms 397,233 40,098 166,476 78,616 5Establishments 509,604 40,228 167,082 80,621 6Employment 6,258,484 0 363,436 520,017 73Annual Payroll 200,757,826 1,608,425 9,776,697 13,785,304 20,08Estimated Receipts 3,403,745,666 28,408,831 227,683,539 248,704,211 323,38Receipts per Firm 8,568.6 708.5 1,367.7 3,163.5 5,Receipts per Employee 543.9 NA 626.5 478.3 Payroll per Employee 32.1 NA 26.9 26.5 
Supplementary Tables 199

Wholesale Trade-Durable

Goods

Firms 250,262 24,153 104,893 51,217 3Establishments 320,860 24,242 105,291 52,548 3Employment 3,623,225 0 231,662 338,884 47Annual Payroll 122,883,061 996,598 6,327,894 9,224,740 13,50Estimated Receipts 1,682,140,603 14,746,705 122,860,032 132,422,997 175,08Receipts per Firm 6,721.5 610.6 1,171.3 2,585.5 4,Receipts per Employee 464.3 NA 530.3 390.8 Payroll per Employee 33.9 NA 27.3 27.2 Wholesale Trade-Nondurable

Goods

Firms 148,336 15,947 61,597 27,431 1Establishments 188,744 15,986 61,791 28,073 2Employment 2,635,259 0 131,774 181,133 25Annual Payroll 77,874,765 611,827 3,448,803 4,560,564 6,57Estimated Receipts 1,721,605,063 13,662,126 104,823,507 116,281,214 148,30Receipts per Firm 11,606.1 856.7 1,701.8 4,239.0 7,Receipts per Employee 653.3 NA 795.5 642.0 Payroll per Employee 29.6 NA 26.2 25.2 Retail TradeFirms 1,090,076 133,846 466,311 224,416 13Establishments 1,554,437 134,716 468,263 230,128 15Employment 19,778,588 0 1,049,947 1,479,083 1,85Annual Payroll 265,297,525 3,158,098 12,174,679 17,035,912 21,75Estimated Receipts 2,029,104,606 21,250,963 122,989,810 139,672,590 166,78Receipts per Firm 1,861.4 158.8 263.8 622.4 1,Receipts per Employee 102.6 NA 117.1 94.4 Payroll per Employee 13.4 NA 11.6 11.5 Building Materials,

Hardware, Garden Supply,and Mobile Homes

Firms 55,766 4,707 23,859 13,747 Establishments 70,543 4,715 23,925 14,007 Employment 725,234 0 55,072 90,481 10Annual Payroll 13,909,239 110,959 871,343 1,530,158 1,96
200 The Annual Report on Small Business and Competition Table A.5 Various Statistics by Industry (Two-Digit SIC Code) and Fi

Dollars)—Continued 

Industry Total 0 1–4 5–9 10–Estimated Receipts 110,307,111 895,332 7,930,419 12,071,432 14,94Receipts per Firm 1,978.0 190.2 332.4 878.1 1,Receipts per Employee 152.1 NA 144.0 133.4 Payroll per Employee 19.2 NA 15.8 16.9 General Merchandise StoresFirms 10,832 1,543 4,958 2,081 Establishments 37,114 1,550 4,978 2,118 Employment 2,338,602 0 10,866 13,448 1Annual Payroll 31,282,951 22,473 100,844 126,281 13Estimated Receipts 259,732,206 274,119 1,130,810 1,211,778 1,22Receipts per Firm 23,978.2 177.7 228.1 582.3 1,Receipts per Employee 111.1 NA 104.1 90.1 Payroll per Employee 13.4 NA 9.3 9.4 Food StoresFirms 130,886 16,537 57,213 26,198 1Establishments 184,486 16,620 57,349 26,570 1Employment 3,193,297 0 126,711 173,178 21Annual Payroll 43,841,157 322,629 1,212,355 1,562,231 1,99Estimated Receipts 378,785,821 2,899,900 16,528,580 16,163,267 17,94Receipts per Firm 2,894.0 175.4 288.9 617.0 1,Receipts per Employee 118.6 NA 130.4 93.3 Payroll per Employee 13.7 NA 9.6 9.0 Automotive Dealers and

Gasoline Service Stations

Firms 142,709 11,783 59,485 30,513 1Establishments 200,525 11,895 59,693 31,250 2Employment 2,036,127 0 134,775 200,819 24
Supplementary Tables 201

Annual Payroll 44,970,753 425,734 1,960,690 3,025,915 4,29Estimated Receipts 580,502,571 5,714,008 32,428,443 40,694,463 56,29Receipts per Firm 4,067.7 484.9 545.2 1,333.7 2,Receipts per Employee 285.1 NA 240.6 202.6 Payroll per Employee 22.1 NA 14.5 15.1 Apparel and Accessory StoresFirms 62,290 7,147 32,266 13,103 Establishments 145,005 7,214 32,594 13,969 Employment 1,301,894 0 72,706 84,781 7Annual Payroll 16,302,884 107,219 749,302 936,581 94Estimated Receipts 109,353,458 852,313 6,370,579 7,289,168 7,76Receipts per Firm 1,755.6 119.3 197.4 556.3 1,Receipts per Employee 84.0 NA 87.6 86.0 Payroll per Employee 12.5 NA 10.3 11.0 Home Furniture, Furnishings,

and Equipment Stores

Firms 82,162 8,855 41,743 17,850 Establishments 113,991 8,943 41,992 18,539 1Employment 802,606 0 92,653 116,190 11Annual Payroll 14,711,864 189,267 1,364,589 1,904,520 2,06Estimated Receipts 103,453,029 1,531,508 12,137,783 14,336,587 14,74Receipts per Firm 1,259.1 173.0 290.8 803.2 1,Receipts per Employee 128.9 NA 131.0 123.4 Payroll per Employee 18.3 NA 14.7 16.4 Eating and Drinking

Places

Firms 343,473 51,299 107,183 65,952 5Establishments 446,618 51,572 107,335 66,362 5Employment 6,815,776 0 250,622 441,340 76Annual Payroll 60,986,888 1,465,446 2,110,219 3,231,702 5,68Estimated Receipts 211,726,302 5,457,139 12,835,043 14,407,741 21,90Receipts per Firm 616.4 106.4 119.7 218.5 Receipts per Employee 31.1 NA 51.2 32.6 Payroll per Employee 8.9 NA 8.4 7.3 
202 The Annual Report on Small Business and Competition Table A.5 Various Statistics by Industry (Two-Digit SIC Code) and Fi

Dollars)—Continued 

Industry Total 0 1–4 5–9 10–Miscellaneous RetailFirms 267,237 31,994 139,747 55,268 2Establishments 356,155 32,207 140,397 57,313 3Employment 2,565,052 0 306,542 358,846 32Annual Payroll 39,291,789 514,371 3,805,337 4,718,524 4,66Estimated Receipts 275,244,108 3,626,644 33,628,153 33,498,154 31,95Receipts per Firm 1,030.0 113.4 240.6 606.1 1,Receipts per Employee 107.3 NA 109.7 93.3 Payroll per Employee 15.3 NA 12.4 13.1 Finance, Insurance, and

Real Estate

Firms 426,778 54,392 251,495 58,210 2Establishments 609,492 54,644 252,286 60,284 3Employment 6,891,117 0 488,223 374,215 38Annual Payroll 232,099,601 2,202,704 10,397,258 9,749,904 10,98Estimated Receipts 1,903,897,876 11,484,175 69,381,663 46,996,699 52,00Receipts per Firm 4,461.1 211.1 275.9 807.4 1,Receipts per Employee 276.3 NA 142.1 125.6 Payroll per Employee 33.7 NA 21.3 26.1 Depository InstitutionsFirms 25,527 618 7,524 3,587 Establishments 102,695 721 7,562 3,765 Employment 2,097,851 0 17,552 23,979 5Annual Payroll 57,876,120 65,935 301,280 519,112 1,30Estimated Receipts 528,330,490 592,873 2,086,661 3,749,108 10,28Receipts per Firm 20,696.9 959.3 277.3 1,045.2 2,Receipts per Employee 251.8 NA 118.9 156.3 Payroll per Employee 27.6 NA 17.2 21.6 
Supplementary Tables 203

Nondepository Credit

Institutions

Firms 19,429 3,705 8,525 3,021 Establishments 42,323 3,718 8,553 3,147 Employment 509,321 0 18,443 19,363 2Annual Payroll 18,776,236 230,013 594,429 695,120 83Estimated Receipts 137,672,366 1,308,384 3,522,779 3,521,923 3,88Receipts per Firm 7,085.9 353.1 413.2 1,165.8 2,Receipts per Employee 270.3 NA 191.0 181.9 Payroll per Employee 36.9 NA 32.2 35.9 Security and Commodity

Brokers, Dealers, Exchanges,and Services

Firms 20,262 3,774 11,007 2,423 Establishments 34,653 3,789 11,045 2,496 Employment 458,429 0 20,746 15,487 1Annual Payroll 40,024,144 283,736 1,062,312 1,197,958 1,42Estimated Receipts 116,610,149 831,594 3,827,074 3,080,505 3,88Receipts per Firm 5,755.1 220.3 347.7 1,271.4 3,Receipts per Employee 254.4 NA 184.5 198.9 Payroll per Employee 87.3 NA 51.2 77.4 Insurance CarriersFirms 10,530 2,018 3,779 1,496 Establishments 43,800 2,020 3,788 1,524 Employment 1,556,365 0 7,890 9,736 1Annual Payroll 52,502,131 117,204 190,281 227,492 33Estimated Receipts 839,395,144 990,348 2,106,478 2,305,326 3,62Receipts per Firm 79,714.6 490.8 557.4 1,541.0 3,Receipts per Employee 539.3 NA 267.0 236.8 Payroll per Employee 33.7 NA 24.1 23.4 Insurance Agents, Brokers,

and Service

Firms 112,594 9,890 75,407 16,332 Establishments 122,684 9,914 75,538 16,823 Employment 661,085 0 150,904 103,767 8Annual Payroll 20,474,670 249,659 2,988,035 2,756,234 2,66
204 The Annual Report on Small Business and Competition Table A.5 Various Statistics by Industry (Two-Digit SIC Code) and Fi

Dollars)—Continued 

Industry Total 0 1–4 5–9 10–Estimated Receipts 55,224,394 677,251 12,060,070 7,413,523 6,56Receipts per Firm 490.5 68.5 159.9 453.9 1,Receipts per Employee 83.5 NA 79.9 71.4 Payroll per Employee 31.0 NA 19.8 26.6 Real EstateFirms 217,035 30,348 132,524 29,011 1Establishments 235,784 30,434 132,995 30,028 1Employment 1,346,854 0 249,702 186,492 17Annual Payroll 30,144,510 945,076 4,495,421 3,722,756 3,76Estimated Receipts 155,061,707 5,273,212 37,538,261 23,142,617 19,17Receipts per Firm 714.5 173.8 283.3 797.7 1,Receipts per Employee 115.1 NA 150.3 124.1 Payroll per Employee 22.4 NA 18.0 20.0 Holding and Other Investment

Offices

Firms 25,898 4,046 12,780 2,454 Establishments 27,553 4,048 12,805 2,501 Employment 261,212 0 22,986 15,391 1Annual Payroll 12,301,790 311,081 765,500 631,232 65Estimated Receipts 71,603,626 1,810,513 8,240,340 3,783,697 4,58Receipts per Firm 2,764.8 447.5 644.8 1,541.8 3,Receipts per Employee 274.1 NA 358.5 245.8 Payroll per Employee 47.1 NA 33.3 41.0 ServicesFirms 2,030,895 230,004 1,039,341 380,465 19Establishments 2,294,559 230,671 1,041,481 386,848 21Employment 32,262,429 0 2,196,422 2,475,411 2,60
Supplementary Tables 205

Annual Payroll 745,774,734 8,999,723 51,274,343 56,204,293 61,64Estimated Receipts 1,904,405,317 24,781,917 181,816,183 157,129,927 159,65Receipts per Firm 937.7 107.7 174.9 413.0 Receipts per Employee 59.0 NA 82.8 63.5 Payroll per Employee 23.1 NA 23.3 22.7 Hotels, Rooming Houses,

Camps, and OtherLodging Places

Firms 45,745 7,747 16,247 6,383 Establishments 53,470 7,760 16,285 6,478 Employment 1,556,820 0 33,379 42,372 8Annual Payroll 22,448,315 406,184 407,551 432,463 80Estimated Receipts 75,392,947 1,436,600 2,640,962 2,051,732 3,44Receipts per Firm 1,648.1 185.4 162.6 321.4 Receipts per Employee 48.4 NA 79.1 48.4 Payroll per Employee 14.4 NA 12.2 10.2 Personal ServicesFirms 171,361 19,645 95,550 32,692 1Establishments 201,965 19,732 95,939 33,906 1Employment 1,268,179 0 202,672 212,049 19Annual Payroll 15,658,079 292,097 2,126,890 2,439,070 2,44Estimated Receipts 45,723,770 866,180 8,774,173 7,378,349 6,69Receipts per Firm 266.8 44.1 91.8 225.7 Receipts per Employee 36.1 NA 43.3 34.8 Payroll per Employee 12.3 NA 10.5 11.5 Business ServicesFirms 278,910 46,483 127,874 43,456 2Establishments 325,954 46,608 128,073 44,019 2Employment 5,949,822 0 258,898 284,464 35Annual Payroll 128,231,376 1,783,900 6,067,033 6,242,756 8,14Estimated Receipts 310,237,629 4,500,683 23,975,946 20,451,990 23,93Receipts per Firm 1,112.3 96.8 187.5 470.6 Receipts per Employee 52.1 NA 92.6 71.9 Payroll per Employee 21.6 NA 23.4 21.9 
206 The Annual Report on Small Business and Competition Table A.5 Various Statistics by Industry (Two-Digit SIC Code) and Fi

Dollars)—Continued 

Industry Total 0 1–4 5–9 10–Automotive Repair, Services,

and Parking

Firms 152,701 17,470 87,340 29,850 1Establishments 175,937 17,494 87,494 30,485 1Employment 932,194 0 188,736 191,570 14Annual Payroll 17,990,611 341,110 3,142,919 3,659,610 3,00Estimated Receipts 76,134,358 1,366,600 15,691,156 13,387,625 10,38Receipts per Firm 498.6 78.2 179.7 448.5 Receipts per Employee 81.7 NA 83.1 69.9 Payroll per Employee 19.3 NA 16.7 19.1 Miscellaneous Repair ServicesFirms 67,757 7,417 40,121 11,676 Establishments 73,159 7,424 40,146 11,783 Employment 442,840 0 81,580 75,314 6Annual Payroll 10,524,095 124,054 1,351,593 1,493,268 1,56Estimated Receipts 33,349,553 399,884 6,014,188 4,982,261 4,95Receipts per Firm 492.2 53.9 149.9 426.7 Receipts per Employee 75.3 NA 73.7 66.2 Payroll per Employee 23.8 NA 16.6 19.8 Motion PicturesFirms 32,291 5,812 15,148 5,849 Establishments 42,867 5,840 15,210 6,009 Employment 508,554 0 32,192 38,106 4Annual Payroll 10,557,570 422,435 1,171,625 543,111 65Estimated Receipts 49,367,903 1,627,361 3,413,414 2,240,198 3,18Receipts per Firm 1,528.8 280.0 225.3 383.0 1,Receipts per Employee 97.1 NA 106.0 58.8 Payroll per Employee 20.8 NA 36.4 14.3 
Supplementary Tables 207

Amusement and Recreation

Services

Firms 82,987 18,535 30,370 12,474 Establishments 88,602 18,553 30,425 12,596 Employment 1,223,860 0 63,464 82,575 13Annual Payroll 21,842,647 859,389 1,856,200 1,220,734 1,66Estimated Receipts 66,405,394 2,871,535 6,602,128 4,844,365 6,16Receipts per Firm 800.2 154.9 217.4 388.4 Receipts per Employee 54.3 NA 104.0 58.7 Payroll per Employee 17.8 NA 29.2 14.8 Health ServicesFirms 424,346 29,359 212,235 105,065 4Establishments 474,109 29,546 212,936 107,257 4Employment 10,507,120 0 489,548 679,728 54Annual Payroll 287,270,177 1,932,445 17,835,890 22,845,997 21,29Estimated Receipts 640,534,553 4,346,697 52,845,838 52,483,988 43,28Receipts per Firm 1,509.5 148.1 249.0 499.5 1,Receipts per Employee 61.0 NA 107.9 77.2 Payroll per Employee 27.3 NA 36.4 33.6 Legal ServicesFirms 153,207 14,266 99,798 21,450 1Establishments 158,641 14,291 99,887 21,713 1Employment 963,540 0 189,305 138,442 13Annual Payroll 40,697,592 710,167 5,245,230 4,475,144 5,52Estimated Receipts 104,083,278 1,815,525 19,323,509 12,144,543 12,63Receipts per Firm 679.4 127.3 193.6 566.2 1,Receipts per Employee 108.0 NA 102.1 87.7 Payroll per Employee 42.2 NA 27.7 32.3 Educational ServicesFirms 37,750 3,716 11,785 5,320 Establishments 43,172 3,745 11,855 5,375 Employment 1,972,121 0 25,036 35,564 7Annual Payroll 37,210,993 104,314 420,726 515,554 1,00Estimated Receipts 99,757,967 306,873 1,542,661 1,597,790 2,80Receipts per Firm 2,642.6 82.6 130.9 300.3 
208 The Annual Report on Small Business and Competition Table A.5 Various Statistics by Industry (Two-Digit SIC Code) and Fi

Dollars)—Continued 

Industry Total 0 1–4 5–9 10–Receipts per Employee 50.6 NA 61.6 44.9 Payroll per Employee 18.9 NA 16.8 14.5 Social ServicesFirms 108,775 9,939 41,598 19,818 1Establishments 147,908 9,993 41,647 20,036 1Employment 2,063,931 0 89,128 132,806 22Annual Payroll 27,653,061 203,905 1,095,263 1,603,891 2,76Estimated Receipts 71,874,059 515,554 3,939,874 4,403,795 7,16Receipts per Firm 660.8 51.9 94.7 222.2 Receipts per Employee 34.8 NA 44.2 33.2 Payroll per Employee 13.4 NA 12.3 12.1 Membership OrganizationsFirms 233,847 11,112 128,753 48,783 2Establishments 239,206 11,114 128,771 48,890 2Employment 2,069,524 0 279,157 316,685 33Annual Payroll 27,158,326 187,840 2,958,022 3,293,146 3,76Estimated Receipts 95,814,404 665,231 14,168,016 12,704,530 13,87Receipts per Firm 409.7 59.9 110.0 260.4 Receipts per Employee 46.3 NA 50.8 40.1 Payroll per Employee 13.1 NA 10.6 10.4 Engineering, Accounting,

Research, Management,and Related Services

Firms 232,611 35,222 123,794 35,620 1Establishments 251,292 35,270 123,989 36,011 1Employment 2,643,305 0 246,773 231,211 24Annual Payroll 93,874,179 1,458,248 6,949,088 7,046,226 8,56Estimated Receipts 223,666,529 3,612,149 21,139,534 17,394,339 19,95
Supplementary Tables 209

Receipts per Firm 961.5 102.6 170.8 488.3 1,Receipts per Employee 84.6 NA 85.7 75.2 Payroll per Employee 35.5 NA 28.2 30.5 Services, n.e.c.Firms 13,777 2,985 7,411 1,699 Establishments 14,642 2,989 7,432 1,745 Employment 86,233 0 13,657 11,007 1Annual Payroll 3,321,864 167,891 603,642 344,372 36Estimated Receipts 8,379,437 435,114 1,589,435 904,717 91Receipts per Firm 608.2 145.8 214.5 532.5 1,Receipts per Employee 97.2 NA 116.4 82.2 Payroll per Employee 38.5 NA 44.2 31.3 Nonclassifiable EstablishmentsFirms 49,070 31,228 14,548 2,286 Establishments 49,075 31,228 14,548 2,286 Employment 55,214 0 23,854 14,777 Annual Payroll 804,998 420,458 196,178 85,680 5Estimated Receipts 4,761,247 2,383,444 1,280,711 511,761 30Receipts per Firm 97.0 76.3 88.0 223.9 Receipts per Employee 86.2 NA 53.7 34.6 Payroll per Employee 14.6 NA 8.2 5.8 

n.e.c. = not elsewhere classifiedNA = not availableNote: A firm is defined as an aggregation of all establishments owned by a paren

can include subsidiaries or other branch establishments under the same ownership and 

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, 

Census, 1996.
210 The Annual Report on Small Business and Competition Table A.6 Employment Share by Firm Size and Major Industrial Sec

Industrial Sector Total (Number of Jobs) 0–4 5–9 10–19Total 1988 87,844,303 5.7 6.9 8.3 

1989 91,626,094 5.5 6.7 8.1 1990 93,469,275 5.5 6.7 8.1 1991 92,307,559 5.6 6.7 8.0 1992 92,825,797 5.6 6.7 8.0 1993 94,773,913 5.5 6.7 7.9 

Agricultural 1988 471,827 16.6 19.5 19.3 

Services, Forestry, 1989 498,774 16.4 19.7 19.6 and Fishing 1990 534,125 16.2 19.8 20.0 

1991 545,156 16.6 20.1 20.3 1992 593,811 16.1 19.4 20.4 1993 588,556 16.2 19.8 21.1 

Mining 1988 736,777 3.0 3.7 5.8 

1989 713,360 3.0 3.7 5.7 1990 723,420 3.0 3.6 5.7 1991 716,425 3.1 3.7 5.6 1992 650,241 3.4 3.7 5.5 1993 608,309 3.5 4.0 5.7 

Construction 1988 4,995,795 11.5 14.0 16.5 

1989 5,135,544 11.5 13.9 16.4 1990 5,258,524 11.5 13.8 16.1 1991 4,680,166 12.9 14.5 16.4 1992 4,501,728 13.5 15.1 16.8 1993 4,525,346 13.4 15.2 17.0 

Manufacturing 1988 19,234,894 1.1 2.1 3.7 

1989 19,534,078 1.1 2.1 3.7 1990 19,167,922 1.1 2.1 3.8 1991 18,390,674 1.2 2.2 3.9 1992 18,166,798 1.3 2.3 3.9 
Supplementary Tables 211

1993 18,183,981 1.3 2.2 3.9 

Transportation, 1988 5,293,212 3.1 3.8 5.3 

Communications, 1989 5,438,191 3.0 3.8 5.3 and Public 1990 5,594,752 3.0 3.7 5.1 Utilities 1991 5,590,526 3.1 3.7 5.0 

1992 5,520,912 3.2 3.7 5.0 1993 5,621,889 3.3 3.8 5.1 

Wholesale Trade 1988 5,994,021 5.5 8.4 12.0 

1989 6,192,885 5.3 8.1 11.7 1990 6,332,437 5.3 7.9 11.5 1991 6,225,619 5.5 8.1 11.5 1992 6,095,217 5.7 8.2 11.5 1993 6,258,484 5.8 8.3 11.7 

Retail Trade 1988 18,867,211 5.6 7.9 9.9 

1989 19,478,857 5.4 7.7 9.8 1990 19,861,604 5.3 7.6 9.7 1991 19,626,546 5.5 7.6 9.6 1992 19,681,419 5.4 7.6 9.6 1993 19,778,588 5.3 7.5 9.4 

Finance, Insurance, 1988 6,662,355 6.9 5.3 5.7 

and Real Estate 1989 6,819,379 6.8 5.3 5.7 

1990 6,983,931 6.8 5.3 5.6 1991 6,862,377 6.8 5.2 5.3 1992 6,904,478 6.9 5.2 5.4 1993 6,891,117 7.1 5.4 5.5 

Services 1988 25,252,106 8.0 8.8 9.0 

1989 27,535,086 7.5 8.3 8.7 1990 28,880,444 7.3 8.2 8.6 1991 29,623,508 7.2 8.1 8.4 1992 30,655,625 7.0 7.9 8.2 1993 32,262,429 6.8 7.7 8.1 

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, 

Census, 1996. 
212 The Annual Report on Small Business and Competition Table A.7 Enterprises by Firm Size and Major Industrial Sector, 198

Industrial Sector Total 0–4 5–9 10–19

Total 1988 4,954,645 2,979,905 923,580 540,98

1989 5,021,315 3,003,224 937,202 553,441990 5,073,795 3,020,935 952,030 562,611991 5,051,025 3,036,304 941,296 551,291992 5,095,356 3,075,280 945,802 551,911993 5,193,642 3,139,518 962,481 559,60

Agricultural Services, 1988 78,324 53,786 14,047 6,94

Forestry, and 1989 83,431 57,011 15,019 7,47Fishing 1990 87,939 59,421 16,173 8,09

1991 91,743 62,340 16,690 8,411992 96,211 64,796 17,485 9,271993 99,397 67,399 17,705 9,48

Mining 1988 25,035 13,545 4,100 3,17

1989 24,365 13,308 3,994 3,001990 24,309 13,250 3,925 3,051991 24,285 13,214 4,051 2,971992 22,953 13,032 3,678 2,651993 22,486 12,763 3,685 2,55

Construction 1988 572,317 355,556 106,921 61,57

1989 589,025 367,479 108,634 63,161990 597,272 372,677 110,619 63,291991 582,344 377,827 103,475 57,491992 584,453 381,755 103,810 56,931993 594,187 388,468 105,170 57,95

Manufacturing 1988 320,408 119,421 59,060 52,87

1989 324,139 121,318 59,761 53,121990 327,036 124,543 60,470 53,151991 322,018 125,369 59,552 52,011992 328,201 129,370 61,180 52,10
Supplementary Tables 213

1993 328,167 129,461 60,944 52,06

Transportation, 1988 173,108 97,992 30,644 20,77

Communications, 1989 178,280 101,404 31,197 21,24and Public 1990 180,900 102,820 31,795 21,25Utilities 1991 181,524 105,518 31,184 20,72

1992 184,889 108,287 31,396 20,761993 193,203 114,351 32,399 21,46

Wholesale Trade 1988 368,169 181,502 76,046 54,09

1989 370,674 182,377 76,210 54,351990 374,283 186,019 75,610 54,581991 377,669 191,665 76,182 53,591992 380,328 197,541 75,451 52,451993 397,233 206,574 78,616 54,87

Retail Trade 1988 1,094,188 600,339 227,277 140,41

1989 1,104,567 605,002 228,137 142,481990 1,109,703 605,787 229,751 144,171991 1,104,036 608,654 227,132 141,961992 1,089,071 593,938 226,503 141,661993 1,090,076 600,157 224,416 139,00

Finance, 1988 402,849 285,673 55,081 28,73

Insurance, and 1989 409,605 290,422 56,179 29,04Real Estate 1990 419,963 298,358 57,674 29,54

1991 409,863 294,303 55,029 27,551992 411,466 294,004 55,783 28,061993 426,778 305,887 58,210 28,82

Services 1988 1,834,660 1,163,501 344,196 172,22

1989 1,872,348 1,175,756 353,313 179,811990 1,921,767 1,200,505 363,345 186,431991 1,962,388 1,231,750 367,892 188,501992 1,963,563 1,214,230 370,129 190,561993 2,030,895 1,269,345 380,465 195,98

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, 

Census, 1996. 
214 The Annual Report on Small Business and Competition

United States 806,885 819,477 1.6 

Region I 40,496 40,328 -0.4 

Connecticut 9,914 9,395 -5.2 40 

Maine 3,982 4,476 12.4 8 

Massachusetts 16,167 16,040 -0.8 29 

New Hampshire 5,001 4,988 -0.3 28 

Rhode Island 3,409 3,290 -3.5 36 

Vermont 2,023 2,139 5.7 14 

Region II 80,593 81,726 1.4 

New Jersey 25,498 27,106 6.3 12 

New York 55,095 54,620 -0.9 30 

Region III 69,978 72,169 3.1 

Delaware 2,750 2,783 1.2 25 

District of Columbia 5,464 3,250 -40.5 51 

Maryland 14,062 18,458 31.3 1 

Pennsylvania 23,008 23,820 3.5 17 

Virginia 20,565 19,433 -5.5 42 

West Virginia 4,129 4,425 7.2 11 

Region IV 166,483 150,807 -9.4 

Alabama 10,087 9,140 -9.4 45 

Florida 56,320 54,006 -4.1 37 

Georgia 39,069 24,478 -37.3 50 

Kentucky 8,061 9,078 12.6 7 

Mississippi 6,936 6,185 -10.8 47 

North Carolina 21,960 21,650 -1.4 31 

South Carolina 8,730 10,447 19.7 5 

Tennessee 15,320 15,823 3.3 18 

Region V 109,741 120,286 9.6 

Illinois 29,934 30,393 1.5 22 

Indiana 13,969 14,355 2.8 19 

Michigan 20,001 23,972 19.9 4 

Minnesota 12,899 12,178 -5.6 44 

Ohio 21,256 27,046 27.2 2 

Wisconsin 11,682 12,342 5.6 15 

Region VI 84,255 83,357 -1.1 

Arkansas 6,452 7,042 9.1 10 

Louisiana 9,600 9,817 2.3 21 

New Mexico 6,140 4,837 -21.2 49 

Oklahoma 8,387 8,790 4.8 16 

Texas 53,676 52,871 -1.5 32 

Region VII 32,563 32,533 -0.1 

Missouri 14,718 14,935 1.5 23 

Iowa 6,095 6,103 0.1 27 

Kansas 7,423 7,600 2.4 20 

Nebraska 4,327 3,895 -10.0 46 
Supplementary Tables 2

Region VIII 37,189 36,541 -1.7 

Colorado 19,458 19,703 1.3 24 

Montana 3,449 3,377 -2.1 33 

North Dakota 1,613 1,631 1.1 26 

South Dakota 2,228 1,858 -16.6 48 

Utah 8,104 7,742 -4.5 38 

Wyoming 2,337 2,230 -4.6 39 

Region IX 132,088 150,143 13.7 

Arizona 11,347 12,044 6.1 13 

California 111,085 127,074 14.4 6 

Hawaii 3,183 3,874 21.7 3 

Nevada 6,473 7,151 10.5 9 

Region X 53,499 51,587 -3.6 

Alaska 2,665 2,521 -5.4 41 

Idaho 5,202 5,053 -2.9 35 

Oregon 14,577 13,770 -5.5 43 

Washington 31,055 30,243 -2.6 34 

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from d

provided by the U.S. Department of Labor, Employment and Training Administration, based up

state employment security agencies’ quarterly unemployment insurance reports, 1994 and 19
1994 1995 Change Rank

United States 741,657 770,206 3.8 

Region I 30,702 30,609 -0.3 

Connecticut 6,911 6,857 -0.8 38

Maine 2,637 2,805 6.4 16

Massachusetts 14,065 13,479 -4.2 49

New Hampshire 2,990 3,095 3.5 22

Rhode Island 2,500 2,743 9.7 8

Vermont 1,599 1,630 1.9 29

Region II 101,558 110,294 8.6 

New Jersey 30,869 37,861 22.7 1

New York 70,689 72,433 2.5 26

Region III 103,619 110,646 6.8 

Delaware 44,762 50,094 11.9 5 

District of Columbia 2,256 2,256 0.0 35 

Maryland 17,730 18,014 1.6 30 

Pennsylvania 17,394 18,575 6.8 13 

Virginia 19,150 19,172 0.1 34 

West Virginia 2,327 2,535 8.9 10 

Region IV 170,043 176,940 4.1 

Alabama 7,169 7,686 7.2 12 

Florida 93,388 98,066 5.0 18 

Georgia 24,707 26,990 9.2 9 

Kentucky 7,688 7,764 1.0 31 

Mississippi 4,814 4,618 -4.1 48 

North Carolina 14,830 16,021 8.0 11 

South Carolina 7,374 7,601 3.1 23 

Tennessee 10,073 8,194 -18.7 50 

Region V 116,197 119,165 2.6 

Illinois 34,287 34,495 0.6 33 

Indiana 11,987 12,333 2.9 25 

Michigan 30,374 31,254 2.9 24 

Minnesota 11,429 12,203 6.8 14 

Ohio 20,013 20,859 4.2 20 

Wisconsin 8,107 8,021 -1.1 39 

Region VI 65,278 67,199 2.9 

Arkansas 5,867 6,615 12.7 4 

Louisiana 11,328 11,082 -2.2 41 

New Mexico 3,088 3,584 16.1 3 

Oklahoma 7,633 7,796 2.1 27 

Texas 37,362 38,122 2.0 28 

216 The Annual Report on Small Business and Competition
1994 1995 Change Rank

Region VII 23,657 24,503 3.6 

Missouri 11,022 10,743 -2.5 44 

Iowa 4,915 5,925 20.5 2 

Kansas 4,273 4,475 4.7 19 

Nebraska 3,447 3,360 -2.5 43 

Region VIII 27,249 27,574 1.2 

Colorado 15,187 15,309 0.8 32 

Montana 2,177 1,767 -18.8 51 

North Dakota 1,042 1,021 -2.0 40 

South Dakota 1,349 1,401 3.9 21 

Utah 5,560 5,917 6.4 15 

Wyoming 1,934 2,159 11.6 6 

Region IX 74,934 75,497 0.8 

Arizona 11,248 10,866 -3.4 46 

California 42,871 41,913 -2.2 42 

Hawaii 3,792 3,792 0.0 36 

Nevada 17,023 18,926 11.2 7 

Region X 28,417 27,779 -2.2 

Alaska 1,428 1,428 0.0 37 

Idaho 2,530 2,668 5.5 17 

Oregon 10,015 9,730 -2.8 45 

Washington 14,444 13,953 -3.4 47 

Source: U.S. Small Business Administration, Office of Advocacy, based upon data from 

Dun and Bradstreet Corporation, 1996.

Supplementary Tables 2
1994 1995 Change Rank

United States 8,999 8,896 21.1

Region I 521 543 4.2 

Connecticut 115 121 5.2 16 

Maine 67 73 9.0 9 

Massachusetts 218 231 6.0 14 

New Hampshire 56 60 7.1 12 

Rhode Island 28 23 217.9 49 

Vermont 37 35 25.4 34 

Region II 733 712 22.9 

New Jersey 217 210 23.2 31 

New York 516 502 22.7 29 

Region III 819 763 26.8 

Delaware 17 19 11.8 5 

District of Columbia 14 12 214.3 48 

Maryland 144 131 29.0 43 

Pennsylvania 382 373 22.4 28 

Virginia 213 184 213.6 47 

West Virginia 49 44 210.2 45 

Region IV 1,489 1,469 21.3 

Alabama 131 127 23.1 30 

Florida 416 431 3.6 19 

Georgia 208 213 2.4 20 

Kentucky 134 126 26.0 38 

Mississippi 82 63 223.2 50 

North Carolina 243 231 24.9 33 

South Carolina 97 101 4.1 17 

Tennessee 178 177 20.6 24 

Region V 1,420 1,421 0.1 

Illinois 354 331 26.5 39 

Indiana 181 175 23.3 32 

Michigan 242 264 9.1 8 

Minnesota 171 188 9.9 7 

Ohio 318 318 0.0 23 

Wisconsin 154 145 25.8 36 

Region VI 1,080 1,109 2.7 

Arkansas 91 86 25.5 35 

Louisiana 118 131 11.0 6 

New Mexico 78 82 5.1 51 

Oklahoma 113 119 5.3 15 

Texas 680 691 1.6 22 

218 The Annual Report on Small Business and Competition
1994 1995 Change Rank

Region VII 457 439 23.9 

Missouri 187 176 25.9 37 

Iowa 122 111 29.0 42 

Kansas 90 89 21.1 27 

Nebraska 58 63 8.6 10 

Region VIII 349 345 21.1 

Colorado 164 152 27.3 40 

Montana 50 52 4.0 18 

North Dakota 21 27 28.6 1 

South Dakota 28 30 7.1 13 

Utah 67 61 29.0 41 

Wyoming 19 23 21.1 3 

Region IX 1,641 1,641 0.0 

Arizona 138 137 20.7 25 

California 1,416 1,403 28.5 11 

Nevada 40 50 25.0 2 

Region X 493 454 27.9 

Alaska 30 35 16.7 4 

Idaho 56 57 1.8 21 

Oregon 164 148 29.8 44 

Washington 243 214 211.9 46 

Note: The self-employed are aged 16 and over and in nonagricultural industries. Data rep

sent unincorporated self-employed persons. Incorporated self-employed individuals are coun

as wage-and-salary workers in their own businesses.

Source: U.S. Department of Labor, Bureau of Labor Statistics, Local Area Unemploym

Statistics, 1994 and 1995, Table 19.

Supplementary Tables 2
1994 1995 Change Rank

U.S. Total 50,845 50,516 20.6

Region I 2,224 2,016 29.4 

Connecticut 206 205 20.5 29 

Maine 296 274 27.4 39 

Massachusetts 1,300 1,116 214.2 47

New Hampshire 111 92 217.1 49 

Rhode Island 177 162 28.5 42 

Vermont 134 167 24.6 6 

Region II 4,765 4,569 24.1 

New Jersey 1,354 1,195 211.7 45

New York 3,411 3,374 21.1 30

Region III 5,112 5,215 2.0

Delaware 120 277 130.8 1

District of Columbia 118 100 215.3 48

Maryland 1,243 1,493 20.1 8 

Pennsylvania 1,925 1,770 28.1 41 

Virginia 1,396 1,261 29.7 44 

West Virginia 310 314 1.3 26

Region IV 6,917 6,009 213.1 

Alabama 717 796 11.0 16

Florida 2,218 1,949 212.1 46

Georgia 1,708 496 271.0 51

Kentucky 422 473 12.1 13

Mississippi 218 283 29.8 5 

North Carolina 782 726 27.2 37

South Carolina 221 337 52.5 2 

Tennessee 631 949 50.4 3 

Region V 7,420 7,558 1.9

Illinois 1,751 1,624 27.3 38

Indiana 886 842 25.0 36

Michigan 1,098 1,072 22.4 34

Minnesota 1,962 1,901 23.1 35

Ohio 728 1,052 44.5 4

Wisconsin 995 1,067 7.2 20

Region VI 5,361 5,662 5.6

Arkansas 373 422 13.1 10

Louisiana 570 562 21.4 31

New Mexico 287 322 12.2 12

Oklahoma 873 946 8.4 18

Texas 3,258 3,410 4.7 24

220 The Annual Report on Small Business and Competition
1994 1995 Change Rank

Region VII 1,697 1,708 0.6

Iowa 482 556 15.4 9

Kansas 372 419 12.6 11

Missouri 653 521 220.2 50

Nebraska 190 212 11.6 14

Region VIII 1,440 1,422 21.3

Colorado 670 610 29.0 43

Montana 162 171 5.6 22

North Dakota 120 118 21.7 32

South Dakota 164 172 4.9 23

Utah 222 242 9.0 17

Wyoming 102 109 6.9 21

Region IX 13,451 13,691 1.8

Arizona 965 1,045 8.3 19

California 11,938 12,097 1.3 25

Hawaii 157 159 1.3 27

Nevada 391 390 20.3 28

Region X 2,458 2,666 8.5

Alaska 162 159 21.9 33

Idaho 351 391 11.4 15

Oregon 844 781 27.5 40

Washington 1,101 1,335 21.3 7

Note: A business bankruptcy is the legal recognition that a company is insolvent (i.e., 

able to satisfy creditors or discharge liabilities); the company must restructure or completely liq

date. A business bankruptcy culminates with the filing of a bankruptcy petition under Chapte

9, 11, or 12 of the federal bankruptcy law.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from d

collected by the Administrative Office of the U.S. Courts, Statistical Analysis and Reports D

sion, 1996.

Supplementary Tables 2
1994 1995 Change Rank

U.S. Total 71,558 71,194 20.5

Region I 3,771 3,389 210.1

Connecticut 577 482 216.5 44

Maine 335 315 26.0 33

Massachusetts 2,100 1,931 28.0 39

New Hampshire 416 385 27.5 35

Rhode Island 213 127 240.4 50

Vermont 130 149 14.6 11

Region II 7,730 7,842 1.4

New Jersey 2,190 2,782 27.0 5

New York 5,540 5,060 28.7 40

Region III 6,363 6,781 6.6

Delaware 88 45 248.9 51

District of Columbia 168 155 27.7 38

Maryland 1,610 1,813 12.6 13

Pennsylvania 2,742 2,761 0.7 26

Virginia 1,459 1,719 17.8 10

West Virginia 296 288 22.7 29

Region IV 9,694 8,284 214.5

Alabama 668 549 217.8 45

Florida 3,609 2,904 219.5 46

Georgia 1,961 1,489 224.1 48

Kentucky 707 663 26.2 34

Mississippi 249 230 27.6 37

North Carolina 1,046 968 27.5 36

South Carolina 498 491 21.4 28

Tennessee 956 990 3.6 23

Region V 8,504 8,340 21.9

Illinois 1,757 1,684 24.2 32

Indiana 908 799 212.0 41

Michigan 1,955 1,683 213.9 42

Minnesota 722 904 25.2 6

Ohio 1,987 2,133 7.3 19

Wisconsin 1,175 1,137 23.2 31

Region VI 8,355 9,103 9.0

Arkansas 366 733 100.3 1

Louisiana 656 463 229.4 49

New Mexico 330 408 23.6 7

Oklahoma 1,168 1,317 12.8 12

Texas 5,835 6,182 5.9 20

222 The Annual Report on Small Business and Competition
1994 1995 Change Rank

Region VII 2,717 2,950 8.6

Iowa 473 570 20.5 8

Kansas 871 946 8.6 17

Missouri 1,059 1,112 5.0 21

Nebraska 314 322 2.5 24

Region VIII 2,096 2,359 12.5

Colorado 1,315 1,476 12.2 14

Montana 181 152 216.0 43

North Dakota 90 98 8.9 16

South Dakota 168 182 8.3 18

Utah 260 344 32.3 3

Wyoming 82 107 30.5 4

Region IX 18,908 18,467 -2.3

Arizona 1,407 1,413 0.4 27

California 16,796 16,329 22.8 30

Hawaii 259 271 4.6 22

Nevada 446 454 1.8 25

Region X 3,420 3,679 7.6

Alaska 112 122 8.9 15

Idaho 276 389 40.9 2

Oregon 1,027 798 222.3 47

Washington 2,005 2,370 18.2 9

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from d

provided by the Dun and Bradstreet Corporation, 1996.

Supplementary Tables 2
1994 1995 Change Rank

United States 803,290 863,699 7.5 

Region I 41,026 45,318 10.5 

Connecticut 11,644 11,619 20.2 33 

Maine 3,799 4,676 23.1 8 

Massachusetts 13,688 15,417 12.6 14 

New Hampshire 4,818 5,044 4.7 24 

Rhode Island 4,277 5,985 39.9 3 

Vermont 2,800 2,577 28.0 44 

Region II 86,121 82,480 24.2 

New Jersey 27,155 25,667 25.5 42 

New York 58,966 56,813 23.7 39 

Region III 72,185 73,617 2.0 

Delaware 2,523 3,193 26.6 6 

District of Columbia 4,536 3,302 227.2 49 

Maryland 16,049 16,256 1.3 30 

Pennsylvania 26,462 27,254 3.0 27 

Virginia 18,618 18,493 20.7 34 

West Virginia 3,997 5,119 28.1 5 

Region IV 168,600 152,656 29.5 

Alabama 10,603 10,968 3.4 26 

Florida 56,976 52,467 27.9 43 

Georgia 35,200 23,161 234.2 51 

Kentucky 10,151 9,307 28.3 45 

Mississippi 7,778 7,077 29.0 46 

North Carolina 24,413 23,389 24.2 41 

South Carolina 8,879 10,391 17.0 10 

Tennessee 14,600 15,896 8.9 18 

Region V 107,929 118,332 9.6 

Illinois 31,051 30,260 22.5 37 

Indiana 14,255 14,129 20.9 35 

Michigan 19,267 20,340 5.6 22 

Minnesota 12,960 12,458 23.9 40 

Ohio 18,154 28,091 54.7 1 

Wisconsin 12,242 13,054 6.6 21 

Region VI 84,214 86,109 2.3 

Arkansas 7,006 4,872 230.5 50 

Louisiana 10,384 11,347 9.3 15 

New Mexico 5,847 5,240 210.4 48 

Oklahoma 8,914 8,623 23.3 38 

Texas 52,063 56,027 7.6 20 

224 The Annual Report on Small Business and Competition
1994 1995 Change Rank

Region VII 37,120 38,322 3.2 

Missouri 16,104 17,588 9.2 17 

Iowa 7,902 7,702 22.5 36 

Kansas 7,969 8,387 5.2 23 

Nebraska 5,145 4,645 29.7 47 

Region VIII 32,023 36,793 14.9 

Colorado 14,371 17,933 24.8 7 

Montana 4,023 4,066 1.1 31 

North Dakota 1,754 2,045 16.6 11 

South Dakota 2,347 2,360 0.6 32 

Utah 7,005 7,654 9.3 16 

Wyoming 2,523 2,735 8.4 19 

Region IX 128,120 178,812 39.6 

Arizona 11,087 15,431 39.2 4 

California 107,923 152,945 41.7 2 

Hawaii 3,492 3,953 13.2 13 

Nevada 5,618 6,483 15.4 12 

Region X 45,952 51,260 11.6 

Alaska 2,478 2,530 2.1 29 

Idaho 4,697 4,861 3.5 25 

Oregon 12,716 13,022 2.4 28 

Washington 26,061 30,847 18.4 9 

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from d

provided by the U.S. Department of Labor, Employment and Training Administration, based up

state employment security agencies’ quarterly unemployment insurance reports, 1994 and 19

Supplementary Tables 2
gg g 

(Minimum Years) All Firms No Jobs 1–4 Jobs 51 Jobs

2 23.7 29.9 8.3 6.0

4 52.7 64.8 19.6 13.1

6 62.2 74.0 23.5 21.1

8 70.9 81.5 46.5 30.0

10* 79.0 90.5 59.1 37.6

*Estimated using log linear regression models.

Note: Firms were traced beginning in 1976 and observed, if available, every other year 

ginning in 1978 and ending in 1990. Business dissolution includes businesses that disappear 

any reason at all, including failure, bankruptcy, owner retirement, owner health, or the desire 

enter a more profitable endeavor. It has been estimated that about 15 percent of business disso

tions represent actual failures.

Source: U.S. Small Business Administration, Office of Advocacy, Small Business Data Ba

1978–1990 USEEM file.

226 The Annual Report on Small Business and Competition
SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

Total, Small-Business-Dominated 45,559.9 46,805.6 1,245.7 2.7

Mining 31.5 32.1 0.6 1.9

144 Sand and Gravel 31.5 32.1 0.6 1.9

Construction 5,073.1 5,205.9 132.8 2.6

151 General Building Contractors 1,236.0 1228.9 27.1 20.6

152 Residential Building Construction 614.5 611.7 22.8 20.5

153 Operative Builders 28.2 28.1 20.1 20.4

154 Nonresidential Building Construction 593.3 589.1 24.2 20.7

161 Heavy Construction other than 

Building 698.1 695.5 20.3 20.2

161 Highway and Street Construction 193.3 193.3 0.3 0.2

172 Special Trade Contractors 3,139.0 3,281.5 142.5 4.5

171 Plumbing, Heating, and Air 

Conditioning 717.8 758.1 40.3 5.6

172 Painting, Paper Hanging, and 

Decorating 174.9 182.3 7.4 4.2

173 Electrical Work 595.4 630.2 34.8 5.8

174 Masonry, Stonework, and Plastering 441.4 453.5 12.1 2.7

175 Carpentry and Flooring 216.7 231.6 14.9 6.9

176 Roofing and Sheet Metal Work 210.8 213.4 2.6 1.2

Manufacturing 3,529.8 3,523.6 26.2 20.2

233 Women’s and Misses’ Outerwear 281.2 249.5 231.7 211.3

2361 Girls’, Children’s, Infants’ Dresses

and Blouses 19.3 17.4 21.9 29.8

238 Miscellaneous Apparel and 

Accessories 39.6 36.7 22.9 27.3

239 Miscellaneous Fabricated Textile

Products 83.2 80.0 23.2 23.8

2391 Curtains and Draperies 20.8 18.8 22.0 29.6 

241 Logging 81.1 82.8 1.7 2.1 

242 Sawmills and Planing Mills 189.6 182.0 27.6 24.0

243 Millwork, Veneer, Plywood 30.9 32.1 1.2 3.9

2434 Wood Kitchen Cabinets 77.1 75.5 21.6 22.1

2435 Hardwood Veneer and Plywood 25.0 24.7 20.3 21.2

244 Wood Containers 49.9 50.3 0.4 0.8

249 Miscellaneous Wood Products 91.2 90.5 20.7 20.8

2515 Mattresses, Foundations, and 

Convertible Beds 31.1 30.9 20.2 20.6

Supplementary Tables 2
Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

254 Partitions, Shelving, Lockers, Fixtures 81.4 80.2 21.2 21.5

259 Miscellaneous Furniture and Fixtures 37.2 37.1 20.1 20.3

275 Commercial Printing 562.3 566.0 3.7 0.7

279 Printing Trade Services 57.0 55.6 21.4 22.5

316 Luggage 11.7 11.3 20.4 23.4

317 Handbags and Personal Leather Goods 12.6 11.8 20.8 26.3

327 Concrete, Gypsum, and Plaster 

Products 197.3 200.0 2.7 1.4

3441 Fabricated Structural Metal 70.2 74.9 4.7 6.7

3444 Sheet Metal Work 105.8 109.9 4.1 3.9

3446 Architectural and Ornamental 

Metal Work 27.9 29.0 1.1 3.9

3451 Screw Machine Products 50.9 51.1 0.2 0.4

3469 Metal Stampings, n.e.c. 90.5 92.4 1.9 2.1

347 Coating, Engraving, and Allied 

Services 127.1 129.7 2.6 2.0

3496 Miscellaneous Fabricated Wire

Products 57.4 58.5 1.1 1.9

3535 Conveyors and Conveying Equipment 38.4 40.7 2.3 6.0

354 Metalworking Machinery and 

Equipment 123.2 129.6 6.4 5.2

3544 Special Dies and Tools 156.2 161.5 5.3 3.4

3545 Cutting Tools, Machine Tool 

Accessories 50.9 53.6 2.7 5.3

3552 Textile Machinery 15.5 15.2 20.3 21.9

3556 Food Products Machinery 24.3 25.3 1.0 4.1

359 Miscellaneous Industrial Machinery 67.3 68.4 1.1 1.6

3596 Scales and Balances, except 

Laboratory 261.7 271.6 9.9 3.8

3633 Household Laundry Equipment 17.7 16.5 21.2 26.8

3645 Residential Electric Lighting Fixtures 21.4 20.8 20.6 22.8

391 Jewelry, Silverware, and Plated Ware 13.2 12.8 20.4 23.0

3911 Jewelry, Precious Metal 39.0 38.2 20.8 22.1

393 Musical Instruments 13.7 14.5 0.8 5.8

396 Costume Jewelry 28.5 25.9 22.6 29.1

399 Miscellaneous Manufacturing 

Industries 149.5 150.3 0.8 0.5

Transportation and Public Utilities 1,117.4 1,182.4 65.0 5.8

413 Local and Interurban Passenger

Transit 53.8 57.4 3.6 6.7

228 The Annual Report on Small Business and Competition
Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

411 Local and Suburban Passenger

Transportation 210.2 235.0 24.8 11.8

412 Taxicabs 33.0 36.4 3.4 10.3

415 School Buses 143.0 154.0 11.0 7.7

422 Public Warehousing 149.4 152.8 3.4 2.3

472 Transportation Services 39.3 40.1 0.8 2.0

472 Arrangement of Passenger Transport 199.3 194.7 24.6 22.3

473 Arrangement of Transportation of 

Freight 172.1 190.7 18.6 10.8

4832 Radio Broadcasting Stations 117.3 121.3 4.0 3.4

Wholesale Trade 3,868.3 3,964.3 96.0 2.5

50 Durable Goods 2,607.9 2,685.0 77.1 3.0

501 Motor Vehicles and Automotive 

Equipment 483.6 498.2 14.6 3.0

502 Furniture and Home Furnishings 146.8 157.3 10.5 7.2

503 Lumber and Construction Materials 235.0 240.1 5.1 2.2

505 Metals and Minerals, except 

Petroleum 135.9 141.2 5.3 3.9

5063 Electrical Equipment, Wiring, and 

Construction 201.2 210.8 9.6 4.8

5064 Electrical Appliances, Television, 

and Radio 50.5 49.3 21.2 22.4

507 Hardware, Plumbing, and Heating 

Equipment 282.9 290.0 7.1 2.5

508 Machinery, Equipment, and Supplies 755.5 767.7 12.2 1.6

509 Miscellaneous Durable Goods 316.5 330.4 13.9 4.4

51 Nondurable Goods 1,260.4 1,279.3 18.9 1.5

513 Apparel, Piece Goods, and Notions 211.5 212.1 0.6 0.3

5147 Meats and Meat Products 63.1 62.6 20.5 20.8

5148 Fresh Fruits and Vegetables 98.1 101.0 2.9 3.0

515 Farm Product Raw Materials 113.3 108.6 24.7 24.1

517 Petroleum and Petroleum Products 164.4 167.7 3.3 2.0

5181 Beer and Ale 98.6 100.8 2.2 2.2

519 Miscellaneous Nondurable Goods 511.4 526.5 15.1 3.0

Retail Trade 12,783.4 13,032.4 249.0 1.9

523 Building Materials and Garden 

Supplies 31.3 36.1 4.8 15.3

521 Lumber and Other Building Materials 

Stores 489.4 499.3 9.9 2.0 

523 Paint, Glass, and Wallpaper Stores 65.5 66.1 0.6 0.9

525 Hardware Stores 162.7 165.4 2.7 1.7

Supplementary Tables 2
Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

526 Retail Nurseries and Garden Stores 85.6 86.9 1.3 1.5

542 Meat Markets and Freezer Provisioners 52.9 54.4 1.5 2.8

545 Dairy Products Stores 19.4 16.5 22.9 214.9

546 Retail Bakeries 184.0 192.2 8.2 4.5

552 Automotive Dealers and Service 

Stations 161.4 172.9 11.5 7.1

551 New and Used Car Dealers 986.0 1,014.5 28.5 2.9

553 Auto and Home Supply Stores 372.7 394.0 21.3 5.7

554 Gasoline Service Stations 632.6 647.9 15.3 2.4

559 Automotive Dealers, n.e.c. 7.3 6.8 20.5 26.8

561 Men’s and Boys’ Clothing and 

Furnishings 94.7 90.3 24.4 24.6 

571 Furniture and Home Furnishings 

Stores 504.0 517.9 13.9 2.8

572 Household Appliance Stores 81.0 77.6 23.4 24.2

58 Eating and Drinking Places 7,134.7 7,242.8 108.1 1.5

592 Liquor Stores 115.5 115.9 0.4 0.3

593 Used Merchandise Stores 96.3 100.9 4.6 4.8

594 Miscellaneous Shopping Goods 

Stores 225.0 235.4 10.4 4.6

5941 Sporting Goods and Bicycles 190.6 185.8 24.8 22.5

5943 Stationery Stores 77.4 82.4 5.0 6.5

5944 Jewelry Stores 153.0 149.6 23.4 22.2

5947 Gift, Novelty, and Souvenir Shops 222.3 227.8 5.5 2.5

5962 Automatic Merchandising Machine 

Operators 71.4 70.6 20.8 21.1

598 Fuel Dealers 101.8 102.1 0.3 0.3

599 Retail Stores, n.e.c. 464.9 480.3 15.4 3.3

Finance, Insurance and Real Estate 2,347.7 2,401.2 53.5 2.3

606 Credit Unions 152.7 158.7 6.0 3.9

64 Insurance Agents, Brokers, and 

Services 694.9 711.5 16.6 2.4

652 Real Estate 31.7 29.7 22.0 26.3

651 Real Estate Operators and Lessors 580.6 580.7 0.1 0.0

653 Real Estate Agents and Managers 651.7 674.4 22.7 3.5

655 Subdividers and Developers 105.0 105.2 0.2 0.2

230 The Annual Report on Small Business and Competition
Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

67 Holding and Investment Services 131.1 141.0 9.9 7.6

Services 16,808.7 17,463.7 655.0 3.9 

007 Agricultural Services 538.9 586.5 47.6 8.8

721 Laundry, Cleaning, and Garment 

Services 429.4 432.8 3.4 0.8

723 Beauty Shops 388.1 387.4 20.7 20.2

726 Funeral Service and Crematories 89.0 88.9 20.1 20.1

731 Advertising 230.4 250.0 19.6 8.5

732 Credit Reporting and Collection 116.2 121.5 5.3 4.6

733 Mailing, Reproduction, Stenographic 268.9 287.9 19.0 7.1

734 Services to Buildings 867.0 892.8 25.8 3.0

735 Miscellaneous Equipment Rental 

and Leasing 219.6 236.2 16.6 7.6

7361 Employment Agencies 273.0 290.0 17.0 6.2

7384 Photofinishing Laboratories 73.3 72.7 20.6 20.8

753 Automotive Repair Shops 128.9 134.9 6.0 4.7

7532 Top, Body, and Upholstery Repair 

Shops 193.5 207.7 14.2 7.3

7538 General Automotive Repair Shops 232.8 240.5 7.7 3.3

754 Automotive Services, except Repair 86.1 90.9 4.8 5.6

7542 Carwashes 109.0 116.1 7.1 6.5

762 Electrical Repair Shops 106.7 108.3 1.6 1.5

79 Amusement and Recreation Services 258.0 283.9 25.9 10.0

793 Bowling Centers 90.0 88.6 21.4 21.6

799 Miscellaneous Amusement 

Recreation Services 906.3 949.8 43.5 4.8

801 Office of Physicians 1,564.3 1,617.4 53.1 3.4

802 Offices of Dentists 585.4 614.6 29.2 5.0

804 Offices of Other Health Practitioners 393.4 429.8 36.4 9.3

8052 Intermediate Care Facilities 207.2 213.5 6.3 3.0

8059 Nursing and Personal Care, n.e.c. 222.0 230.1 8.1 3.6

807 Medical and Dental Laboratories 195.6 206.6 11.0 5.6

81 Legal Services 928.6 929.8 1.2 0.1

821 Elementary and Secondary Schools 566.0 583.6 17.6 3.1

824 Correspondence and Vocational 

Schools 77.9 83.2 5.3 6.8

Supplementary Tables 2
Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

832 Social Services 194.1 199.8 5.7 2.9

832 Individual and Family Services 602.4 619.5 17.1 2.8

833 Job Training and Related Services 299.6 306.7 7.1 2.4

835 Child Day Care Services 526.2 540.8 14.6 2.8

836 Residential Care 620.4 642.4 22.0 3.5

839 Social Services, n.e.c. 194.1 199.8 5.7 2.9

84 Museums, Botanical and Zoological 

Gardens 77.8 80.1 2.3 3.0

86 Membership Organizations 1,347.1 1,348.3 1.2 0.1

861 Business Associations 102.4 101.2 21.2 21.2

862 Professional Organizations 54.5 55.2 0.7 1.3

863 Labor Organizations 140.0 133.2 26.8 24.9

864 Civic and Social Associations 406.6 412.8 6.2 1.5

87 Engineering, Accounting, Research 1,015.6 1,117.9 102.3 10.1

8712 Architectural Services 123.5 128.7 5.2 4.2

8713 Surveying Services 50.5 53.5 3.0 5.9

872 Accounting, Auditing, and 

Bookkeeping 515.6 543.8 28.2 5.5

8732 Commercial Economic, Sociological, 119.1 126.9 7.8 6.5

and Educational Research

8743 Public Relations Services 33.0 35.2 2.2 6.7

89 Services, n.e.c. 40.7 41.9 1.2 2.9

n.e.c. = Not elsewhere classified.

1Represents sum of three-digit components, which are also shown separately.

2Represents two-digit industries with three-digit industry breakout. However, because of 

inability to distribute all industry employment, industry components do not equal the specif

two-digit total. If the industry was clearly large-business-dominated or small-business-dominat

the two-digit industry was listed to represent the overall two-digit industry total. 3Each two-digit subcomponent industry reflects both the sum of the separately enumera

three-digit components and a residual component representing industries not covered by the 

reau of Labor Statistics.

Note: Excludes self-employed workers. Small-business-dominated industries are industrie

which a minimum of 60 percent of employment is in firms with fewer than 500 employe

While 99.9 percent of industry employment was allocated to small, large, and indeterminate 

dustries, about 2 percent of employment in the manufacturing and service sectors could not 

232 The Annual Report on Small Business and Competition
Supplementary Tables 2

Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

Total, Large-Business-Dominated 33,825.0 33,893.3 68.3 0.2

Mining 331.6 313.2 218.4 25.5

10 Metal Mining 25.9 27.3 1.4 5.4

101 Iron Ores 8.9 8.8 20.1 21.1 

102 Copper Ores 14.7 14.7 0.0 0.0

12 Coal Mining 7.7 6.2 21.5 219.0

122 Bituminous Coal 103.8 97.6 26.2 26.0 

131 Oil and Gas Extraction 156.6 144.2 212.4 27.9 

147 Chemical and Fertilizer Minerals 14.0 14.4 0.4 2.9 

Manufacturing 10,935.9 10,807.9 2128.0 21.2

2011 Meat Packing Plants 141.2 141.1 20.1 20.1

2015 Poultry Slaughtering and Processing 230.4 236.4 6.0 2.6 

202 Dairy Products 146.7 149.3 2.6 1.8 

203 Canned, Frozen Fruits, Vegetables 221.0 211.5 29.5 24.3

204 Grain Mill Products 127.9 124.9 23.0 22.3

205 Bakery Products 214.5 211.9 22.6 21.2

206 Sugar and Confectionery Products 82.9 84.4 1.5 1.8 

2061 Cane Sugar, except Refining 7.5 8.1 0.6 8.0 

2062 Cane Sugar Refining 4.7 5.0 0.3 6.4 

2063 Beet Sugar 10.5 10.7 0.2 1.9 

207 Fats and Oils 33.3 32.8 20.5 21.5

208 Beverages 176.1 177.9 1.8 1.0 

211 Cigarettes 29.1 26.7 22.4 -8.2

221 Broadwoven Fabric Mills, Cotton 80.5 78.3 22.2 22.7

222 Broadwoven Fabric Mills, Manmade 

Fiber 68.6 65.8 22.8 24.1

225 Knitting Mills 120.2 112.9 27.3 26.1

2251 Women’s Full Length Hosiery, 

except Socks 25.0 22.8 22.2 28.8

2254 Knit Underwear and Nightwear Mills 24.5 21.7 22.8 211.4

2257 Weft Knit Fabric Mills 27.1 25.2 21.9 27.0

2262 Finishers of Broadwoven Fabrics, 

Manmade 25.7 24.2 21.5 25.8

227 Carpets and Rugs 66.1 63.3 22.8 24.2

228 Yarn and Thread Mills 94.9 89.0 25.9 26.2

231 Men’s and Boys’ Suits, Coats, and 

Overcoats 38.1 33.3 24.8 212.6

232 Men’s and Boys’ Furnishings 265.5 236.2 229.3 211.0
234 The Annual Report on Small Business and Competition

Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

2341 Women’s, Misses’, Children’s 

Underwear 40.0 32.9 27.1 217.8

2436 Softwood Veneer and Plywood 28.8 28.7 20.1 20.3

2451 Mobile Homes 58.9 60.8 1.9 3.2

252 Office Furniture 63.5 62.0 21.5 22.4

262 Paper Mills 167.1 162.2 24.9 22.9

263 Paperboard Mills 50.2 50.8 0.6 1.2

265 Paperboard Containers and Boxes 72.8 69.5 23.3 24.5

2653 Corrugated and Solid Fiber Boxes 128.2 129.4 1.2 0.9

2656 Sanitary Food Containers, except 

Folding 15.7 15.4 20.3 21.9

267 Converted Paper, except Containers 

and Boxes 175.6 170.7 24.9 22.8

2672 Coated and Laminated Paper 46.7 46.6 20.1 20.2

2677 Envelopes 23.9 24.4 0.5 2.1

271 Newspapers, Publishing, and Printing 456.3 453.2 23.1 20.7

273 Books 122.5 123.3 0.8 0.7

281 Industrial Inorganic Chemicals 131.3 126.5 24.8 23.7

282 Plastic Materials 158.6 155.8 22.8 21.8

283 Drugs 262.5 256.6 25.9 22.2

2841 Soap and Other Detergents 42.7 42.6 20.1 20.2

2844 Perfumes, Cosmetics, and Toilet

Preparations 66.3 66.1 20.2 20.3

2865 Cyclic Organic Crude Dyes and 

Pigments 26.5 26.1 20.4 21.5

2869 Industrial Organic Chemicals, n.e.c. 114.2 115.0 0.8 0.7

287 Agricultural Chemicals 54.0 52.2 21.8 23.3

291 Petroleum Refining 109.5 99.7 29.8 28.9

301 Tires and Inner Tubes 78.3 83.8 5.5 7.0

302 Rubber and Plastic Footwear 11.1 7.0 24.1 236.9

305 Gaskets, Packing, and Sealing Devices 65.0 66.2 1.2 1.8

314 Footwear, except Rubber 56.3 50.0 26.3 211.2

321 Flat Glass 15.3 15.0 20.3 22.0

322 Glass and Glassware, Pressed or Brown 75.3 73.2 22.1 22.8

324 Cement, Hydraulic 17.7 17.5 20.2 21.1

329 Abrasive, Asbestos, etc. 51.1 51.2 0.1 0.2

3292 Asbestos Products 2.9 3.0 0.1 3.4

3296 Mineral Wool 24.0 23.8 20.2 20.8
Supplementary Tables 2

Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

331 Steel Works, Blast Furnaces 213.9 212.5 21.4 20.7

3317 Steel Pipe and Tubes 26.7 27.5 0.8 3.0

332 Iron and Steel Foundries 42.4 41.9 20.5 21.2

3321 Gray and Ductile Iron Foundries 82.5 81.1 21.4 21.7

3322 Malleable Iron Foundries 5.5 5.3 20.2 23.6

333 Primary Smelting and Refining 18.1 18.8 0.7 3.9

3334 Primary Production of Aluminum 22.8 23.1 0.3 1.3

335 Rolling, Drawing of Nonferrous Metals 47.5 46.9 20.6 21.3

3351 Rolling, Drawing of Copper 23.6 23.7 0.1 0.4

3353 Aluminum Sheet 23.0 22.9 20.1 20.4

3357 Drawing of Nonferrous Wire 76.3 76.2 20.1 20.1

3411 Metal Cans 33.0 32.1 20.9 22.7

3429 Hardware, n.e.c. 74.2 72.3 21.9 22.6

3432 Plumbing Fixture Fittings 25.1 23.9 21.2 24.8

3465 Automotive Stampings 111.8 114.1 2.3 2.1

348 Ordnance and Accessories 22.9 21.8 21.1 24.8

3483 Ammunition, except for Small Arms 29.9 27.7 22.2 27.4

3511 Steam, Gas, and Hydraulic Turbines 28.1 26.7 21.4 25.0

3519 Internal Combustion Engines 61.3 58.6 22.7 24.4

3531 Construction Machinery and 

Equipment 74.8 78.8 4.0 5.3

3533 Oil and Gas Field Machinery 35.1 36.5 1.4 4.0

3546 Power Driven Handtools 24.6 24.9 0.3 1.2

3561 Pumps and Pumping Equipment 30.6 30.4 20.2 20.7

3562 Ball and Roller Bearings 37.6 38.2 0.6 1.6

3563 Air and Gas Compressors 26.6 27.2 0.6 2.3

357 Computer and Office Equipment 95.1 96.1 1.0 1.1

3571 Electronic Computers 190.9 191.8 0.9 0.5

3575 Computer Terminals 55.3 56.7 1.4 2.5

358 Refrigeration and Service Machinery 63.0 64.1 1.1 1.7

3585 Air Conditioning Equipment 131.9 137.2 5.3 4.0

3592 Carburetors, Pistons, Piston Rings 23.1 22.9 20.2 20.9

3612 Power and Distribution Transformers 41.0 39.6 21.4 23.4

3613 Switchgear and Switchboard 

Apparatus 41.0 39.7 21.3 23.2

362 Electrical Industrial Apparatus 158.6 162.1 3.5 2.2

363 Household Appliances 65.0 62.1 22.9 24.5

3632 Household Refrigerators 30.0 30.0 0.0 0.0

3634 Electric Housewares and Fans 30.3 29.7 20.6 22.0

364 Electric Lighting and Wiring Equipment 75.2 75.4 0.2 0.3

3641 Electric Lamp Bulbs and Tubes 23.0 23.1 0.1 0.4

3643 Current Carrying Wiring Devices 64.0 64.5 0.5 0.8

3644 Noncurrent Carrying Wiring Devices 20.1 19.0 21.1 25.5

365 Household Audio and Video 

Equipment 93.4 94.7 1.3 1.4
236 The Annual Report on Small Business and Competition

Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

366 Communications Equipment 248.1 250.3 2.2 0.9

367 Electronic Components and 

Accessories 305.7 325.4 19.7 6.4

3671 Electron Tubes 24.7 25.1 0.4 1.6

3674 Semiconductors and Related Devices 229.8 254.8 25.0 10.9

369 Miscellaneous Electrical Machinery 158.5 153.8 24.7 23.0

371 Motor Vehicles and Equipment 94.4 91.3 23.1 23.3

3711 Motor Vehicles and Passenger Car

Bodies 354.7 362.1 7.4 2.1

3714 Motor Vehicle Parts and Accessories 486.3 484.3 22.0 20.4

3721 Aircraft 262.3 240.1 222.2 28.5

3724 Aircraft Engines and Engine Parts 90.6 88.6 22.0 22.2

3728 Aircraft Parts and Auxiliary Equipment 112.4 110.8 21.6 21.4

3731 Ship Building and Repairing 107.7 103.1 24.6 24.3

374 Railroad Equipment 37.5 37.3 20.2 20.5

376 Guided Missiles and Space Vehicles 104.4 94.5 29.9 29.5

381 Search, Detection, Navigation 

Equipment 170.9 157.2 213.7 28.0

382 Laboratory Apparatus 287.2 289.3 2.1 0.7

384 Surgical, Medical, and Dental 

Instruments 263.4 262.1 21.3 20.5

385 Ophthalmic Goods 36.2 35.3 20.9 22.5

386 Photographic Equipment and Supplies 87.5 86.1 21.4 21.6

Transportation and Public Utilities 3,144.2 3,179.8 35.6 1.1

40 Railroad Transportation 26.4 26.6 0.2 0.8

4011 Railroads, Line-Haul Operating 212.9 209.1 23.8 21.8

45 Transportation by Air 36.9 45.1 8.2 22.2

451 Air Transportation 609.5 626.9 17.4 2.9

458 Air Transportation Services 109.0 116.8 7.8 7.2

46 Pipelines, except Natural Gas 17.5 15.9 21.6 29.1

48 Communications 18.3 13.4 24.9 226.8

481 Telephone Communication 921.8 929.5 7.7 0.8

4833 Television Broadcasting Stations 125.2 132.8 7.6 6.1

484 Cable and Other Pay Television

Services 150.2 167.3 17.1 11.4

49 Electric, Gas, and Sanitary Services 30.3 30.7 0.4 1.3

491 Electrical Services 410.7 398.4 212.3 23.0

492 Gas Production and Distribution 157.8 150.7 27.1 24.5

493 Combination Utility Services 174.1 167.6 26.5 23.7
Supplementary Tables 2

Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

495 Sanitary Services 143.6 149.0 5.4 3.8

Wholesale Trade 755.3 769 13.7 1.8

5045 Computers and Computer Peripheral 

Equipment 275.0 286.3 11.3 4.1

512 Drugs, Drug Proprietaries and 

Druggists’ Sundries 199.4 199.5 0.1 0.1

5141 Groceries, General Line 280.9 283.2 2.3 0.8

Retail Trade 6,986.1 6,929.9 256.2 20.8

531 Department Stores 2,498.5 2,450.1 248.4 21.9

533 Variety Stores 154.3 149.0 25.3 23.4

539 Miscellaneous General Merchandise 

Stores 214.1 197.4 216.7 27.8

541 Grocery Stores 2,982.5 3,050.8 68.3 2.3

563 Apparel and Accessory Stores 189.8 176.0 213.8 27.3

562 Women’s Clothing Stores 366.9 359.5 27.4 22.0

565 Family Clothing Stores 364.5 333.8 230.7 28.4

566 Shoe Stores 215.5 213.3 22.2 21.0

5735 Record and Prerecorded Tape Stores 87.3 89.4 2.1 2.4

Finance, Insurance, and Real Estate 3,178.0 3,175.6 22.4 20.1

602 Banking 125.3 125.8 0.5 0.4

6021 National Commercial Banks 888.7 879.7 29.0 21.0

6036 Savings Institutions, Not Federally 

Chartered 139.0 126.7 212.3 28.8

615 Business Credit Institutions 86.6 94.1 7.5 8.7

621 Security Brokers and Dealers 402.2 407.3 5.1 1.3

632 Insurance Carriers 62.9 63.0 0.1 0.2

631 Life Insurance 571.0 558.7 212.3 22.2

632 Medical Service and Health Insurance 300.3 321.4 21.1 7.0

633 Fire, Marine, and Casualty Insurance 538.2 534.9 23.3 20.6

636 Title Insurance 63.8 64.0 0.2 0.3

Services 8,493.9 8,717.9 224.0 2.6

7363 Personnel Supply Services 2,162.2 2,227.6 65.4 3.0
Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

7374 Computer Processing and Data 

Preparation 222.7 241.7 19.0 8.5

7375 Information Retrieval Services 51.1 59.5 8.4 16.4

7378 Computer Maintenance and Repair 42.5 44.1 1.6 3.8

7514 Passenger Car Rental 112.8 122.0 9.2 8.2

781 Motion Picture Production 260.1 307.1 47.0 18.1

783 Motion Picture Theaters 113.4 117.1 3.7 3.3

80 Health Services 344.4 358.1 13.7 4.0

8062 Hospitals 3,484.6 3,535.2 50.6 1.5

8063 Psychiatric Hospitals 98.3 94.7 23.6 23.7

8069 Specialty Hospitals, except 

Psychiatric 205.5 208.0 2.5 1.2

822 Colleges and Universities 1,171.2 1,184.5 13.3 1.1

8731 Physical and Biological Research 225.1 218.3 26.8 23.0

n.e.c. = Not elsewhere classified

1Represents sum of three-digit components, which are also shown separately.

2Represents two-digit industries with three-digit industry breakout. However, because of 

inability to distribute all industry employment, industry components do not equal the specif

two-digit total. If the industry was clearly large-business-dominated or small-business-dominat

the two-digit industry was listed to represent the overall two-digit industry total. 3Each two-digit subcomponent industry reflects both the sum of the separately enumera

three-digit components and a residual component representing industries not covered by the 

reau of Labor Statistics.

Note: Excludes self-employed workers. Large-business-dominated industries are industrie

which a minimum of 60 percent of employment is in firms with more than 500 employees. Wh

99.9 percent of industry employment was allocated to small, large, and indeterminate industr

about 2 percent of employment in the manufacturing and service sectors could not be alloca

because of SIC code inconsistencies.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from 

U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings (March 199

Table B-12.

238 The Annual Report on Small Business and Competition
Supplementary Tables 2

Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

Total, Indeterminate Industries 17,753.4 18,101.3 347.9 2.0

Mining 229.5 223.5 26.0 22.6

13 Oil and Gas Extraction 7.3 6.7 -0.6 -8.2

138 Oil and Gas Field Services 166.0 160.3 -5.7 -3.4

14 Mining and Quarrying of Nonmetal

Minerals 17.0 16.6 -0.4 -2.4

142 Crushed and Broken Stone 39.2 39.9 0.7 1.8

Manufacturing 4,278.1 4,247.8 230.3 20.7

2013 Sausage and Other Prepared Meat 

Products 91.1 94.3 3.2 3.5

2041 Flour and Other Grain Mill Products 19.2 18.8 20.4 22.1

2048 Prepared Feeds and Feed Ingredients 42.8 42.6 20.2 20.5

2064 Candy and other Confectionery 

Products 54.0 57.4 3.4 6.3

209 Miscellaneous Food Preparations and

Kindred Products 179.3 176.3 -3.0 -1.7

223 Broadwoven Fabric Mills, Wool 17.3 17.6 0.3 1.7

224 Narrow Fabric and Other Smallwares

Mills, Cotton 23.9 22.1 21.8 27.5

2252 Hosiery, n.e.c. 41.7 38.6 23.1 27.4

2253 Knit Outerwear Mills 55.7 51.5 24.2 27.5

2261 Finishers of Broadwoven Fabrics

of Cotton 32.4 31.0 21.4 24.3

229 Miscellaneous Textile Goods 51.6 49.2 22.4 24.7

2342 Brassieres, Girdles, and Allied 

Garments 12.4 12.1 20.3 22.4

236 Girls’, Children’s, and Infants’

Outerwear 44.2 39.8 24.4 210.0

2392 House Furnishings, except Curtains 57.0 54.2 22.8 24.9

2396 Automotive Trimmings, Apparel

Findings 56.2 53.1 23.1 25.5

2431 Millwork 112.2 109.7 22.5 22.2

245 Wood Buildings and Mobile Homes 76.9 78.2 1.3 1.7

251 Household Furniture 12.6 12.2 20.4 23.2

2511 Wood Household Furniture, except

Upholstered 127.2 124.8 22.4 21.9

2512 Wood Household Furniture, 

Upholstered 92.0 91.0 21.0 21.1
Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

2514 Metal Household Furniture 24.3 21.1 23.2 213.2

253 Public Building and Related Furniture 39.8 39.7 20.1 20.3

2657 Folding Paperboard Boxes 48.9 46.5 22.4 24.9

2673 Plastics, Foil, and Coated Paper Bags 40.6 40.2 20.4 21.0

272 Periodicals, Publishing and Printing 137.8 136.6 21.2 20.9

274 Miscellaneous Publishing 83.2 81.5 21.7 22.0

276 Manifold Business Forms 45.4 44.1 21.3 22.9

278 Blankbooks, Looseleaf Binders, and

Bookbinding 71.7 71.2 20.5 20.7

2842 Specialty Cleaning, Polishing, and

Sanitation Preparations 42.5 41.5 21.0 22.4

285 Paints, Varnishes, Lacquers, Enamels 57.6 56.9 20.7 21.2

289 Miscellaneous Chemical Products 94.1 92.2 21.9 22.0

295 Asphalt Paving and Roofing Materials 25.4 24.8 20.6 22.4

306 Fabricated Rubber Products, n.e.c. 109.6 108.0 21.6 21.5

308 Miscellaneous Plastics Products 709.9 699.6 210.3 21.5

3111 Leather Tanning and Finishing 25.5 25.8 0.3 1.2

323 Products of Purchased Glass 62.0 61.5 20.5 20.8

325 Structural Clay Products 32.7 31.2 21.5 24.6

326 Pottery and Related Products 42.1 40.8 21.3 23.1

3291 Abrasive Products 20.4 19.6 20.8 23.9

3325 Steel Foundries, n.e.c. 27.0 26.5 20.5 21.9

342 Cutlery, Handtools, and General

Hardware 12.6 12.9 0.3 2.4

3423 Hand and Edge Tools, except

Machine Tools 46.2 45.7 20.5 21.1

343 Heating Equipment, except Electric

and Warm Air 61.6 59.6 22.0 23.2

3442 Metal Doors, Sash, Frames, Molding, 

Trim 75.3 75.4 0.1 0.1

3443 Fabricated Plate Work (Boiler Shops) 99.4 102.2 2.8 2.8

3452 Bolts, Nuts, Screws, Rivets, Washers 48.1 47.6 20.5 21.0

3462 Iron and Steel Forgings 30.9 30.8 20.1 20.3

3494 Valves and Pipe Fittings, n.e.c. 25.3 26.0 0.7 2.8

352 Farm and Garden Machinery and 

Equipment 28.3 26.3 22.0 27.1

3523 Farm Machinery and Equipment 77.7 75.1 22.6 23.3

240 The Annual Report on Small Business and Competition
Supplementary Tables 2

Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

353 Construction, Mining, and Materials 16.2 17.2 1.0 6.2

3532 Mining Machinery and Equipment, 

except Oil and Gas Field 16.3 16.8 0.5 3.1

3537 Industrial Trucks, Tractors, Trailers,

and Stackers 29.4 30.8 1.4 4.8

3541 Machine Tools, Metal Cutting Types 38.9 41.6 2.7 6.9

3542 Machine Tools, Metal Forming Types 16.9 18.2 1.3 7.7

355 Special Industry Machinery, except

Metalworking Machinery 98.6 108.8 10.2 10.3

3555 Printing Trades Machinery and 

Equipment 22.1 22.9 0.8 3.6

356 General Industrial Machinery and 

Equipment 84.0 87.6 3.6 4.3

3564 Industrial and Commercial Fans and 

Blowers 33.2 34.6 1.4 4.2

3566 Speed Changers, Industrial High 

Speed Drives 15.6 17.0 1.4 9.0

3568 Mechanical Power Transmission 

Equipment, n.e.c. 20.9 21.7 0.8 3.8

3679 Electronic Components, n.e.c. 133.1 142.3 9.2 6.9

3713 Truck and Bus Bodies 38.8 39.4 0.6 1.5

3715 Truck Trailers 35.3 32.7 22.6 27.4

3732 Boat Building and Repairing 55.9 56.4 0.5 0.9

379 Miscellaneous Transportation 

Equipment 50.9 48.3 22.6 25.1

387 Watches, Clocks, Clockwork Devices 

and Parts 8.8 7.8 21.0 211.4

3942 Dolls and Stuffed Toys 44.5 44.5 0.0 0.0

3949 Sporting and Athletic Goods, n.e.c. 73.1 73.8 0.7 1.0

Transportation and Public Utilities 1,939.2 1,954.5 15.3 0.8

413 Intercity and Rural Bus Transportation 22.8 24.5 1.7 7.5

421 Trucking and Courier Services,

except Air 1,755.6 1,779.4 23.8 1.4

44 Water Transportation 42.6 36.8 25.8 213.6

444 Water Transportation of Freight 12.8 13.2 0.4 3.1

449 Services Incidental to Water

Transportation 105.4 100.6 24.8 24.6
Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

Wholesale Trade 1,602.5 1,658.1 55.6 3.5

504 Professional and Commercial 

Equipment 328.3 347.1 18.8 5.7

5047 Medical, Dental, and Hospital 

Equipment 169.6 179.3 9.7 5.7

5065 Electronic Parts and Equipment 217.1 222.0 4.9 2.3

511 Paper and Paper Products 256.7 274.3 17.6 6.9

514 Groceries and Related Products 436.8 443.8 7.0 1.6

516 Chemicals and Allied Products 140.3 136.8 23.5 22.5

5182 Wine and Distilled Alcoholic 

Beverages 53.7 54.8 1.1 2.0

Retail Trade 1,487.4 1,525.7 38.3 2.6

54 Food Stores 137.3 143.5 6.2 4.5

573 Radio, TV, and Music Stores 125.6 141.9 16.3 13.0

5731 Radio, Television, and Consumer 

Electronics 166.2 179.8 13.6 8.2

591 Drug Stores and Proprietary Stores 613.6 619.7 6.1 1.0

5942 Book Stores 115.2 120.3 5.1 4.4

5949 Sewing, Needlework, and Piece 

Goods Stores 64.8 60.8 24.0 26.2

596 Nonstore Retailers 51.5 54.6 3.1 6.0

5961 Catalog and Mail-Order Houses 213.2 205.1 28.1 23.8

Finance, Insurance, and Real Estate 1,389.1 1,409.2 20.1 1.4

6022 State Commercial Banks 608.6 611.8 3.2 0.5

6035 Savings Institutions, Federally 

Chartered 156.5 146.8 29.7 26.2

61 Nondepository Credit Institutions 22.5 25.2 2.7 12.0

614 Personal Credit Institutions 139.4 147.7 8.3 6.0

616 Mortgage Bankers and Brokers 231.2 240.8 9.6 4.2

623 Security and Commodity Exchanges 25.3 26.5 1.2 4.7

628 Services Allied with Exchange of 

Securities 100.7 100.2 20.5 20.5

671 Holding Offices 104.9 110.2 5.3 5.1

Services 6,827.6 7,082.5 254.9 3.7

701 Hotels, Motels, and Tourist Courts 1,514.1 1,522.6 8.5 0.6

242 The Annual Report on Small Business and Competition
Supplementary Tables 2

Absolute Percen

SIC December Change Chang

Code 1994– 1994–

(1987) Industry 1994 1995 1995 1995

722 Photographic Portrait Studios 79.4 83.7 4.3 5.4

729 Miscellaneous Personal Services 122.7 118.8 23.9 23.2

737 Computer and Data Processing 

Services 178.9 196.4 17.5 9.8

7371 Computer Programming Services 218.2 247.6 29.4 13.5

7372 Prepackaged Software 159.8 184.5 24.7 15.5

7373 Computer Integrated Systems Design 119.6 129.5 9.9 8.3

738 Miscellaneous Business Services 775.0 797.1 22.1 2.9

7381 Detective, Guard, and Armored Car 

Services 519.1 543.4 24.3 4.7

7382 Security Systems Services 45.9 48.8 2.9 6.3

751 Automotive Rentals, Without Drivers 66.7 69.8 3.1 4.6

752 Automobile Parking 64.4 64.9 0.5 0.8

783 Motion Pictures 162.0 164.8 2.8 1.7

8051 Skilled Nursing Care Facilities 1,239.5 1,274.3 34.8 2.8

808 Home Health Care Services 587.8 630.1 42.3 7.2

82 Educational Services 141.2 150.7 9.5 6.7

8711 Engineering and Architectural 

Services 611.7 630.0 18.3 3.0

873 Research, Development, and Testing 

Services 85.2 91.2 6.0 7.0

8733 Research and Testing Services 136.4 134.3 22.1 21.5

n.e.c. = not elsewhere classified

1Represents sum of three-digit components, which are also shown separately.

2Represents two-digit industries with three-digit industry breakout. However, because of 

inability to distribute all industry employment, industry components do not equal the specif

two-digit total. If the industry was clearly large-business-dominated or small-business-dominat

the two-digit industry was listed to represent the overall two-digit industry total. 3Each two-digit subcomponent industry reflects both the sum of the separately enumera

three-digit components and a residual component representing industries not covered by the 

reau of Labor Statistics.

Note: Excludes self-employed workers. Small-business-dominated industries are industrie

which a minimum of 60 percent of employment is in firms with fewer than 500 employe

While 99.9 percent of industry employment was allocated to small, large, and indeterminate 

dustries, about 2 percent of employment in the manufacturing and service sectors could not 

allocated because of SIC code inconsistencies.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from 

U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings (March 199

Table B-12. 
244 The Annual Report on Small Business and Competition Table A.18 Change in Employment in Small-Business-Dominated, L

1982 to 1995 (Percent) Total Small-Business- L

Employment Dominated 

(Thousands) Industries 

1995 124,900 2.7 1994 123,060 4.7 1993 119,306 3.2 1992 117,598 1.0 1991 116,877

20.5

1990 117,914 1.1 1989 117,342 3.2 1988 114,968 4.9 1987 112,440 3.5 1986 109,597 2.1 1985 107,150 4.6 

1984 105,005 7.2 1983 100,834 5.9 1982 99,526

21.1

Note: Annual change in this table is measured from December to December. D

are industries in which a minimum of 60 percent of the industry employment is in fiare industries in which a minimum of 60 percent of industry employment is in firms wness share of employment falls between 40 and 60 percent of the industry employmen

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy

ment and Earnings (various issues, 1982-1996). Industry classification is based on 199

merce, Bureau of the Census, 1996.
Supplementary Tables 2

1994 1995 Change Rank

U.S. Total

Wages and Salaries 3,233,326 3,423,330 5.9

Nonfarm Proprietors’ Income 415,879 449,257 8.0

Total Earned Income 3,649,205 3,872,587 6.1

Region I

Wages and Salaries 191,036 191,882 5.1

Nonfarm Proprietors’ Income 23,892 24,226 4.1

Total Earned Income 214,928 216,108 5.0

Connecticut

Wages and Salaries 53,866 54,606 5.1 41

Nonfarm Proprietors’ Income 6,392 6,766 6.2 34

Total Earned Income 60,258 61,372 5.2 41

Maine

Wages and Salaries 12,406 12,459 3.1 46

Nonfarm Proprietors’ Income 1,864 2,207 2.3 48

Total Earned Income 14,270 14,665 2.9 48

Massachusetts

Wages and Salaries 93,383 93,337 5.6 35

Nonfarm Proprietors’ Income 11,328 10,690 4.6 42

Total Earned Income 104,711 104,027 5.5 37

New Hampshire

Wages and Salaries 13,579 13,642 6.5 23

Nonfarm Proprietors’ Income 2,109 2,124 -2.5 51

Total Earned Income 15,688 15,766 5.2 40

Rhode Island

Wages and Salaries 11,540 11,571 2.7 48

Nonfarm Proprietors’ Income 1,236 1,340 5.1 39

Total Earned Income 12,776 12,911 3.0 47

Vermont

Wages and Salaries 6,262 6,268 4.0 45

Nonfarm Proprietors’ Income 963 1,100 1.6 49

Total Earned Income 7,225 7,368 3.6 46

Region II

Wages and Salaries 393,663 398,966 5.5

Nonfarm Proprietors’ Income 50,412 52,296 7.8

Total Earned Income 444,075 451,262 5.7

New Jersey

Wages and Salaries 121,098 122,796 4.9 42

Nonfarm Proprietors’ Income 14,097 13,961 4.6 43

Total Earned Income 135,195 136,757 4.9 43

New York

Wages and Salaries 272,565 276,170 5.7 32

Nonfarm Proprietors’ Income 36,315 38,335 9.1 19

Total Earned Income 308,880 314,505 6.1 31
1994 1995 Change Rank

Region III

Wages and Salaries 349,493 352,229 5.0

Nonfarm Proprietors’ Income 39,864 42,893 6.3

Total Earned Income 389,357 395,122 5.1

Delaware

Wages and Salaries 10,431 10,403 5.9 31

Nonfarm Proprietors’ Income 1,525 940 21.2 3

Total Earned Income 11,956 11,343 7.0 22

District of Columbia

Wages and Salaries 28,587 28,638 2.0 50

Nonfarm Proprietors’ Income 2,124 2,055 15.5 7

Total Earned Income 30,711 30,694 2.8 49

Maryland

Wages and Salaries 64,790 65,465 5.5 36

Nonfarm Proprietors’ Income 6,733 8,360 8.2 24

Total Earned Income 71,523 73,825 5.8 36

Pennsylvania

Wages and Salaries 143,372 145,035 5.1 40

Nonfarm Proprietors’ Income 20,487 21,365 3.8 45

Total Earned Income 163,859 166,400 4.9 42

Virginia

Wages and Salaries 86,602 86,913 5.1 39

Nonfarm Proprietors’ Income 7,075 8,119 7.9 28

Total Earned Income 93,677 95,033 5.3 39

West Virginia

Wages and Salaries 15,711 15,774 6.4 25

Nonfarm Proprietors’ Income 1,920 2,054 3.9 44

Total Earned Income 17,631 17,829 6.1 32

Region IV

Wages and Salaries 524,946 525,858 6.8

Nonfarm Proprietors’ Income 56,874 61,234 5.6

Total Earned Income 581,820 587,092 6.7

Alabama

Wages and Salaries 43,483 43,435 6.1 28

Nonfarm Proprietors’ Income 4,608 4,826 2.9 46

Total Earned Income 48,091 48,260 5.8 35

Florida

Wages and Salaries 149,609 150,269 5.9 30

Nonfarm Proprietors’ Income 14,958 17,981 7.0 30

Total Earned Income 164,567 168,250 6.0 33

Georgia

Wages and Salaries 87,217 87,959 7.6 14

Nonfarm Proprietors’ Income 9,564 9,449 5.2 37

Total Earned Income 96,781 97,407 7.4 19

246 The Annual Report on Small Business and Competition
Supplementary Tables 2

1994 1995 Change Rank

Kentucky

Wages and Salaries 38,386 38,357 6.7 21

Nonfarm Proprietors’ Income 4,290 4,432 4.6 41

Total Earned Income 42,676 42,789 6.5 27

Mississippi

Wages and Salaries 22,754 22,871 9.8 3

Nonfarm Proprietors’ Income 2,873 3,043 2.9 47

Total Earned Income 25,627 25,914 8.9 6

North Carolina

Wages and Salaries 84,491 84,248 6.7 20

Nonfarm Proprietors’ Income 8,747 8,948 8.1 25

Total Earned Income 93,238 93,196 6.9 24

South Carolina

Wages and Salaries 38,474 38,344 5.1 38

Nonfarm Proprietors’ Income 3,369 3,898 -0.7 50

Total Earned Income 41,843 42,241 4.6 44

Tennessee

Wages and Salaries 60,532 60,376 8.7 8

Nonfarm Proprietors’ Income 8,465 8,659 6.9 31

Total Earned Income 68,997 69,034 8.4 10

Region V

Wages and Salaries 619,884 625,091 7.7

Nonfarm Proprietors’ Income 63,801 65,599 9.8

Total Earned Income 683,685 690,690 7.9

Illinois

Wages and Salaries 164,065 166,207 6.5 24

Nonfarm Proprietors’ Income 18,530 19,958 11.4 13

Total Earned Income 182,595 186,165 7.0 23

Indiana

Wages and Salaries 68,941 69,829 8.4 9

Nonfarm Proprietors’ Income 7,499 7,081 8.4 23

Total Earned Income 76,440 76,910 8.4 11

Michigan

Wages and Salaries 124,950 126,102 9.4 5

Nonfarm Proprietors’ Income 10,508 10,537 15.7 6

Total Earned Income 135,458 136,639 9.8 4

Minnesota

Wages and Salaries 62,877 63,222 6.7 22

Nonfarm Proprietors’ Income 6,739 6,841 8.5 21

Total Earned Income 69,616 70,063 6.9 25

Ohio

Wages and Salaries 137,232 137,437 8.0 12

Nonfarm Proprietors’ Income 14,410 15,135 6.0 35

Total Earned Income 151,642 152,571 7.8 16

Wisconsin

Wages and Salaries 61,819 62,294 7.4 17

Nonfarm Proprietors’ Income 6,115 6,049 8.0 26

Total Earned Income 67,934 68,344 7.5 18
1994 1995 Change Rank

Region VI

Wages and Salaries 321,009 342,598 6.7

Nonfarm Proprietors’ Income 56,787 61,587 8.5

Total Earned Income 377,796 404,185 7.0

Arkansas

Wages and Salaries 22,426 23,899 6.6 17

Nonfarm Proprietors’ Income 3,245 3,505 8.0 31

Total Earned Income 25,671 27,404 6.8 18

Louisiana

Wages and Salaries 41,622 44,124 6.0 23

Nonfarm Proprietors’ Income 5,806 6,368 9.7 8

Total Earned Income 47,428 50,492 6.5 22

New Mexico

Wages and Salaries 15,894 17,117 7.7 1

Nonfarm Proprietors’ Income 1,943 2,148 10.6 5

Total Earned Income 17,837 19,265 8.0 7

Oklahoma

Wages and Salaries 30,349 31,652 4.3 46

Nonfarm Proprietors’ Income 4,971 5,296 6.5 45

Total Earned Income 35,320 36,948 4.6 45

Texas

Wages and Salaries 210,718 225,806 7.2 11

Nonfarm Proprietors’ Income 40,822 44,270 8.4 23

Total Earned Income 251,540 270,076 7.4 11

Region VII

Wages and Salaries 139,746 148,479 6.2

Nonfarm Proprietors’ Income 17,256 18,767 8.8

Total Earned Income 157,002 167,246 6.5

Iowa

Wages and Salaries 30,278 32,057 5.9 28

Nonfarm Proprietors’ Income 3,938 4,312 9.5 10

Total Earned Income 34,216 36,369 6.3 23

Kansas

Wages and Salaries 28,481 30,104 5.7 31

Nonfarm Proprietors’ Income 3,796 4,131 8.8 16

Total Earned Income 32,277 34,235 6.1 30

Missouri

Wages and Salaries 62,606 66,701 6.5 18

Nonfarm Proprietors’ Income 7,280 7,900 8.5 21

Total Earned Income 69,886 74,601 6.7 20

Nebraska

Wages and Salaries 18,381 19,617 6.7 15

Nonfarm Proprietors’ Income 2,242 2,424 8.1 27

Total Earned Income 20,623 22,041 6.9 15

248 The Annual Report on Small Business and Competition
Supplementary Tables 2

1994 1995 Change Rank

Region VIII

Wages and Salaries 94,718 101,891 7.6

Nonfarm Proprietors’ Income 13,047 14,281 9.5

Total Earned Income 107,765 116,172 7.8

Colorado

Wages and Salaries 48,906 52,810 8.0 6

Nonfarm Proprietors’ Income 6,539 7,143 9.2 12

Total Earned Income 55,445 59,953 8.1 6

Montana

Wages and Salaries 7,007 7,408 5.7 33

Nonfarm Proprietors’ Income 1,241 1,492 20.2 4

Total Earned Income 8,248 8,899 7.9 14

North Dakota

Wages and Salaries 5,834 6,163 5.6 34

Nonfarm Proprietors’ Income 790 872 10.4 14

Total Earned Income 6,623 7,035 6.2 30

South Dakota

Wages and Salaries 6,212 6,661 7.2 18

Nonfarm Proprietors’ Income 1,144 1,350 18.1 5

Total Earned Income 7,356 8,011 8.9 7

Utah

Wages and Salaries 18,880 20,600 9.1 6

Nonfarm Proprietors’ Income 2,075 2,251 8.4 22

Total Earned Income 20,955 22,851 9.0 5

Wyoming

Wages and Salaries 4,888 5,114 4.6 44

Nonfarm Proprietors’ Income 776 948 22.1 2

Total Earned Income 5,664 6,062 7.0 21

Region IX

Wages and Salaries 463,077 479,891 3.6

Nonfarm Proprietors’ Income 71,120 81,708 14.9

Total Earned Income 534,197 561,599 5.1

Arizona

Wages and Salaries 40,105 44,269 10.4 2

Nonfarm Proprietors’ Income 4,219 4,869 15.4 8

Total Earned Income 44,324 49,138 10.9 2

California

Wages and Salaries 387,273 397,837 2.7 47

Nonfarm Proprietors’ Income 61,497 70,518 14.7 9

Total Earned Income 448,770 468,355 4.4 45

Hawaii

Wages and Salaries 16,816 16,865 0.3 51

Nonfarm Proprietors’ Income 2,602 2,871 10.3 15

Total Earned Income 19,418 19,736 1.6 51

Nevada

Wages and Salaries 18,884 20,920 10.8 1

Nonfarm Proprietors’ Income 2,801 3,450 23.2 1

Total Earned Income 21,684 24,370 12.4 1
1994 1995 Change Rank

Region X

Wages and Salaries 116,332 123,557 6.2

Nonfarm Proprietors’ Income 19,011 21,087 10.9

Total Earned Income 135,344 144,643 6.9

Alaska

Wages and Salaries 9,014 9,207 2.1 49

Nonfarm Proprietors’ Income 1,686 1,785 5.9 36

Total Earned Income 10,700 10,992 2.7 50

Idaho

Wages and Salaries 9,991 10,968 9.8 4

Nonfarm Proprietors’ Income 2,176 2,487 14.3 10

Total Earned Income 12,168 13,455 10.6 3

Oregon

Wages and Salaries 32,738 35,369 8.0 10

Nonfarm Proprietors’ Income 5,153 5,860 13.7 12

Total Earned Income 37,891 41,228 8.8 8

Washington

Wages and Salaries 64,590 68,013 5.3 37

Nonfarm Proprietors’ Income 9,996 10,955 9.6 16

Total Earned Income 74,585 78,968 5.9 34

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from d

prepared by the U.S.Department of Commerce, Bureau of Economic Analysis, Regional E

nomic Marketing Division, 1996.

250 The Annual Report on Small Business and Competition
Supplementary Tables 2

1994 1995 Change Rank

U.S. Total 5,695,861 6,064,095 6.5

Region I 341,910 363,938 6.4

Connecticut 98,269 103,862 5.7 38

Maine 23,591 24,846 5.3 45

Massachusetts 158,988 170,031 6.9 20

New Hampshire 27,338 29,331 7.3 15

Rhode Island 22,111 23,560 6.6 23

Vermont 11,613 12,308 6.0 37

Region II 700,304 738,335 5.4

New Jersey 224,206 236,871 5.6 39

New York 476,098 501,465 5.3 44

Region III 611,226 644,111 5.4

Delaware 17,436 18,716 7.3 14

District of Columbia 18,068 18,541 2.6 50

Maryland 126,350 132,556 4.9 47

Pennsylvania 268,877 283,778 5.5 42

Virginia 149,741 158,195 5.6 40

West Virginia 30,754 32,324 5.1 46 

Region IV 937,123 1,005,179 7.3

Alabama 75,846 80,733 6.4 27

Florida 302,469 324,770 7.4 12

Georgia 143,416 154,619 7.8 9

Kentucky 67,535 71,948 6.5 25

Mississippi 41,752 44,476 6.5 26

North Carolina 138,029 148,958 7.9 8

South Carolina 65,241 69,417 6.4 31

Tennessee 102,835 110,258 7.2 18

Region V 1,057,186 1,124,336 6.4

Illinois 279,957 298,300 6.6 24

Indiana 117,181 124,297 6.1 36

Michigan 214,092 227,829 6.4 30

Minnesota 103,500 109,853 6.1 35

Ohio 235,597 250,313 6.2 33

Wisconsin 106,860 113,744 6.4 28
1994 1995 Change Rank

Region VI 571,566 611,408 7.0

Arkansas 40,807 43,642 6.9 19

Louisiana 77,550 81,917 5.6 41

New Mexico 28,030 30,396 8.4 4

Oklahoma 57,387 60,528 5.5 43

Texas 367,792 394,925 7.4 11

Region VII 246,205 263,546 7.0

Iowa 54,479 58,233 6.9 21

Kansas 51,903 55,341 6.6 22

Missouri 108,245 116,070 7.2 17

Nebraska 31,578 33,902 7.4 13

Region VIII 162,926 175,786 7.9

Colorado 82,537 89,340 8.2 6

Montana 14,771 15,720 6.4 29

North Dakota 10,902 11,717 7.5 10

South Dakota 12,614 13,766 9.1 2

Utah 32,701 35,397 8.2 5

Wyoming 9,401 9,846 4.7 48

Region IX 850,825 906,466 6.5

Arizona 78,658 85,769 9.0 3

California 709,991 754,400 6.3 32

Hawaii 28,122 29,023 3.2 49

Nevada 34,053 37,274 9.5 1

Region X 216,591 230,990 6.6

Alaska 14,120 14,476 2.5 51

Idaho 19,868 21,315 7.3 16

Oregon 62,228 67,329 8.2 7

Washington 120,375 127,870 6.2 34

Source: U.S. Small Business Administration, Office of Advocacy, from data supplied by 

U.S. Department of Commerce, Bureau of Economic Analysis, 1996

252 The Annual Report on Small Business and Competition
Supplementary Tables 253

Table A.21 Nonfarm Sole Proprietorships by Gender of Ownership 

1980

j

All Women- Women’s 

Nonfarm Owned Share 

Industry Businesses Businesses of Total U.S. Total 9,730,019 2,535,240 26.1 Region I 512,401 120,273 23.5 Region II 807,319 195,756 24.2 Region III 866,848 231,216 26.7 Region IV 1,480,801 370,354 25.0 Region V 1,774,893 481,945 27.2 Region VI 1,237,802 277,022 22.4 Region VII 602,859 166,643 27.6 Region VIII 431,948 115,755 26.8 Region IX 1,513,668 446,169 29.5 Region X 484,626 123,924 25.6 

Note: Detail may not add to totals because of disclosure rules regarding the rel

lows: Region I: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, VColumbia, Maryland, Pennsylvania, Virginia, West Virginia; Region IV: Alabama, Flonessee; Region V: Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin; Region VKansas, Missouri, Nebraska; Region VIII: Colorado, Montana, North Dakota, South Dand Region X: Alaska, Idaho, Oregon, Washington.

Source: Special tabulations prepared for the U.S. Small Business Administratio

Revenue Service, 1996.
254 The Annual Report on Small Business and Competition Table A.22 Receipts of Nonfarm Sole Proprietorships by Gender of 

1980 and 1993 (Thousands of Dollars) 

1980

j

All Women- Women’s 

Nonfarm Owned Share 

Industry Businesses Businesses of Total U.S. Total 411,205,713 36,376,570 8.8 7Region I 19,394,807 1,521,698 7.8 Region II 30,900,154 3,065,589 9.9 Region III 37,319,189 3,408,915 9.1 Region IV 66,605,226 5,515,772 8.3 1Region V 73,456,559 6,463,322 8.8 1Region VI 57,683,340 4,538,872 7.9 Region VII 26,636,767 2,080,737 7.8 Region VIII 16,337,108 1,206,690 7.4 Region IX 64,684,469 6,989,048 10.8 1Region X 17,823,850 1,528,716 8.6 

Note: Detail may not add to totals because of disclosure rules regarding the rel

lows: Region I: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, VColumbia, Maryland, Pennsylvania, Virginia, West Virginia; Region IV: Alabama, Flonessee; Region V: Illinois, Indiana, Michigan, Minnesota, Ohio, Wisconsin; Region VKansas, Missouri, Nebraska; Region VIII: Colorado, Montana, North Dakota, South Dand Region X: Alaska, Idaho, Oregon, Washington.

Source: Special tabulations prepared for the U.S. Small Business Administration, 

enue Service, 1996.
Supplementary Tables 255

Table A.23 Nonfarm Sole Proprietorships by Gender of Ownership 

1980

j

All Women- Women’s 

Nonfarm Owned Share 

Industry Businesses Businesses of Total Total, All Industries 9,730,019 2,535,240 26.1 Agriculture, Forestry, and

Fishing 307,720 30,811 10.0 

Mining, Construction, and

Manufacturing 1,409,280 84,221 6.0 

Transportation,

Communications, andPublic Utilities 438,795 27,696 6.3 

Wholesale and Retail Trade 2,527,084 824,771 32.6 Finance, Insurance, and

Real Estate 1,048,966 354,801 33.8 

Services 3,918,166 1,212,940 3.0 

Note: Detail may not add to totals because of disclosure rules regarding the releaSource: Special tabulations prepared for the U.S. Small Business Administratio

Revenue Service, 1996.
Table A.24 Receipts of Nonfarm Sole Proprietorships by Gender of 

(Thousands of Dollars)

1980

j

All Women- Women’s 

Nonfarm Owned Share 

Industry Businesses Businesses of Total U.S. Total 411,205,713 36,376,570 8.8 7Agriculture, Forestry,

and Fishing 6,433,612 234,280 3.6 

Mining, Construction,

and Manufacturing 71,248,141 1,977,303 2.8 1

Transportation,

Communications, andPublic Utilities 19,965,525 698,144 3.5 

Wholesale and Retail

Trade 202,283,802 18,937,581 9.4 2

Finance, Insurance,

and Real Estate 21,530,768 3,640,416 16.9 

Services 89,743,865 10,888,846 12.1 2

Note: Detail may not add to totals because of disclosure rules regarding the releaSource: Special tabulations prepared for the U.S. Small Business Administratio

Revenue Service, 1996.

256 The Annual Report on Small Business and Competition
Supplementary Tables 2

Change,

1987 1992 1987–1992 Rank

U.S., Total 4,114,784 5,888,882 43.1

Region I 247,254 336,641 36.2

Connecticut 60,924 79,931 31.2 48

Maine 23,922 35,260 47.4 17

Massachusetts 111,376 147,572 32.5 47

New Hampshire 22,713 31,492 38.7 35

Rhode Island 14,517 21,353 47.1 18

Vermont 13,802 21,033 52.4 9 

Region II 402,285 560,742 39.4

New Jersey 117,373 164,798 40.4 29

New York 284,912 395,944 39.0 31

Region III 386,932 547,918 41.6

Delaware 9,727 14,904 53.2 7

District of Columbia 10,987 14,599 32.9 45

Maryland 81,891 121,777 48.7 16

Pennsylvania 167,362 227,500 35.9 40

Virginia 94,416 138,494 46.7 19

West Virginia 22,549 30,644 35.9 41

Region IV 643,443 990,180 53.9

Alabama 48,018 71,466 48.8 15

Florida 221,361 352,048 59.0 4

Georgia 88,050 143,045 62.5 2

Kentucky 53,454 74,280 39.0 32

Mississippi 28,976 40,879 41.1 27

North Carolina 93,532 142,516 52.4 10

South Carolina 42,604 64,812 52.1 11

Tennessee 67,448 101,134 49.9 13

Region V 712,370 1,018,037 42.9

Illinois 177,057 250,613 41.5 26

Indiana 89,949 125,411 39.4 30

Michigan 133,958 193,820 44.7 21

Minnesota 88,137 124,143 40.9 28

Ohio 154,084 224,693 45.8 20

Wisconsin 69,185 99,357 43.6 22
Change,

1987 1992 1987–1992 Rank

Region VI 478,546 664,998 39.0

Arkansas 35,469 50,440 42.2 25

Louisiana 55,852 76,849 37.6 36

New Mexico 25,397 40,636 60.0 3

Oklahoma 63,690 82,894 30.2 49

Texas 298,138 414,179 38.9 33

Region VII 227,037 298,991 31.7

Iowa 53,592 71,040 32.6 46

Kansas 53,502 66,429 24.2 50

Missouri 87,658 117,885 34.5 44

Nebraska 32,285 43,637 35.2 43

Region VIII 173,827 240,782 38.5

Colorado 89,411 121,659 36.1 39

Montana 17,747 25,310 42.6 24

North Dakota 12,689 15,355 21.0 51

South Dakota 13,374 18,215 36.2 38

Utah 29,810 45,626 53.1 8

Wyoming 10,796 14,617 35.4 42

Region IX 660,915 956,960 44.8

Arizona 60,567 93,300 54.0 6

California 559,821 801,487 43.2 23

Hawaii 21,696 29,743 37.1 37

Nevada 18,831 32,430 72.2 1

Region X 182,175 273,633 50.2

Alaska 13,976 19,380 38.7 34

Idaho 18,973 29,946 57.8 5

Oregon 58,941 87,970 49.3 14

Washington 90,285 136,337 51.0 12

Source: U.S. Department of Commerce, Bureau of the Census, 1992 Economic Cens

Women-Owned Businesses, WB92-1 (Washington, D.C.: U.S. Government Printing Office, Ja

ary 1996).

258 The Annual Report on Small Business and Competition
Supplementary Tables 2

Percent Perc

1987 1992 Change 1987 1992 Cha

United States 424,165 620,912 46.4 13,695,480 17,253,143 2

Region I 9,769 14,496 48.4 819,319 1,014,250 2

Connecticut 4,061 5,714 40.7 196,537 237,705 2

Maine 131 235 79.4 88,208 109,360 2

Massachusetts 4,761 7,225 51.8 356,780 442,848 2

New Hampshire 229 326 42.4 79,771 97,772 2

Rhode Island 489 857 75.3 52,780 67,641 2

Vermont 98 139 41.8 45,243 58,924 3

Region II 50,845 71,449 40.5 1,337,461 1,676,904 2

New Jersey 14,556 20,137 38.3 406,792 517,204 2

New York 36,289 51,312 41.4 930,669 1,159,700 2

Region III 62,588 91,039 45.5 1,275,511 1,620,401 2

Delaware 1,399 2,060 47.2 30,976 42,228 3

District of Columbia 8,275 10,111 22.2 29,244 35,344 2

Maryland 21,678 35,758 65.0 244,071 328,403 3

Pennsylvania 11,728 15,917 35.7 595,653 728,063 2

Virginia 18,781 26,100 39.0 297,541 391,451 3

West Virginia 727 1,093 50.3 78,026 94,912 2

Region IV 113,025 174,990 54.8 2,255,180 2,986,803 3

Alabama 10,085 14,707 45.8 178,119 227,119 2

Florida 25,527 40,371 58.2 735,810 1,000,542 3

Georgia 21,283 38,264 79.8 305,382 425,118 3

Kentucky 3,738 5,097 36.4 193,806 236,525 2

Mississippi 9,667 14,067 45.5 112,245 135,497 2

North Carolina 19,487 29,221 50.0 329,373 439,301 3

South Carolina 12,815 18,343 43.1 149,190 197,330 3

Tennessee 10,423 14,920 43.1 251,255 325,371 2

Region V 58,398 85,398 46.2 2,335,756 2,967,770 2

Illinois 19,011 28,433 49.6 573,973 726,974 2

Indiana 5,867 8,349 42.3 294,570 364,253 2

Michigan 13,708 19,695 43.7 426,656 551,091 2

Minnesota 1,448 2,785 92.3 280,249 358,921 2

Ohio 15,983 22,690 42.0 521,123 666,183 2

Wisconsin 2,381 3,446 44.7 239,185 300,348 2

Region VI 59,496 81,604 37.2 1,671,035 2,006,843 2

Arkansas 4,392 5,738 30.6 134,766 159,820 1

Louisiana 15,331 20,312 32.5 204,723 236,589 1

New Mexico 587 925 57.6 82,253 107,377 3

Oklahoma 3,461 4,621 33.5 223,676 246,936 1

Texas 35,725 50,008 40.0 1,025,617 1,256,121 2

Region VII 11,721 15,507 32.3 739,656 871,292 1

Iowa 703 1,106 57.3 174,121 206,840 1

Kansas 2,323 3,078 32.5 169,593 191,262 1

Missouri 7,832 9,973 27.3 293,131 348,978 1

Nebraska 863 1,350 56.4 102,811 124,212 2
Percent Perc

1987 1992 Change 1987 1992 Cha

Region VIII 3,351 5,164 54.1 551,525 673,828 2

Colorado 2,871 4,372 52.3 262,597 323,147 2

Montana 77 113 46.8 63,623 75,331 1

North Dakota 57 117 105.3 42,717 48,368 1

South Dakota 63 111 76.2 47,829 57,084 1

Utah 202 354 75.2 100,186 129,202 2

Wyoming 81 97 19.8 34,573 40,696 1

Region IX 50,940 74,357 46.0 2,121,872 2,674,500 2

Arizona 1,811 2,936 62.1 191,908 248,337 2

California 47,728 68,968 44.5 1,809,252 2,259,327 2

Hawaii 399 717 79.7 60,928 79,050 2

Nevada 1,002 1,736 73.3 59,784 87,786 4

Region X 4,032 6,913 71.5 588,165 759,552 2

Alaska 507 739 45.8 48,784 58,898 2

Idaho 94 152 61.7 68,006 88,712 3

Oregon 848 1,447 70.6 185,151 238,967 2

Washington 2,583 4,575 77.1 286,224 372,975 3

Source: U.S. Small Business Administration, Office of Advocacy, based upon data from 

U.S. Department of Commerce, Bureau of the Census.

260 The Annual Report on Small Business and Competition
Supplementary Tables 2

Percent Perc

1987 1992 Change 1987 1992 Cha

United States 422,373 771,708 82.7 13,695,480 17,253,143 2

Region I 5,798 13,978 141.1 819,319 1,014,250 2

Connecticut 2,235 4,502 101.4 196,537 237,705 2

Maine 139 427 207.2 88,208 109,360 2

Massachusetts 2,636 6,914 162.3 356,780 442,848 2

New Hampshire 244 487 99.6 79,771 97,772 2

Rhode Island 426 1,297 204.5 52,780 67,641 2

Vermont 118 351 197.5 45,243 58,924 3

Region II 40,348 72,799 80.4 1,337,461 1,676,904 2

New Jersey 12,094 22,198 83.5 406,792 517,204 2

New York 28,254 50,601 79.1 930,669 1,159,700 2

Region III 9,420 22,391 137.7 1,275,511 1,620,401 2

Delaware 184 497 170.1 30,976 42,228 3

District of Columbia 762 1,452 90.6 29,244 35,344 2

Maryland 2,931 7,289 148.7 244,071 328,403 3

Pennsylvania 2,650 5,186 95.7 595,653 728,063 2

Virginia 2,716 7,654 181.8 297,541 391,451 3

West Virginia 177 313 76.8 78,026 94,912 2

Region IV 69,273 131,611 90.0 2,255,180 2,986,803 3

Alabama 397 1,029 159.2 178,119 227,119 2

Florida 64,413 118,208 83.5 735,810 1,000,542 3

Georgia 1,931 5,501 184.9 305,382 425,118 3

Kentucky 359 752 109.5 193,806 236,525 2

Mississippi 308 660 114.3 112,245 135,497 2

North Carolina 918 2,802 205.2 329,373 439,301 3

South Carolina 393 1,057 169.0 149,190 197,330 3

Tennessee 554 1,602 189.2 251,255 325,371 2

Region V 17,351 33,492 93.0 2,335,756 2,967,770 2

Illinois 9,636 18,368 90.6 573,973 726,974 2

Indiana 1,427 2,454 72.0 294,570 364,253 2

Michigan 2,654 5,036 89.8 426,656 551,091 2

Minnesota 751 1,583 110.8 280,249 358,921 2

Ohio 1,989 4,289 115.6 521,123 666,183 2

Wisconsin 894 1,762 97.1 239,185 300,348 2

Region VI 113,590 186,033 63.8 1,671,035 2,006,843 2

Arkansas 324 701 116.4 134,766 159,820 1

Louisiana 2,697 4,983 84.8 204,723 236,589 1

New Mexico 14,299 21,586 51.0 82,253 107,377 3

Oklahoma 1,516 2,854 88.3 223,676 246,936 1

Texas 94,754 155,909 64.5 1,025,617 1,256,121 2

Region VII 3,882 6,618 70.5 739,656 871,292 1

Iowa 475 859 80.8 174,121 206,840 1

Kansas 1,541 2,396 55.5 169,593 191,262 1

Missouri 1,247 2,216 77.7 293,131 348,978 1

Nebraska 619 1,147 85.3 102,811 124,212 2
Percent Perc

1987 1992 Change 1987 1992 Cha

Region VIII 11,901 17,881 50.2 551,525 673,828 2

Colorado 9,516 13,817 45.2 262,597 323,147 2

Montana 304 568 86.8 63,623 75,331 1

North Dakota 88 116 31.8 42,717 48,368 1

South Dakota 109 239 119.3 47,829 57,084 1

Utah 1,300 2,375 82.7 100,186 129,202 2

Wyoming 584 766 31.2 34,573 40,696 1

Region IX 145,050 274,644 89.3 2,121,872 2,674,500 2

Arizona 9,845 17,835 81.2 191,908 248,337 2

California 132,212 249,717 88.9 1,809,252 2,259,327 2

Hawaii 1,226 3,192 160.4 60,928 79,050 2

Nevada 1,767 3,900 120.7 59,784 87,786 4

Region X 5,760 12,262 112.9 588,165 759,552 2

Alaska 502 766 52.6 48,784 58,898 2

Idaho 974 1,865 91.5 68,006 88,712 3

Oregon 1,598 3,538 121.4 185,151 238,967 2

Washington 2,686 6,093 126.8 286,224 372,975 3

Source: U.S. Small Business Administration, Office of Advocacy, based upon data from 

U.S. Department of Commerce, Bureau of the Census.

262 The Annual Report on Small Business and Competition
Supplementary Tables 2

1994 1995 Change Rank

U.S. Total 512,669.9 583,865.2 13.9

Region I 21,245.4 23,738.7 11.7

Connecticut 5,663.9 5,665.6 0.0 43 

Maine 1,089.5 1,357.3 24.6 10

Massachusetts 11,199.1 12,945.8 15.6 25

New Hampshire 999.9 1,252.9 25.3 8

Rhode Island 922.5 897.4 22.7 46

Vermont 1,370.5 1,619.7 18.2 18

Region II 36,431.0 39,166.1 7.5

New Jersey 10,518.6 11,071.0 5.3 4

New York 25,912.4 28,095.1 8.4 39

Region III 29,726.0 33,438.0 12.5

Delaware 1,497.5 1,401.5 26.4 47

District of Columbia 546.1 230.7 257.8 51

Maryland 4,873.9 5,222.8 7.2 40

Pennsylvania 11,650.3 13,030.9 11.9 33

Virginia 9,572.5 11,512.4 20.3 15

West Virginia 1,585.7 2,039.7 28.6 5

Region IV 58,516.0 70,322.0 20.2

Alabama 3,894.7 4,764.0 22.3 14

Florida 16,286.8 18,908.8 16.1 22

Georgia 8,237.1 10,290.6 24.9 9

Kentucky 4,802.8 5,252.5 9.4 37

Mississippi 1,646.4 2,591.7 57.4 1

North Carolina 11,663.3 14,312.8 22.7 12

South Carolina 5,235.9 6,423.3 22.7 13

Tennessee 6,749.0 7,778.3 15.3 26

Region V 86,532.2 95,465.1 10.3

Illinois 19,096.9 22,163.3 16.1 23

Indiana 8,255.5 10,382.8 25.8 6

Michigan 25,830.0 25,274.5 22.2 45

Minnesota 6,620.5 7,746.5 17.0 20

Ohio 19,006.9 20,966.6 10.3 35

Wisconsin 7,722.4 8,931.4 15.7 24
1994 1995 Change Rank

Region VI 70,375.8 83,413.5 18.5

Arkansas 1,671.9 1,993.6 19.2 17

Louisiana 14,549.3 19,792.5 36.0 3

New Mexico 526.1 432.1 217.9 49

Oklahoma 2,110.1 2,079.1 21.5 44

Texas 51,518.4 59,116.2 14.7 28

Region VII 11,352.4 12,909.7 13.7

Missouri 3,540.6 3,876.0 9.5 36

Iowa 3,213.6 3,842.2 19.6 16

Kansas 3,025.4 3,432.7 13.5 30

Nebraska 1,572.8 1,758.8 11.8 34

Region VIII 7,596.6 9,426.0 24.1

Colorado 3,801.5 4,460.2 17.3 19

Montana 327.8 358.4 9.3 38

North Dakota 457.5 525.9 15.0 27

South Dakota 295.1 387.8 31.4 4

Utah 2,354.6 3,282.3 39.4 2

Wyoming 360.1 411.4 14.2 29

Region IX 73,674.1 85,760.8 16.4

Arizona 6,466.5 7,326.5 13.3 31

California 66,291.6 77,528.7 17.0 21

Hawaii 295.5 241.1 218.4 50

Nevada 620.5 664.5 7.1 41

Region X 33,653.7 34,121.6 1.4

Alaska 2,455.9 2,771.9 12.9 32

Idaho 1,465.6 1,803.6 23.1 11

Oregon 6,103.1 7,666.8 25.6 7

Washington 23,629.1 21,879.3 27.4 48

Source: U.S. Small Business Administration, Office of Advocacy, based upon data from 

Bureau of the Census, Foreign Trade Division, Exhibit 2A., 1994 and 1995.

264 The Annual Report on Small Business and Competition
Supplementary Tables 2

Absolute

SIC December Change

Code 1994–

(1987) Industry 1994 1995 1995 Rank

172 Special Trade Contractors 3,139.0 3,281.5 142.5 1 

58 Eating and Drinking Places 7,134.7 7,242.8 108.1 2 

87 Engineering, Accounting,

Research 1,015.6 1,117.9 102.3 3 

50 Durable Goods 2,607.9 2,685.0 77.1 4

801 Offices of Physicians 1,564.3 1,617.4 53.1 5

007 Agricultural Services 538.9 586.5 47.6 6

799 Miscellaneous Amusement and

Recreation Services 906.3 949.8 43.5 7 

171 Plumbing, Heating and Air 

Conditioning 717.8 758.1 40.3 8

804 Offices of Other Health 

Practitioners 393.4 429.8 36.4 9 

173 Electrical Work 595.4 630.2 34.8 10 

802 Offices of Dentists 585.4 614.6 29.2 11 

551 New and Used Car Dealers 986.0 1,014.5 28.5 12 

872 Accounting, Auditing, 

and Bookkeeping 515.6 543.8 28.2 13 

79 Amusement and Recreation 

Services 258.0 283.9 25.9 14 

734 Services to Buildings 867.0 892.8 25.8 15 

411 Local and Suburban Passenger

Transportation 210.2 235.0 24.8 16 

653 Real Estate Agents and

Managers 651.7 674.4 22.7 17 

836 Residential Care 620.4 642.4 22.0 18 

553 Auto and Home Supply Stores 372.7 394.0 21.3 19 

731 Advertising 230.4 250.0 19.6 20

1Represents sum of three-digit components, which are also shown separately.

2Represents two-digit industries with three-digit industry breakout. However, because of 

inability to distribute all industry employment, industry components do not equal the specif

two-digit total. If the industry was clearly large-business-dominated or small-business-dominat

the two-digit industry was listed to represent the overall two-digit industry total. 3Each two-digit subcomponent industry reflects both the sum of the separately enumera

three-digit components and a residual component representing industries not covered by the 

reau of Labor Statistics.

Note: Excludes self-employed workers. Small-business-dominated industries are industrie

which a minimum of 60 percent of employment is in firms with fewer than 500 employe

While 99.9 percent of industry employment was allocated to small, large, and indeterminate 

dustries, about 2 percent of employment in the manufacturing and service sectors could not 

allocated because of SIC code inconsistencies.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from 

U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings (March 199
Percent

SIC December Change

Code 1994–

(1987) Industry 1994 1995 1995 Rank

523 Building Materials and Garden

Supplies 31.3 36.1 15.3 1

411 Local and Suburban Passenger

Transportation 210.2 235.0 11.8 2

473 Arrangement of Transportation of

Freight and Cargo 172.1 190.7 10.8 3

412 Taxicabs 33.0 36.4 10.3 4

87 Engineering, Accounting,

Research 1,015.6 1,117.9 10.1 5

79 Amusement and Recreation

Services 258.0 283.9 10.0 6

804 Offices of Other Health

Practitioners 393.4 429.8 9.3 7

007 Agricultural Services 538.9 586.5 8.8 8 

731 Advertising 230.4 250.0 8.5 9 

415 School Bus Transportation 143.0 154.0 7.7 10

735 Miscellaneous Equipment Rental

and Leasing 219.6 236.2 7.6 11

67 Holding and Investment Services 131.1 141.0 7.6 12

7532 Top, Body, and Upholstery Repair

Shops 193.5 207.7 7.3 13

502 Furniture and Home Furnishings 146.8 157.3 7.2 14

552 Automotive Dealers and Service

Stations 161.4 172.9 7.1 15

733 Mailing, Reproduction, 

Stenographic 268.9 287.9 7.1 16

175 Carpentry and Flooring 216.7 231.6 6.9 17

824 Correspondence and Vocational

Schools 77.9 83.2 6.8 18

3441 Fabricated Structural Metal 70.2 74.9 6.7 19 

413 Local and Interurban Passenger

Transit 53.8 57.4 6.7 20 

n.e.c. = Not elsewhere classified.

1Represents sum of three-digit components, which are also shown separately.

2Represents two-digit industries with three-digit industry breakout. However, because of 

inability to distribute all industry employment, industry components do not equal the specif

two-digit total. If the industry was clearly large-business-dominated or small-business-dominat

the two-digit industry was listed to represent the overall two-digit industry total. 3Each two-digit subcomponent industry reflects both the sum of the separately enumera

three-digit components and a residual component representing industries not covered by the 

reau of Labor Statistics.

Note: Excludes self-employed workers. Small-business-dominated industries are industrie

which a minimum of 60 percent of employment is in firms with fewer than 500 employe

While 99.9 percent of industry employment was allocated to small, large, and indeterminate 

dustries, about 2 percent of employment in the manufacturing and service sectors could not 

allocated because of SIC code inconsistencies.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from 

U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings (March 199

Table B-12.

266 The Annual Report on Small Business and Competition
Supplementary Tables 2

Absolute

SIC December Change

Code 1994–

(1987) Industry 1994 1995 1995 Rank

541 Grocery Stores 2,982.5 3,050.8 68.3 1 

7363 Personnel Supply Services 2,162.2 2,227.6 65.4 2

8062 Hospitals 3,484.6 3,535.2 50.6 3

781 Motion Picture Production 260.1 307.1 47.0 4

3674 Semiconductors and Related

Devices 229.8 254.8 25.0 5

632 Medical Service and Health 

Insurance 300.3 321.4 21.1 6

367 Electronic Components and

Accessories Manufacturing 305.7 325.4 19.7 7

7374 Computer Processing and Data 

Preparation 222.7 241.7 19.0 8

451 Air Transportation 609.5 626.9 17.4 9

484 Cable and Other Pay Television

Services 150.2 167.3 17.1 10

80 Health Services 344.4 358.1 13.7 11

822 Colleges and Universities 1,171.2 1,184.5 13.3 12

5045 Computers and Computer Peripheral

Equipment 275.0 286.3 11.3 13

7514 Passenger Car Rental 112.8 122.0 9.2 14

7375 Information Retrieval Services 51.1 59.5 8.4 15

45 Transportation by Air 36.9 45.1 8.2 16

458 Air Transportation Services 109.0 116.8 7.8 17

481 Telephone Communications 921.8 929.5 7.7 18

4833 Television Broadcasting Stations 125.2 132.8 7.6 19

615 Business Credit Institutions 86.6 94.1 7.5 20

Note: Excludes self-employed workers. Large-business-dominated industries are industrie

which a minimum of 60 percent of employment is in firms with more than 500 employees. Wh

99.9 percent of industry employment was allocated to small, large, and indeterminate industr

about 2 percent of employment in the manufacturing and service sectors could not be alloca

because of SIC code inconsistencies.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from 

U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings (March 199

Table B-12.
Percent

SIC December Change

Code 1994–

(1987) Industry 1994 1995 1995 Rank

45 Transportation by Air 36.9 45.1 22.2 1

781 Motion Picture Production 260.1 307.1 18.1 2

7375 Information Retrieval Services 51.1 59.5 16.4 3

484 Cable and Other Pay Television

Services 150.2 167.3 11.4 4

3674 Semiconductors and Related 

Devices 229.8 254.8 10.9 5

615 Business Credit Institutions 86.6 94.1 8.7 6

7374 Computer Processing and Data 

Preparation 222.7 241.7 8.5 7

7514 Passenger Car Rental 112.8 122.0 8.2 8

2061 Cane Sugar, except Refining 7.5 8.1 8.0 9

458 Air Transportation Services 109.0 116.8 7.2 10

632 Medical Service and Health

Insurance 300.3 321.4 7.0 11

301 Tires and Inner Tubes 78.3 83.8 7.0 12

367 Electronic Components and

Accessories 305.7 325.4 6.4 13

2062 Cane Sugar Refining 4.7 5.0 6.4 14

4833 Television Broadcasting Stations 125.2 132.8 6.1 15

10 Metal Mining 25.9 27.3 5.4 16

3531 Construction Machinery and 

Equipment 74.8 78.8 5.3 17

5045 Computers and Computer Peripheral

Equipment 275.0 286.3 4.1 18

3585 Air Conditioning Equipment 131.9 137.2 4.0 19

3533 Oil and Gas Field Machinery 35.1 36.5 4.0 20

Note: Excludes self-employed workers. Large-business-dominated industries are industrie

which a minimum of 60 percent of employment is in firms with more than 500 employees. Wh

99.9 percent of industry employment was allocated to small, large, and indeterminate industr

about 2 percent of employment in the manufacturing and service sectors could not be alloca

because of SIC code inconsistencies.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from 

U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings (March 199

Table B-12.

268 The Annual Report on Small Business and Competition
Supplementary Tables 2

Absolute

SIC December Change

Code 1994–

(1987) Industry 1994 1995 1995 Rank

808 Home Health Care Services 587.8 630.1 42.3 1

8051 Skilled Nursing Care 

Facilities 1,239.5 1,274.3 34.8 2

7371 Computer Programming Services 218.2 247.6 29.4 3

7372 Prepackaged Software 159.8 184.5 24.7 4

7381 Detective, Guard, and Armored

Services 519.1 543.4 24.3 5

421 Trucking and Courier Services 1,755.6 1,779.4 23.8 6

738 Miscellaneous Business

Services 775.0 797.1 22.1 7

504 Professional and Commercial

Equipment 328.3 347.1 18.8 8

8711 Engineering and Architectural

Services 611.7 630.0 18.3 9 

511 Paper and Paper Products 256.7 274.3 17.6 10

737 Computer and Data Processing

Services 178.9 196.4 17.5 11

573 Radio, TV and Music Stores 125.6 141.9 16.3 12

5731 Radio, Television, and 

Consumer Electronics 166.2 179.8 13.6 13

355 Special Industry Machinery, 

except Metalworking Machinery 98.6 108.8 10.2 14

7373 Computer Integrated Systems 

Design 119.6 129.5 9.9 15 

5047 Medical, Dental, and Hospital

Equipment 169.6 179.3 9.7 16

616 Mortgage Bankers and Brokers 231.2 240.8 9.6 17

82 Educational Services 141.2 150.7 9.5 18

3679 Electronic Components, n.e.c. 133.1 142.3 9.2 19

701 Hotels, Motels, and Tourist

Courts 1,514.1 1,522.6 8.5 20

n.e.c. = Not elsewhere classified.

Note: Excludes self-employed workers. Indeterminate industries are industries in wh

dominance by large or small firms is unclear. While 99.9 percent of industry employment w

allocated to small, large, and indeterminate industries, about 2 percent of employment in 

manufacturing and service sectors could not be allocated because of SIC code inconsistenc

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from 

U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings (March 199

Table B-12.
Absolute

SIC December Change

Code 1994–

(1987) Industry 1994 1995 1995 Rank

7372 Prepackaged Software 159.8 184.5 15.5 1

7371 Computer Programming Services 218.2 247.6 13.5 2

573 Radio, TV and Music Stores 125.6 141.9 13.0 3

61 Nondepository Credit Institutions 22.5 25.2 12.0 4

355 Special Industry Machinery, 

except Metalworking Machinery 98.6 108.8 10.3 5

737 Computer and Data Processing

Services 178.9 196.4 9.8 6

3566 Speed Changers, Industrial High

Speed Drives 15.6 17.0 9.0 7

7373 Computer Integrated Systems Design 119.6 129.5 8.3 8 

5731 Radio, Television, and 

Consumer Electronics 166.2 179.8 8.2 9 

3542 Machine Tools, Metal Forming 

Types 16.9 18.2 7.7 10 

413 Intercity and Rural Bus 

Transportation 22.8 24.5 7.5 11 

808 Home Health Care Services 587.8 630.1 7.2 12

873 Research, Development, and 

Testing Services 85.2 91.2 7.0 13 

3541 Machine Tools, Metal Cutting 

Types 38.9 41.6 6.9 14 

3679 Electronic Components, n.e.c. 133.1 142.3 6.9 15 

511 Paper and Paper Products 256.7 274.3 6.9 16

82 Educational Services 141.2 150.7 6.7 17

7382 Security Systems Services 45.9 48.8 6.3 18 

2064 Candy and Other Confectionery

Products 54.0 57.4 6.3 19

353 Construction, Mining, and

Materials 16.2 17.2 6.2 20 

Note: Excludes self-employed workers. Interminate industries are industries in which do

nance by large or small firms is unclear. While 99.9 percent of industry employment was a

cated to small, large, and indeterminate industries, about 2 percent of employment in the ma

facturing and service sectors could not be allocated because of SIC code inconsistencies.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from 

U.S. Department of Labor, Bureau of Labor Statistics, Employment and Earnings (March 199

Table B-12.

270 The Annual Report on Small Business and Competition
Financing Small Business

Synopsis

Small businesses use a variety of financing sources, including informal 

sources such as friends and business associates, financial intermediaries su

as banks and finance companies, and the public markets. Both small busine

lending and equity investment in small firms were up in 1995.

Moderate growth in demand for credit and the easing of credit policy 

the Federal Reserve Board contributed to declines in most interest rates 

the credit markets in 1995. Although long-term interest rates declined 

some 180 basis points, however, small firm borrowing costs showed on

limited declines. The prime rate—the index rate for most small business va

able-rate loans—declined only 35 basis points in 1995.

While overall borrowing by U.S. domestic sectors showed only mod

ate increases, business borrowing surged to an annual rate of $211 billion 

1995, a level comparable to the high levels of 1986–1988. Lending to sm

firms, including bank and finance company lending, increased significan

during the year. Because large C&I loans were increasing so rapidly, ho

ever, the small business share of total loans declined slightly, from 40.4 p

cent in June 1994 to 39.2 percent in June 1995. 

A booming stock market contributed to a very active small business e

uity capital market. Initial public offerings were up significantly. Fun

raised by venture capital firms reached a new high of $4.4 billion. 

Credit Conditions for U.S. Businesses in 1995

High interest rates in 1994 continued to slow business activity in the Unit

States into 1995. Moderate growth in the demand for credit resulted in d

clines in most interest rates in the credit markets in 1995, except small bu

ness rates, which remained high. With the Federal Reserve Board easing 

on the credit markets after spring 1995, long-term interest rates declin

steadily. AAA corporate bond rates declined from 8.68 percent in Novemb

1994 to 6.82 percent in December 1995. The yield curve flattened sign

cantly, as long-term rates declined faster than short-term rates during t

period (Chart B.1).

The State of Small Business 2
Uses of Funds by Major Sectors

Overall borrowing by U.S. domestic sectors increased moderately in 19

after a slight decrease in 1994. Most of the increases in 1995 came from t

business sector. Borrowing by other sectors changed little or declined slight

Business borrowing surged to an annual rate of $211 billion in 1995, a lev

comparable to the high levels of the 1986-1988 period. Borrowing by t

nonfarm, noncorporate sector also increased in 1995 to an annual rate of $

billion (Tables B.3 and B.5). Increases in capital expenditures contribut

much to the increase in demand for financing by the business sector.

272 The Annual Report on Small Business and Competition

Source: U.S. Board of Governors of The Federal Reserve System, Federal Reserv

Bulletin, various issues. Interest Rate

Year/Quarter

1988 1989 1990 1991 1992 1993 1994 1995

Prime Rate

AAA Corporate Bond Rate

3-Month Treasury Bill Rate

2

3

4

5

6

7

8

9

10

11

12

13

14

22
tion; “informal” external sources, such as friends and business associates; 

nancial intermediaries, such as banks and finance companies; and the pub

markets, where standardized financial instruments are sold to many buyers. 

Small businesses use many different types of credit (Table B.2

Preliminary results of the 1993 National Survey of Small Business Financ

indicates that some 55 percent of small firms used selected credit and 61 pe

cent used trade credit. 

An ample supply of funds and continued high borrowing costs characte

ized the small firm financing markets in 1995. Although other market intere

rates declined steadily in 1995, borrowing costs paid by small firms show

slight upward movement (Tables B.6 and B.7). 

Loans rates paid by small firms have remained the same or declin

somewhat in the recent past. While market interest rates declined from th

peak in early 1995 by about 180 basis points for long-term rates and abo

60 basis points for three-month Treasury bill rates, the prime rate quoted 

banks declined only 35 basis points. The prime rate has become the ind

rate for small business loans; a lower-than-prime rate is now norma

charged to prime borrowers.2 The rate spread between small loan rates a

the below-prime rates paid by larger borrowers widened in 1995. High

margins, however, did motivate bankers to promote small business lending.

Lending to Small Businesses by Commercial Banks

While the lack of time series data on small business lending prevents analy

of changes in the availability of bank credit to businesses, indications are th

bank lending to small businesses increased further during 1995.3

The State of Small Business 2

1 Efforts to analyze changes in financing used by small firms are hampered by a lack of s

tistics. Some data are available, however, on the volume of financing provided by some supp

ers. In an effort to obtain additional information, the U.S. Small Business Administration and 

Federal Reserve Board have sponsored a second nationwide survey of small business financi

the 1993 National Survey of Small Business Finances. For tabulations, see John Wolken a

Rebel Cole, “Financial Services Used by Small Businesses: Evidence from the 1993 Natio

Survey of Small Business Finances,” Federal Reserve Bulletin , July 1995. 2 Below prime lending to larger firms is very common. More than 60 percent of bank loa

with 1- to 12-month maturities were made at below the prime rate in 1995. Computed from lo

rate data from Survey of Terms of Bank Lending, various issues. 3 Data on bank lending to small businesses became available with the June 1993 call 

ports filed with financial regulatory authorities. However, because of data reporting and coll

tion difficulties, it is still difficult to measure changes in the number and amount of small loa

from June 1994 to June 1995. All commercial banks are required to report in their June call 

port filings the number and dollar amount of their commercial and industrial and nonresiden

real estate loans by loan size. 
• Lending by small banks showed a significant increase in 199

Commercial and industrial (C&I) loans by small banks, a proxy for sm

business lending, increased at an annual rate of 11.7 percent duri

1995, compared with a 5.1 percent increase in 1994 (Table B.

Lending by large banks increased by 10.8 percent during this period, 

though the increase in total assets was even larger.5

• Lending by banks that made primarily small loans (less than $1 millio

also increased. Total business loans (C&I and business real estate loa

by small banks that extend mostly small loans increased by about 12

percent from June 1994 to June 1995 (Table B.9).6 

Profile of Bank Lending to Small Businesses in 1995

Some 5.9 million small business loans were outstanding from 10,149 fed

ally insured domestic banks in June 1995.7 These loans totaled $316 billi

and accounted for 39.2 percent of total business loan dollars (Chart B.2). T

small business total includes $165 billion in C&I loans and $151 billion 

nonfarm, nonresidential real estate loans (Table B.10). Small loans represen

larger proportion (52 percent) of total nonresidential real estate loans than 

total C&I loans (32 percent) (Chart B.3). 

The small business share of total business loans declined slightly, from 40

percent in June 1994 to 39.2 percent in June 1995 (Chart B.2). Larger increas

in large C&I loans during this period contributed to the decline (Table B.11).8

274 The Annual Report on Small Business and Competition

4 Federal Reserve Board, Senior Loan Officer Opinion Survey on Bank Lending Practi

(Washington, D.C.: Board of Governors of the Federal Reserve System, November 1995). 5 The total assets of large weekly reporting banks have increased much faster than those 

other (small) banks. 6 Federal Reserve Board, Information on Depository Credit for Small Businesses and Sm

Farms (Washington, DC: Board of Governors of the Federal Reserve System, December 199

Table A.5. C&I loans for these banks increased by 12.7 percent between June 1994 and Ju

1995, a rate quite comparable to that for small banks. 7 Small business loans are defined here as business loans of less than $1 million. This is 

definition used by the Federal Reserve Board and the Comptroller of Currency. The U.S. Sm

Business Administration’s Office of Advocacy used a different definition in compiling Sm

Business Lending in the United States, 1995 Edition. There were about 4.44 million C&I loans 

less than $250,000 with a total outstanding value of $98.3 billion and 1.0 million nonresiden

real estate loans of less than $250,000 valued at $65.6 billion. 8 This development contradicts observations in Table B.8, where growth in lending w

found to be greater in small banks than in large banks between December 1994 and Decem

1995.
The State of Small Business 2

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, fro

special tabulations of the June 1994 call reports (Consolidated Reports of Condition and Incom

for U.S. Banks) prepared by james Kolari, Texas A&M University, College Station, Texas.

Loans between

$250,000 and $1 million

19.1% 

Loans between 

$100,000 and $250,000

7.9%

Loans under $100,000

13.4% 

Loans of 

$1 million or more

59.6%

Loans between

$250,000 and $1 million

18.9% 

Loans between 

$100,000 and $250,000

7.9%

Loans Under $100,000

12.5% 

Loans of 

$1 million or more

60.8%

1995

1994

The 193 largest banks—banks with assets of more than $3 billion—su

plied 40.6 percent and 34.8 percent, respectively, of small business C&I a

mortgage loans, compared with 38 percent and 32 percent, respectively, 

1994 (Chart B.4). The growth was attributable as much to increases in bo
276 The Annual Report on Small Business and Competition

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from 

special tabulations of June 1995 call reports (Consolidated Reports of Condition and Incom

for U.S. Banks) prepared by James Kolari, Texas A&M University, College Station, Texas.

Loans of $100,000–

$250,000

11.1%

Loans of $100,000–

$250,000

6.1%

Loans under $100,000

11.5%

Loans under $100,000

13.0%

Loans of 

$250,000–$1 Million

29.4%

Loans of 

$250,000–

$1 Million

13.0%

Loans over

$1 Million

48.0%

Loans over

$1 Million

68.0%

Real Estate Loans Commercial and Industrial Loans

the number and total assets of these larger banks as to an increased sm

business share of their lending.9 

The largest banks’ share of the smallest C&I and real estate loans—tho

under $100,000—also increased, from 26 percent and 16 percent, respe

tively, in 1994 to 29.3 percent and 19.3 percent in 1995 (Table B.12). Sm

banks with assets under $300 million are the major suppliers of loans und

$100,000, accounting for more than two-thirds of mortgage loans and mo

than 50 percent of C&I loans (Chart B.5). 

In sum, banks of all sizes have been active in small business lending, a

it appears that a number of large banks became more active in 1995. Sm

banks, however, remained the predominent lenders to very small borrowers. 

Lending Under the SBA’s Guarantee Programs

The number of business loans guaranteed by the U.S. Small Busine

Administration (SBA) increased significantly in 1995, although the total dol

9 The share of total assets in the industry for this group increased from 60.6 percent in Ju

1994 to 63 percent in June 1995. The ratio of small business loans to total assets for 175 gi

banks (with assets of $3 billion or more) increased from 2.1 percent in 1994 to 2.26 percent 

1995.
The State of Small Business 2

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, fro

special tabulations of June 1995 call reports (Consolidated Reports of Condition and Incom

for U.S. Banks) prepared by James Kolari, Texas A&M University, College Station, Texas.

Banks with Assets of 

$3 Billion or More

34.8%

Banks with Assets of 

$500 Million–$3 Billion

18.7%

Banks with Assets of 

$100 Million–$300 Million

22.2%

Banks with Assets of 

$100 Million–$300 Millio

18.5%

Banks with Assets 

Under $100 Million

16.4%

Banks with Assets 

Under $100 Million

16.5%

Banks with Assets of

 $300 Million–$500 Million

8.0%

Banks with Assets of 

$300 Million–$500 Million

6.8%

Banks with Assets of 

$3 Billion or More

40.6%

Banks with Assets of 

$500 Million–$3 Billion

17.6%

Real Estate Loans

Commercial and Industrial Loans
278 The Annual Report on Small Business and Competition

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, fro

special tabulations of June 1995 call reports (Consolidated Reports of Condition and Incom

for U.S. Banks) prepared by James Kolari, Texas A&M University, College Station, Texas.

Banks with Assets of 

$100 Million– $300 Million

27.7%

Banks with Assets of 

$100 Million–$300 Million

22.1%

Banks with Assets 

Under $100 Million

34.2%

Banks with Assets 

Under $100 Million

27.7%

Banks with Assets

of $300 Million–

$500 Million

6.5%

Banks with Assets

of $300 Million–

$500 Million

6.5%

Banks with Assets of 

$3 Billion or More

19.3%

Banks with Assets

of $500 Million–

$3 Billion

12.3%

Banks with Assets

of $500 Million–

$3 Billion

14.4%

Banks with Assets of

 $3 Billion

or More

29.3%

Real Estate Loans

Commercial and Industrial Loans
The State of Small Business 2

pgy p

36,480 in FY 1994 to 55,596 in FY 1995. Loans under $100,000 more th

doubled over the fiscal year, from 15,527 to 36,039, and low-documentati

loans increased fivefold, from 5,862 to 30,880. 

Lending by Finance Companies

Lending by finance companies continued to increase during the first ni

months of 1995, although at a slower pace (Table B.13). Finance compan

have been steadily expanding small business lending by entering vario

niche markets.”Captive” finance companies—those owned by major non

nancial corporations—offered vehicle and equipment financing for their pa

ent manufacturing companies.11 

Borrowing in the Public Issue Markets

A booming stock market resulted in explosive initial public offering (IPO) a

tivity during 1995. Common stock IPOs increased significantly, totali

$29.7 billion for 579 issues, as compared with $28.5 billion for 608 issu

in 1994 (Table B.14). The average size of IPOs also increased from $46

million to $51.2 million per issue. Offerings by firms having less than $

million in total assets before the public issue increased from $2.1 billion 

1994 to $3.1 billion, a record high compared with the levels of the previo

seven years.12

Venture Capital Funds

Fundraising by venture capital funds continued to increase in 1995. To

funds raised by venture capital firms amounted to $4.4 billion, a historic hi

(Table B.15).13 Increased commitments from families and individuals a

from banks and insurance companies accounted for the largest increas

(Table B.16). The soaring venture-backed IPO markets contributed to stro

10 Finance companies continued to be the major lender in SBA’s loan guarantee progra

Most finance companies sell SBA- guaranteed loans on the secondary market immediately. 11 Preliminary results of a study by George Haynes show that finance companies were v

active in vehicle loans, equipment loans, and leasing. See George W. Haynes, Finan

Companies and Small Business Borrowers, report no. PB96-146485, prepared for the U.S. Sm

Business Administration, Office of Advocacy (Springfield, Va: National Technical Informat

Service, June 1995). 12 “IPOs Down, But Not Out,” Venture Capital Journal, February 1995. 13 The venture ca

tal market hit bottom when total commitments amounted to $1.27 billion in 1991. 13 The venture capital market hit bottom when total commitments amounted to $1.27 b

lion in 1991.
too high and that the high rates of return will not be sustained.16

Disbursements to small businesses by small business investment comp

nies (SBICs) continued to increase significantly, rising more than 5.7 perce

to $1.2 billion for 2,173 firms in 1995 (Table B.17).

Research on Current Credit Conditions: SBA’s 

Banking Studies 

The availability of call report information allows researchers to study ba

lending behavior with respect to small business. For the second year, the SB

Office of Advocacy produced a national directory of banks ranked by th

“small business friendliness.”17 All insured commercial banks (some 10,00

are rank-ordered in state directories by the sum of their commercial and 

dustrial and commercial mortgage lending to small businesses.18 The proce

developed for the ranking involved selecting five variables considered imp

tant indicators of small business lending:

(1) The ratio of small business loans (defined here as loans of less th

$250,000) to assets. 

(2) The ratio of small business loans to total business loans.

(3) The ratio of small business loans to deposits. 

280 The Annual Report on Small Business and Competition

14 A sizzling stock market fueled the boom in initial public offerings (IPOs) and in the s

ondary offering market for venture-backed companies in 1995. One hundred fifty-two second

offerings were issued in 1995, compared with 56 and 68 in 1994 and 1993 respectively. S

Venture Capital Journal, February and April 1996 issues. 15 “Venture Returns Skyrocket to 50.7 Percent,” Venture Capital Journal, May 1996, 7. 16 “Fundraising Swells to Record-Breaking High,” Venture Capital Journal, July 1994, 40. 17 The information for the study comes from the June 1995 call reports filed by each comm

cial bank with their bank regulatory agency. Reports are available for every state and the Distric

Columbia. See U.S. Small Business Administration, Office of Advocacy, Small Business Lending 

the United States,1995 Edition, report no. PB96-139001; for an IBM-PC compatible floppy d

PB96-500814 (Springfield, Va.: National Technical Information Service, December 1995). The d

are also available on the Internet: http://www.sbaonline.sba.gov/SmallBusinessLending1995/. 18 As with all data sets, these state directories of small business lending are not perfect. 

example: (1) Small business loans made with credit cards or as a second mortgage on the bu

ness owner’s home may or may not be included as a business loan in the call reports. They m

be included as a consumer loan instead. (2) Large banks may refer their small business borrow

to their consumer loan division or to their nonbank finance company. (3) If a small busin

lending bank places a portion of the loan into the secondary market, the dollar amount of loa

will appear low, while the number of loans may appear high if they continue to service the lo

(4) Banks may provide lines of credit to small firms; if the credit is not drawn on, loans will 

appear in the call report. Still, much useful information is found in the call reports and it is 

clear whether the missing information affects the active small business lending banks more 

less severely than the inactive banks. However, the missing information may bias the resu

against the large banks, since they are more likely to have nonbank financial services and co

sumer loan divisions. This area needs further research.
that they could be added together. The maximum score a bank could recei

on the summary ranking was 50. Such a score would indicate that the ba

was in the top decile (tenth decile) in each variable.19 The minimum sco

was 5, which would indicate that the bank would fall in the lowest decile 

all five categories.

The goals of this project were:

(1) To provide more information to the users of banking services on t

lending behavior of the commercial banks in their area. This info

mation will allow depositors and borrowers to make wiser financ

decisions and improve the market’s efficiency.

(2) To encourage small business advocates in the various states to pub

cize banks with the highest summary statistic as a way of encoura

ing more lending to small business. Increased competition to ma

loans to small firms will make more credit available, with bet

terms and at lower interest rates.

Additional research has been undertaken using the call report data. O

study compared large and small banks’ involvement in small business len

ing. The ratios of small business loans to total assets showed that most lar

banks are not active in small business lending. In general, the ratios of sm

business lending to assets, to total business loans, and to deposits decline 

bank size increases. However it is measured, the probability of obtaining 

small business loan is greater if the bank is small, and it decreases with 

creasing bank size.

It is true that these measurement methods favor small banks, whose lo

limits require them to make only small loans. Less size-biased alternative 

dicators are being explored.

As expected, both the number and the dollar amount of loans increa

with bank asset size, implying that larger banks, on average, make mo

loans than smaller banks. Clearly, both large and small banks are needed 

meet the credit needs of small firms.

Nevertheless, small banks with less than $100 million in assets a

medium-sized banks with $100 million-$300 million in assets are the leade

in small business lending across the board. Not only do they rank in the t

deciles in the ratios as expected, but they are also in the top deciles whe

large banks are expected to dominate, in the number and dollar amount 

small loans.

The State of Small Business 2

19 A decile ranking denotes in which 10-percent portion of the distribution of the varia

a bank falls. A bank in the top decile is above 90 percent of the banks in that category. A ba

in the bottom decile falls below 90 to 100 percent of the banks; that is, it ranks among 

lowest 10 
y 

than .05 percent of their assets in small loans. Then the percentages jump d

matically: 28.4 percent in the $300 million-$500 million size class; 42.9 p

cent in the $500 million–$3 billion size class and 88.3 percent in the less-tha

$3-billion size class make almost no small loans relative to their asset size.

A sample of small banks was queried about their lack of small busine

lending. Some two-thirds of the banks were limited-charter banks that a

cepted no deposits and/or made no loans. They serviced credit cards or p

vided cash management, controlled disbursements, investment banking, 

import-export services.

Large banks have many options for their loan funds and often set up sp

cial nonbank subsidiaries to handle small business financing needs. Sm

business borrowers may be referred to the consumer credit section or cre

card division of the bank, or a finance company subsidiary. Thus, call rep

information may underreport large bank loans to small businesses. 

If “small-business-friendly” banks are defined as banks with a great

than-30-percent small business loan-to-asset ratio, it is clear that smal

banks are more small-business-friendly. That is, the small-business-friend

banks are most likely to be found in the $100 million-$300 million or t

less-than-$100-million asset size classes.

Profitability Study

Using a data base that included data from the 1994 and 1995 banking stu

ies, Kolari, Berney and Ou analyzed whether banks that were small-busine

friendly were more profitable than banks that did less small business len

ing.20 The general results showed that the small-business-friendly banks we

more profitable that the banks that did not actively lend to small firms. The 

sults were strongest for the smaller banks than for the larger banks. Wh

profits were adjusted for different measures of risk, the results were wh

economists would expect, that banks carried out their investing in small bu

282 The Annual Report on Small Business and Competition

20 James Kolari, Robert Berney and Charles Ou, The Effects of Small Business Lending 

Bank Profits and Risk (Springfield, Va.: National Technical Information Service, l996). The stu

compares all banks in the top decile with banks in the bottom decile, banks in the second a

third deciles with those in the eighth and ninth deciles, and the top three deciles with the bott

three. The study found there was a statistically significant difference using t-tests for three m

sures of profitability. When the data were adjusted for risk, the banks making the most sm

business loans were as profitable as those making any other investments. Comparisons of 

1994 data with the 1995 data indicate that the statistical relationships are getting stronger. Wh

small business loans have a negligible effect on the profitability of large banks, they have eithe

neutral or a positive effect on the profitability of small banks, holding constant risk and ot

control variables.
g

The Office of Advocacy completed a second banking study on the behav

of large banks in 1995.21 The variable used for the rank ordering was the do

lar amount of small business loans, although the study provides additional 

formation on asset size and ratio values. 

When the lending of all their constituent banks is added together, the t

two holding companies each provided more than $3 billion in small busine

loans (loans of less than $250,000), with both making some 100,000 loan

Twenty-three holding companies made more than $1 billion in small bu

ness loans. 

When the large banks were analyzed on a state-by-state basis, six ban

located in California, Florida, North Carolina and New Jersey, had more th

$1 billion in small business loans.

Future research will explore such topics as the effects of changing sta

and federal bank regulations on merging and branching.22 

Conclusion

Small businesses use a variety of financing sources, including internal resourc

informal external sources such as friends and business associates, financial int

mediaries such as banks and finance companies, and the public markets.

Moderate growth in the demand for credit and the easing of credit poli

by the Federal Reserve Board contributed to declines in interest rates in t

credit markets in 1995. Business borrowing surged to an annual rate of $2

billion in 1995, a level comparable to the high levels of 1986-1988. A boomi

stock market contributed to a very active small business equity capital mark

Recent studies of banks’ “small business friendliness”—measured 

terms of percentages of loan portfolios dedicated to small firms—indicate th

smaller banks are more small-business-friendly overall. However, a numb

of large banks are also important small business lenders in total dollars goi

to small firms.

The State of Small Business 2

21 U.S. Small Business Administration, Office of Advocacy, The Top Small Business Lend

Banks in the United States, 1995 Edition (Springfield, Va.: National Technical Informat

Service, June 1996). 22 Two contracts have been let by the Office of Advocacy to study the changing bank str

ture: James Kolari and Asghar Zardkoohi, Department of Finance, Texas A & M University, on T

Impact of Structural Change in the Banking Industry on Small Business Lending and Joe Pe

Department Of Economics, Boston College on The Effect of Interstate Banking on Small Busin

Lending.

p. 284 Blank—p. 285 fols.
Small Business Financing 2

Table B.1 Major Sources of Business Financing, 1995 2

Table B.2 Small Businesses Using Selected Financial 

Services by Firm Size, 1993 2

Table B.3 Credit Borrowing by Borrowing Sector, 

1980–1995 2

Table B.4 Major Sources and Uses of Funds by Nonfarm, 

Nonfinancial Corporate Businesses, 1980–1995 2

Table B.5 Major Sources and Uses of Funds by Nonfarm, 

Noncorporate Businesses, 1980–1995 2

Table B.6 Short-Term and Long-Term Loan Rates for Small 

Loans by All Commercial Banks, February 1986–

November 1995 2

Table B.7 Loan Rates Charged by Banks on Loans Made in

November 1994 and November 1995 2

Table B.8 Commercial and Industrial Loans by Large Weekly

Reporting and Other Commercial Banks, 

December 31, 1980–December 31, 1995 2

Table B.9 Growth of Business Loans at U.S. Commercial

Banks that Make Loans Primarily to Small 

Business, 1989–1995 2

Table B.10 Number and Amount of Loans by Loan Size and

Asset Size of Bank, June 30, 1995 2

Table B.11 Small Business Lending by Loan Size, 1994 

and 1995 2

Table B.12 Share of Loans by Loan Type and Size and Asset

Size of Bank, June 30, 1995 2

Table B.13 Business Loans Outstanding from Finance Companies, 

December 31, 1980–September 30, 1995 2

Table B.14 Common Stock Initial Public Offerings by All and

Small Issuers, 1988–1995 3

Table B.15 New Commitments, Disbursements, and Total 

Capital Pool of the Venture Capital Industry, 

1982–1995 3
286 The Annual Report on Small Business and Competition

Table B.17 Disbursements to Small Business by 

Small Business Investment Companies 

(SBICs) and 301(d) SBICs, 1980–1995 3
Small Business Financing 2

g

Business Business Busine

Assets and Debt: December 1994

Total Assets 11,166 6,680 4,48

Total Debt2 5,499 3,363 2,13

Total Net Worth2 5,667 3,317 2,35

Other Debt and Net Worth Estimates3

Commercial Paper4 163 163 

Commercial Mortgages by Banks5 290 224 6

Commercial and Industrial Loans by Banks5 516 418 9

Trade Debt6 871 638 23

Finance Company Receivables from Businesses7 362 272 9

Initial Public Offerings of Common Stock8 127 117 1

Venture Capital Pool9 34 0 3

1Most estimates are stock estimates valued at June 1995 or as specified. Small businesses 

clude all noncorporate businesses and small corporations with assets under $25 million. 2 Estimates by the Federal Reserve Board for nonfarm, nonfinancial corporations and n

farm, noncorporate businesses. Total assets and debt for small corporations were estimated by 

plying 17.5 percent and 19.0 percent, respectively, to that of all corporations. Net worth is trea

as a residual. (These ratios were estimated by using corporate tax return data published by 

U.S. Department of the Treasury, Internal Revenue Service). 3Debt estimates below are as of June 1995. These estimates are obtained from sources us

different methodologies. They are not strictly comparable and should not be summed for a to

4 Small business loans are defined as commercial mortgage debt outstanding for the n

farm, noncorporate sector. 5 Small business loans are defined as loans under $250,000.

6 The total represents the sum of trade payables for the nonfarm, noncorporate sector a

small corporations. Totals for small corporations are estimated by applying 20 percent to tra

credit for all nonfinancial corporations. 7 The small business share was derived by applying a 25 percent share to the total.

8 For December 1994. The total estimated cumulative value of initial public offerings of co

mon stock for the period 1988 through 1994. Small businesses are businesses with assets un

$10 million before offering. 9 For December 1994.

NA = Not available.

Source: Board of Governors of the Federal Reserve System, Balance Sheets for the U

Economy 1945–1994 (Washington, D.C.: Board of Governors of the Federal Reserve System, Ju

1995); Tables B.103 and B.104, and Flow of Funds Accounts, Fourth Quarter (March 8, 1996).
288 The Annual Report on Small Business and Competition Table B.2 Small Businesses Using Selected Financial Services by Fir

Credit Lines, Loans, and Capital Leas

Credit 

Category Any Line Mortgage Vehicle Equipment All Firms 55.48 25.54 6.18 24.09 14.00 Firms by Employment Size (Number of Full-Time- Equivalent Employees) 0-1 41.87 15.75 5.72 16.85 8.10 

2-4 54.51 23.37 6.08 24.49 12.31 5-9 67.04 31.59 6.14 32.12 17.62 

10-19 75.89 39.55 7.45 35.35 24.74 20-49 77.83 52.64 5.44 30.43 31.40 50-99 86.16 56.38 5.55 33.10 30.07 

100-499 88.46 59.53 18.99 26.44 28.84 

* Loans from sole proprietors not included.Source: Tabulations from 1993 National Survey of Small Business Finances. See J

nesses: Evidence from the 1993 National Survey of Small Business Finances,” Federal 
Small Business Financing 289

Table B.3 Credit Borrowing by Borrowing Sector, 1980–1995 (Billio

1980 1981 1982 1983 1984 1985 1986 19

Total Domestic 

Borrowing 337.1 382.1 420.8 562.2 780.2 965.1 863.6 73

Government

Federal 77.4 85.5 161.3 185.2 197.2 225.7 216.0 14State and Local 10.9 16.3 30.4 34.6 52.5 163.6 73.4 9

Business

Farm 15.8 16.3 6.7 3.9 20.4 214.5 217.4 21

Nonfarm -

Noncorporate 55.8 44.7 71.2 72.2 109.2 121.2 94.3 5

Nonfinancial 

Corporate 66.2 115.5 68.1 81.0 198.7 168.4 236.3 14

Households 111.2 103.9 83.2 185.3 223.0 300.8 261.1 30Foreign Borrowing in

the United States NA 23.5 16.0 17.3 8.4 1.2 9.7 

NA = Not available.* Excluding equity and borrowing by financial institutions. Major revisions in estiSource: Board of Governors of the Federal Reserve System, Flow of Funds Accou
290 The Annual Report on Small Business and Competition Table B.4 Major Sources and Uses of Funds by Nonfarm, Nonfinan

(Billions of Dollars) 1980 1981 1982 1983 1984 1985 1986 19

Before-Tax Profit 181.1 180.9 133.0 156.0 191.0 167.6 151.3 21Domestic Undis- tributed Profit 69.2 64.2 30.6 30.5 46.4 21.7 22.1 4

Depreciation with Capital Consumption Adjustment 154.8 186.2 215.1 251.5 279.1 310.7 312.8 32Total Internal Funds, on Book Basis 224.0 250.3 245.7 282.0 329.1 336.7 315.5 37Net Increase in Liability 130.6 151.8 84.1 152.3 318.9 379.7 190.0 27Funds Raised in

Credit Markets 66.2 115.5 68.1 81.0 198.7 168.4 236.3 14

Net New Equity Issues 10.4 -13.5 1.9 20.0 279.0 284.5 285.0 27

Capital Expenditures 255.8 313.0 278.8 294.0 387.5 369.6 347.3 35Net Financial 

Investment 233.5 243.4 219.6 235.9 -40.9 2105.6 -18.0 23

Note: Major data revisions in September 1994.Source: Board of Governors of the Federal Reserve System, Flow of Funds Accounts, 
Small Business Financing 291

Table B.5 Major Sources and Uses of Funds by Nonfarm, Noncorpo

(Billions of Dollars) *

1980 1981 1982 1983 1984 1985 1986 19

Net Income 176.0 182.3 183.5 213.4 274.3 298.1 306.7 33Gross Investment 48.7 56.7 63.1 65.2 55.8 59.6 64.0 6Fixed Capital 

Expenditures 63.6 72.2 70.6 69.9 92.6 104.1 106.6 10

Changes in 

Inventories 2.2 0.8 21.0 0.5 3.1 10.0 0.6 

Net Financial 

Investments 214.7 216.3 26.4 25.1 239.9 245.5 243.1 24

Net Increase in Credit

Market Debt 55.8 44.7 71.6 86.7 109.2 111.6 48.1 2

Mortgages 45.7 23.3 76.0 74.0 83.8 109.1 82.7 3

Net Investment by

Proprietors 242.1 237.9 276.4 265.0 223.3 226.5 253.1 22

* Major revisions for 1984-1994.Source: Board of Governors of the Federal Reserve System, Flow of Funds Accou
g

Fixed Floating Prime Fixed Floating

Rate Rate Rate Rate Rate

1995

November 10.01 10.22 8.75 9.77 10.12

August 10.09 10.24 8.75 10.03 10.05

May 9.56 10.29 9.00 10.12 10.40

February 9.33 10.30 9.00 9.82 10.12

1994

November 7.96 9.11 8.15 9.42 9.21

August 8.74 8.54 7.51 8.92 8.46

May 8.01 8.12 6.99 8.57 8.24

February 7.96 7.49 6.00 7.35 7.64

1993

November 8.08 7.41 6.00 8.33 7.60

August 8.50 7.40 6.00 8.59 7.63

May 8.27 7.48 6.00 8.80 7.77

February 8.43 7.42 6.00 8.98 8.13

1992

November 8.64 7.53 9.28 7.95

August 8.94 7.48 6.00 9.41 7.71

May 7.89 7.78 6.50 9.17 7.79

February 8.18 7.80 6.50 9.07 7.84

1991 

November 9.35 8.95 7.50 10.05 9.03

August 11.20 10.16 8.50 11.26 10.37

May 11.19 10.22 8.50 11.24 10.64

February 11.29 10.68 9.00 11.73 11.12

1990

November 11.90 11.87 10.00 12.30 12.06

August 12.06 11.84 10.00 12.15 12.08

May 11.87 11.96 10.00 11.99 12.05

February 12.12 11.96 10.00 12.29 12.19

1989

November 12.38 12.45 10.50 12.28 12.48

August 12.67 12.49 10.50 12.42 12.66

May 13.37 13.46 11.50 13.16 13.74

February 12.26 12.54 10.93 14.08 12.66

1988

November 11.94 11.90 10.05 12.65 12.05

August 11.43 11.48 9.84 11.53 11.59

May 10.90 10.38 8.84 11.77 10.62

February 11.17 10.48 8.51 11.90 10.88

1987

November 11.29 10.78 8.78 11.93 11.28

August 10.66 10.15 8.70 12.11 10.15

May 11.10 9.85 8.25 11.22 10.08

February 10.51 9.41 7.50 11.04 9.81

1986

November 10.55 9.51 7.5 11.35 9.41

August 10.94 9.90 7.9 11.84 9.99

May 11.34 10.42 8.5 12.28 10.54

February 12.52 11.46 9.5 13.02 11.77

1 Small loans refer to loans under $100,000.

2 For rates before November 1990, averages of loan rates for three loan sizes: under $25,0

$25,000 to under $50,000, and $50,000 to under $100,000.

Source: Board of Governors of the Federal Reserve System, Survey of Terms of Bank Lend

ing, Statistical Release E.2, various issues; and Federal Reserve Bulletin, various issues.

292 The Annual Report on Small Business and Competition
Small Business Financing 2

()

1–99 100–499 500–999 1,0001

November 1995

Large Banks

Short-Term Loans

Fixed Rate 8.98 7.96 7.44 *6.72 

Floating Rate 10.04 9.64 9.20 *7.82 

Term Loans

Fixed Rate 9.32 8.32 8.22 7.71

Floating Rate 9.81 9.42 9.06 8.12

Small Banks

Short-Term Loans

Fixed Rate 10.11 9.04 7.83 6.69 

Floating Rate 10.32 9.76 9.56 8.23

Term Loans

Fixed Rate 9.81 9.31 8.86 7.22

Floating Rate 10.22 9.59 9.41 8.21

November 1994

Large Banks

Short-Term Loans

Fixed Rate 7.41 6.78 6.61 *5.75

Floating Rate 8.87 8.51 8.16 *6.60

Term Loans

Fixed Rate 9.21 7.82 6.94 6.40

Floating Rate 8.60 8.40 8.15 7.14

Small Banks

Short-Term Loans

Fixed Rate 7.78 8.23 6.68 5.78

Floating Rate 9.21 8.67 8.46 7.24

Term Loans

Fixed Rate 9.43 9.00 7.01 6.82

Floating Rate 9.4 8.46 8.17 7.54

* Averages of loan rates for three loan sizes: $1 million—$5 million, $5 million—$10 m

lion, and $10 million and over.

Source: Board of Governors of the Federal Reserve System, Survey of Terms of Bank Le

ing, Statistical Release E.2 (December 16, 1994 and December 13, 1995).
294 The Annual Report on Small Business and Competition Table B.8 Commercial and Industrial Loans by Large Weekly Repor

December 31, 1980–December 31, 1995 (Billions of Dollars) 1 La

All Banks

j

Rep

Change 

Amount (Percent) Amount 

December 31, 1995 716.6 11.3 348.3 December 31, 1994 643.9 9.7 314.3 December 31, 1993 586.9

22.3 273.7

December 31, 1992 600.6

23.1 277.9

December 31, 1991 619.1

24.5 290.1

December 31, 1990 648.0 0.8 316.6December 31, 1989 642.6 3.4 318.8 December 31, 1988 605.0 6.8 302.0 December 31, 1987 566.4 5.1 279.5December 31, 1986 539.0 7.3 289.1 December 31, 1985 502.1 5.7 260.0 December 31, 1984 474.9 14.2 251.4 December 31, 1983 415.7 4.9 223.9 December 31, 1982 396.2 10.0 218.5 December 31, 1981 360.1 10.7 197.0 December 31, 1980 325.3 176.1 

1Not seasonally adjusted. Large weekly reporting banks are banks with domestic 2Changes from the fourth quarter of the previous year.

Source: Board of Governors of the Federal Reserve System, Federal Reserve Bulle

U.S. Department of Commerce, Bureau of Economic Analysis, Survey of Current Busin
Small Business Financing 2

Type of Loan

Commercial and Nonfarm, Nonresidenti

Year Total Business3 Industrial Real Estate

Amount Outstanding, June 30 (Billions of Dollars)

1995 68.9 35.5 33.4

1994 61.6 31.5 29.6

1993 55.5 29.0 26.5

1992 53.4 28.8 24.6

1991 51.2 29.0 22.2

1990 49.1 29.2 19.9

1989 45.5 27.8 17.7

Percentage Change, June to June

1995 12.8 12.7 12.8

1994 10.3 8.6 11.7

1993 4.1 0.7 7.7

1992 4.3 20.7 10.8

1991 4.5 20.7 11.6

1990 7.9 5.0 12.4

1U.S. domestically chartered commercial banks, excluding credit card banks and U

branches and agencies of foreign banks. U.S. branches and agencies of foreign banks held 

proximately $156 billion in commercial and industrial loans on June 30, 1995, almost al

which were greater than $1 million; credit card banks held less than $1 billion of commerc

and industrial loans. 2Data include banks that reported that 95 percent or more of their total business loans w

in original amounts of less than $1 million. The number of such banks totaled 7,375 on June 

1995. About 300 of these banks were excluded from the calculations because they were no

operation six years prior to 1995. These numbers do not include the growth of small busin

loans at banks that lend to larger businesses as well as to small businesses, and hence should 

be interpreted as the growth rate of total small business loans. 3Construction and land development loans not included.

Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from F

eral Reserve Board estimates based on call reports (Consolidated Reports of Condition and 

come for U.S. Banks), 1989–1995.
Table B.10 Number and Amount of Loans by Loan Size and Asset S

Under $100,000

j

$100,000–$250,000

Bank’s Asset Size Amount Amount (Millions of (Millions of (Millions of Dollars) Number Dollars) Number Dollars) 

Commercial and Industrial Loans0-$100 898,479 18,559 36,634 3,945 $100-$300 710,458 14,838 54,284 5,791 $300-$500 218,401 4,362 22,229 2,336 $500-$3,000 999,813 9,629 62,573 5,959 Over $3,000 1,308,731 19,611 126,778 13,293 Total 4,135,882 66,999 302,498 31,324 Nonfarm, Nonresidential

Real Estate Loans

0-$100 255,436 11,409 36,722 4,736 $100-$300 199,467 9,230 55,932 7,091 $300-$500 49,506 2,198 21,079 2,717 $500-$3,000 93,441 4,100 48,809 6,309 Over $3,000 151,424 6,438 88,811 11,339 Total 749,184 33,374 251,353 32,193 Total Business Loans0-$100 1,153,825 29,968 73,356 8,682 $100-$300 909,925 24,069 110,216 12,882 $300-$500 267,907 6,560 43,308 5,053 $500-$3,000 1,093,254 13,729 111,382 12,268 Over $3,000 1,460,155 26,049 215,589 24,632 Total 4,885,066 100,374 553,851 63,517 

Note: Loans are reported by loan size; loans under $1 million are assumed to repSource: Adapted by the U.S. Small Business Administration, Office of Advocacy

ports of Condition and Income for U.S. Banks) prepared by James Kolari, Texas A&M U

296 The Annual Report on Small Business and Competition
Table B.11 Small Business Lending by Loan Size, 1994 and 1995 (A

Total 

Under $100,000

j

$100,000–$250,000

j

Under $25

Dollar Percent Dollar Percent Dollar Pe

Amount of Total Amount of Total Amount of 

June 1994Commercial and Industrial

Loans 64,073 14.1 28,637 6.3 92,710 2

Nonfarm, Nonresidential

Real Estate Loans 33,602 12.3 29,228 10.7 62,830 2

Total Business Loans 97,675 13.4 57,866 7.9 155,541 2June 1995Commercial and Industrial

Loans 66,999 13.0 31,324 6.1 98,323 1

Nonfarm, Nonresidential

Real Estate Loans 33,374 11.5 32,193 11.1 65,567 2

Total Business Loans 100,374 12.5 63,517 7.9 163,891 2Changes from 1994 to 1995 Commercial and Industrial

Loans 2,926.4 4.6 2,686.8 9.4 5,613.2 

Nonfarm, Nonresidential

Real Estate Loans (227.6) 20.7 2,965.0 10.1 2,737.3 

Total Business Loans 2,698.8 2.8 5,650.8 9.8 8,349.5 

Note: Loans under $1 million are assumed to represent small business lending.Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, fro

Condition and Income for U.S. Banks) prepared by James Kolari, Texas A&M University, 

Small Business Financing 297
298 The Annual Report on Small Business and Competition Table B.12 Share of Loans by Loan Type and Size and Asset Size of 

Under $100,000

j

$100,000–$250,000

Bank’s Asset Size Dollar Dollar (Millions of Dollars) Number Amount Number Amount 

Commercial and Industrial Loans0-$100 21.7 27.7 12.1 12.6 $100-$300 17.2 22.1 17.9 18.5 $300-$500 5.3 6.5 7.3 7.5 $500-$3,000 24.2 14.4 20.7 19.0 Over $3,000 31.6 29.3 41.9 42.4 Total 100.0 100.0 100.0 100.0 Nonfarm, Nonresidential

Real Estate Loans

0-$100 34.1 34.2 14.6 14.7 $100-$300 26.6 27.7 22.3 22.0 $300-$500 6.6 6.6 8.4 8.4 $500-$3,000 12.5 12.3 19.4 19.6 Over $3,000 20.2 19.3 35.3 35.2 Total 100.0 100.0 100.0 100.0 Total Business Loans0-$100 23.6 29.9 13.2 13.7 $100-$300 18.6 24.0 19.9 20.3 $300-$500 5.5 6.5 7.8 8.0 $500-$3,000 22.4 13.7 20.1 19.3 Over $3,000 29.9 26.0 38.9 38.8 Total 100.0 100.0 100.0 100.0 

Note: Loans under $1 million are assumed to represent small business lending.Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, 

ports of Condition and Income for U.S. Banks) prepared by James Kolari, Texas A&M U
Small Business Financing 2

Change in

Total Receivables Outstandins Chaiin-Type 1

Price Index

Billions of Change for GDP

Dollars (Percent) (Percent)

September 30, 1995 362.4 7.42 2.1

December 31, 1994 331.6 14.6 2.5

December 31, 1993 294.6 -2.3 2.3

December 31, 1992 301.3 1.9 2.5

December 31, 1991 295.8 0.9 2.6 

December 31, 1990 293.6 14.6 3.4

December 31, 1989 256.0 9.1 4.6

December 31, 1988 234.6 13.9 3.9

December 31, 1987 206.0 19.7 4.0

December 31, 1986 172.1 9.3 3.2

December 31, 1985 157.5 14.3 2.5

December 31, 1984 137.8 21.9 3.5

December 31, 1983 113.4 12.9 3.8

December 31, 1982 100.4 0 5.3

December 31, 1981 100.3 11.1 8.5 

December 31, 1980 90.3

1Changes from the fourth quarter of the year before.

2Annualized rate of change.

Source: Board of Governors of the Federal Reserve System, Federal Reserve Bulletin, Table

1.52, various issues; U.S. Department of Commerce, Bureau of Economic Analysis, Survey of

Current Business, various issues.
Number Amount

Offerings by All Issuers

1995 579 29,671

1994 608 28,446

1993 709 41,721

1992 517 24,139

1991 367 16,411

1990 172 4,519

1989 209 6,082

1988 228 5,940

Offerings by Issuers with Assets of 

$10 Million or Less

1995 189 3,147

1994 201 2,079

1993 203 2,798

1992 171 2,241

1991 109 1,227

1990 65 412

1989 89 584

1988 83 656

Offerings by Nonfinancial Issuers with Assets of 

$10 Million or Less

1995 182 3,099

1994 189 1,974

1993 189 2,043

1992 164 1,919

1991 103 1,182

1990 58 354

1989 84 562

1988 71 366

*Excludes closed-end funds. Registered offerings data from the Securities and Exchange

Commission are no longer available. Data provided by Securities Data Company are not as inc

sive as those registered with the SEC. 

Source: Special tabulations prepared for the U.S. Small Business Administration, Office of

Advocacy, by Securities Data Company, Inc., 1996.

300 The Annual Report on Small Business and Competition
Commitments Disbursements Total Investmen

to Venture to Funded Number Capital Pool

Capital Firms Companies of Funded At End of Year *

Year (Billions of Dollars) (Billions of Dollars) Companies (Billions of Dolla

1995 4.4 NA NA NA 

1994 3.8 2.7 1,011 34.1 

1993 2.5 3.1 969 34.8

1992 2.5 2.5 1,207 31.1

1991 1.3 1.4 792 32.9

1990 1.8 2.3 1,176 36.0

1989 2.4 3.4 1,465 34.4

1988 2.9 3.8 1,530 31.1

1987 4.1 4.0 1,740 29.0

1986 3.3 3.2 1,512 24.1

1985 3.3 2.7 1,388 19.6

1984 4.2 2.7 1,410 16.3

1983 4.5 2.5 1,236 12.1

1982 1.7 1.4 828 6.7

NA—not available

*The capital pool at year end should equal the total pool at the end of the previous year p

new commitments, minus the amount of net withdrawal (or liquidation) from the funds. For 19

an additional $600 million was identified which had not been included in the prior estimate.

Source: Capital Publishing Corporation, Venture Capital Journal (various issues).

Small Business Financing 3
Table B.16 Sources of Capital Committed to Independent Venture F

1983 1984 1985 1986 1987 1988 

Total (Billions of 

Dollars) 3.4 3.2 2.3 3.3 4.2 2.8 

Share Contributed by:

Pension Funds 31 34 33 50 39 46 Foreign Sources/

Others 16 18 23 11 13 14 

Corporations 12 14 12 11 11 11 

Endowments 8 6 8 6 10 12 Individuals 21 15 13 12 12 8 Banks/Insurance 

Companies 12 13 11 10 15 9 

Total 100 100 100 100 100 100 

Note: Data may not add to 100 percent because of rounding.Source: Capital Publishing Corporation, Venture Capital Journal (variou

302 The Annual Report on Small Business and Competition
Small Business Financing 3

jj

() 

Year Number Amount Number Amount Number Amount

1995 2,173 1,184.4 1,045 1,036.1 1,128 148.3

1994 2,375 1,120.6 1,070 965.2 1,305 155.4

1993 2,302 923.6 986 784.9 1,316 138.7

1992 1,633 484.2 767 395.7 866 88.5

1991 2,044 460.1 1,036 364.2 1,008 95.9

1990 2,367 645.2 1,334 545.9 1,033 99.3

1989 3,322 690.0 1,876 542.4 1,446 147.6

1988 3,724 750.9 2,227 614.4 1,497 136.5

1987 4,128 680.5 2,522 537.9 1,606 142.6

1986 4,333 620.8 2,675 75.9 1,658 144.9

1985 4,205 542.3 2,756 434.6 1,449 107.7

1984 3,990 513.9 2,755 425.5 1,235 88.0

1983 3,247 468.8 2,464 412.9 783 55.9

1982 2,941 369.9 2,177 322.9 764 47.0

1981 3,176 387.1 2,434 332.7 742 54.4

1980 2,637 337.4 2,090 295.2 547 42.2

*301(d) companies are minority or economically disadvantaged small business investm

companies.

Source: U.S. Small Business Administration, Investment Division.

p. 304 Blank—p. 305 fols.
Procurement

Synopsis

The passage of the Federal Acquisition Streamlining Act of 1994 has givsmall firms a significant boost in the federal procurement markets. Fisc

years 1994 and 1995 were banner years for small government contracto

In FY 1995, small businesses won $66.7 billion in federal contract awar

including $42.9 billion in direct contract awards from the federal gover

ment and an additional $23.8 billion awarded to small businesses as subco

tractors to prime contractors working directly for the federal government. 

The $66.7 billion total represents 33 percent of the $202.3 billion 

contract actions awarded by the federal government in FY 1995, and is 

increase from the previous year’s 31.4 percent small business share valued 

$61.7 billion. In FY 1993 and FY 1992, the small firm shares were 29.9 p

cent and 30.8 percent, respectively.

Small minority- and women-owned businesses experienced significa

gains of $1.5 billion (a 16.1 percent increase) and $508.7 million (a 22

percent gain) in contract dollars, respectively, over FY 1994, outperformi

small businesses overall and the economy in general. These segments of t

small business population have not experienced a decline in their shares 

federal contracting awards for several years, even when overall federal co

tracting levels declined and the total small business share of such awar

was declining.

Introduction

In fiscal year 1995, the federal government awarded $202.3 billion in co

tract actions for the purchase of goods and services, an amount equal to a

proximately 2.8 percent of the 1995 gross domestic product ($7.3 trillion) 

the United States. This amount includes contracting for the purchase of goo

and services such as research and development, educational and traini

courses, paint, tools, toiletries, military weapons, housing, and hardwa

Costs associated with payment for these goods and services support fede

civilian and military personnel around the world.

The government awarded small businesses $42.9 billion in direct co

tract actions—21.2 percent of the total $202.3 billion in contract actions, 

cluding $31.8 billion in actions of more than $25,000 and $11.1 billion 

The State of Small Business 3
pp

Size of Federal Contract Actions

The federal contracting process involves a relatively small number of ve

substantial purchases and a large number of smaller awards. Nearly 90 p

cent ($180.9 billion) of the FY 1995 federal procurement dollars we

awarded in contract actions of $25,000 or more. These large transactio

however, accounted for only 2 percent of the contract actions executed d

ing the period. Conversely, 98 percent of the total number of contract actio

(valued at $21.4 billion) were issued in individual awards of less th

$25,000.3

Small businesses are three times more successful in competing 

smaller awards than they are in competing for larger contracts. They we

awarded more than one-half (51.9 percent) of total federal dollars in contra

actions of less than $25,000, but just 17.6 percent of the larger awards in e

cess of $25,000.4 The financial returns are, of course, much greater for t

small businesses that win larger awards: nearly three-fourths of the total dol

value garnered by small businesses in FY 1995 was in contract actions 

$25,000 or more. The Federal Acquisition Streamlining Act of 1994 (FASA

signed into law on October 13, 1994, simplified and improved the fede

contracting process for small businesses. Prior to enactment of FASA, on

procurements of less than $25,000 were routinely set aside for small bu

nesses. Government procurement personnel may now follow a simplifi

small business acquisition process for purchases between $2,500 a

$100,000 as long as there is a reasonable expectation of bids being receiv

306 The Annual Report on Small Business and Competition

1 For the purpose of participating in the U. S. Small Business Administration’s procurem

programs, a business bidding on a government contract is generally regarded as small if it 

fewer than 500 employees. For detailed definitions, see SBA’s small business size regulations 

13 CFR 121.9, published January 1, 1996. 2Data on subcontracting awards are based on federal agency reports required by Pub

Law 95-507, Section 221(h). Reports and data from the SBA’s Office of Procurement Assistan

(OPA) published at the end of this report and titled “The Annual Report on Federal Procurem

Preference Goals,” are also based on federal agency reports provided directly to OPA as requi

by Public Law 95-507. 3 The Federal Procurement Data System (FPDS) has been publishing data on contr

awards since FY 1979. From FY 1979 to FY 1983, the FPDS published detailed data on all co

tract awards over $10,000. Starting in FY 1983, the Department of Defense (DOD) increased 

reporting threshold from $10,000 to $25,000; for civilian agencies, a similar change began in 

1986. For FY 1994, the threshold was raised to $100,000 for civilian agencies and the DO

Unless otherwise stated, the discussions of federal procurement in this and subsequent sectio

of this report reflect individual awards of $25,000 or more. 4Of course, more than 60 percent of the dollar value of awards under $25,000 is subject 

a small business preference program, such as a small business set-aside, a combined labor-surp

area small business set-aside, or an award issued under Section 8(a) of the Small Business Act.
from two or more responsible small businesses whose bids are competiti

and commensurate with market expectations.

Based on a sample afforded by two years of experience under FASA, it 

apparent that the new provisions have benefited small business contracto

The small business share of prime contract awards has begun to climb af

remaining in the 14–16 percent range for 15 years (Table C.2). The 16.3 pe

cent and 17.6 percent small business shares in FY 1994 and FY 1995, respe

tively, represent record levels of procurement from small firms.

Sources of Small Business Awards by

Agency/Department

Nearly 61 percent ($19.3 billion) of the total $31.8 billion in prime contra

dollars awarded to small businesses in FY 1995 resulted from Department 

The State of Small Business 3

Source: Federal Procurement Data System, The FPDS Federal Procurement Repo

January 29, 1996.

Actions Over $25,000

Other

 82.4%

Other

 78.8%

Small Business

51.9%

Small Business

17.6%

Other

 48.1%

Small Business

 21.2%

All Procurement Dollars Actions Under $25,000
with 4.8 percent ($1.5 billion), and the Department of Agriculture with 3

percent ($1.1 billion).

Small Business Share of Purchasing Agency Awards

The small business share of agency procurement budgets is one measure 

small businesses’ ability to win contracts from the principal procurement ce

ters of the federal government. For example, although the Department 

Defense accounted for 60.7 percent ($19.3 billion) of all contract dollars ov

$25,000 awarded to small businesses in FY 1995 (Table C.3), this amount

to only 16.3 percent of DOD’s total (Table C.5).

As measured by their share of agency budgets, small businesses were m

successful in winning awards from the Smithsonian Institution, garnering 65

percent of the agency’s total award dollars, followed by the Nuclear Regulato

Commission (57.0 percent), the Securities and Exchange Commission (54.4 p

cent), the Department of the Interior (47.5 percent) and the United Sta

Information Agency (46.1 percent) (Table C.5). Small businesses won less than 

percent of prime contract award dollars in all other federal agencies in FY 199

Product/Service Categories

The federal contracting markets encompass four major categories of goo

and services: services, supplies and equipment, research and developme

and construction (Table C.6). The volume of award dollars in each of the fo

major procurement categories shifted slightly as a percentage of total awa

from FY 1994 to FY 1995. 

The services category, which includes activities as diverse as architectu

and engineering services, data processing, telecommunications, natural a

conservation services, administrative and management support services, 

creased modestly from 39.2 percent in FY 1994 to 39.5 percent in FY 199

Expenditures for supplies and equipment, the second largest category, d

creased slightly, from 36.0 percent to 35.7 percent. Research and develo

ment also lost ground slightly, accounting for 15.7 percent of awards in 

1995, compared with 15.8 percent in FY 1994. Awards for construction gre

from 9.0 percent of all awards in FY 1994 to 9.1 percent in FY 1995.

Small businesses experienced an increase in their respective shares in 

major categories from FY 1994 to FY 1995. In construction, the small bu

ness share jumped from 45.0 percent to 47.7 percent (Table C.7). Small fir

increased their shares of service contract awards from 16.2 to 17.8 perce

supplies and equipment from 13.6 to 15.0 percent, and research and develo

ment from 10.2 to 11.2 percent.

308 The Annual Report on Small Business and Competition
tions over $100 million participate by setting aside a small percentage of th

external R&D budgets for the program.5 The percentage was 1.25 percent 

FY 1992, 1.5 percent in FY 1993 and FY 1994, and 2.0 percent in FY 19

and FY 1996. The small business percentage increases to 2.5 percent beg

ning in FY 1997.

The SBIR program has three phases. Phase I is a limited effort, usually f

six months, to determine the scientific and technical merit and feasibility 

an idea. This phase has been restricted by the new legislation to ideas “th

appear to have commercial potential.” The amount that can be awarded 

Phase I has been raised from $50,000 to $100,000.6

Only those small businesses that win Phase I are eligible to apply f

Phase II, the detailed research and development phase that lasts about tw

years and often ends with the development of a prototype product or proce

Commercial potential also receives increased emphasis in Phase II. T

amount that can be awarded in Phase II has been raised from $500,000 

$750,000.

Small businesses conduct Phase III with non-SBIR funds to pursue co

mercial applications of the R&D funded in Phases I and II. Phase III is t

keystone of the program and involves private sector investment and suppo

for introducing the innovation into the marketplace. Phase III may invol

non-SBIR R&D or production contracts with a federal agency for products 

processes intended for use by the federal government.

In the first 13 years of the program, more than $5.5 billion has be

awarded to small businesses in 37,393 projects (Table C.8). The program h

been very competitive: on average, eight proposals have been received f

every Phase I award. 

Agencies using SBIR contracts include the Departments of Commerc

Defense, Education, and Transportation, the Environmental Protecti

Agency, the National Aeronautics and Space Administration, the Nucle

Regulatory Commission and, initially, the Department of the Interior. SB

awards are made in the form of grants at the Departments of Agricultu

Energy, and Health and Human Services, and the National Scien

Foundation, and thus are not included in any R&D data in other tables in th

appendix.

The State of Small Business 3

5 The Small Business Innovation Research program began as a government-wide program 

FY 1983. The most recent extension of the program was authorized in the Small Busin

Innovation Research Program Reauthorization Act of 1992. This act expanded the size of the p

gram and reauthorized it for an additional seven years, through FY 2000. 6 The maximum amount that can be awarded may vary by agency.
ppp

minority-owned businesses still account for a small percentage of total fede

award dollars (Chart C.2). The gap is greatest for women-owned business

which constitute approximately one-third of the total nonagricultural busine

population of the United States. Small women-owned businesses obtain

only 1.8 percent of the FY 1995 federal contract dollars (Table C.9). Minori

owned businesses make up 9 percent of the business population of the Unit

States; however, small minority-owned businesses won just 5.5 percent of t

award dollars.7

Ninety-four percent of the FY 1995 dollar awards to small minori

owned businesses were in contract actions over $25,000; small wome

owned firms received 78 percent of the value of their contract actions in t

category. Conversely, 22 percent of award dollars to small women-own

businesses were in smaller awards of less than $25,000, compared with on

6 percent of minority-owned contractors’ awards. 

Federal contract data indicate that, despite their underrepresentation 

federal contracting markets, small women- and minority-owned business

have been particularly successful in increasing their contract dollars over t

years, especially in comparison with the small business sector overall (Tab

C.10). Since FY 1980, small women- and minority-owned businesses ea

have seen only one year of decline in the value of contract action dollars. 

contrast, the value of contract dollars to the small business sector overall h

declined in six of the 16 years. Dollar awards to small women- and minori

owned businesses grew consistently, even during the period of declining fe

eral award levels (FY 1986-FY 1989). The last decrease in federal contra

awards to small women-owned businesses occurred in FY 1982; to small m

nority-owned businesses, in FY 1985.

310 The Annual Report on Small Business and Competition

7 For additional information, see Harry J. Chmelynski and Jonathan Skolnik, The Pattern 

Federal Procurement From Minority and Women-Owned Small Business, report no. PB9

182582, prepared by Jack Faucett Associates for the U.S. Small Business Administration, Off

of Advocacy, Washington, D. C. (Springfield, Va.: National Technical Information Service, 199

The Faucett study indicates that women-owned firms, after adjustments were made for compa

ble procurement/industry characteristics, competed for and won contracts over a five-year per

with a value that exceeded the annual rate of growth in federal contracting overall and in 

gross domestic product. The latest Bureau of the Census data available indicate that there w

5.9 million women-owned businesses in 1992 and 1.2 million minority-owned businesses in 

United States in 1987. Also see U.S. Department of Commerce, Bureau of the Census, 19

Survey of Minority-Owned Business Enterprises, Summary (Washington, D. C.: U. S. Governm

Printing Office, August 1991) and idem; Women-Owned Business, 1992, (Washington, D. 

U.S. Government Printing Office, August 1990).
Procurement Reform 

Two recent laws, the Federal Acquisition Streamlining Act of 1994 and t

Federal Acquisition Reform Act (FARA) as included in the National Defen

Authorization Act of 1996, have had, and will continue to have, a compelli

and unprecedented impact on the federal procurement process. The ne

laws put in place many of the recommendations made in the Vice Presiden

National Performance Review, simplifying and streamlining the procureme

process and saving taxpayer money. 

FASA repealed or substantially modified more than 225 provisions of la

to reduce paperwork burdens, facilitate the acquisition of commercial pro

The State of Small Business 3

Source: Federal Procurement Data System, The FPDS Federal Procurement Repor

January 29, 1996. Billions of Dollars

Total

Awards

250

200

$202.3

$42.9

$11.2 $3.6

150

100

50

0

All Small

Firms

Women-Owned

Firms

Minority-Owned

Firms
y g

Acquisition Reform Act. It further streamlines the procurement process, imp

menting commercial practices and making it easier for agencies to buy goo

and services. 

Increased Threshold for Small Business Set-Asides

It is estimated that more than 95 percent of all federal contract actions are 

amounts under $100,000. The new simplified and streamlined acquisiti

procedures exempt contracting agencies and contractors from numerous 

quirements for such purchases and contracts.

Until passage of FASA, the “small purchase threshold” was $25,000. T

new simplified acquisition threshold for small businesses is $100,000. T

higher threshold expands streamlined processes, making it easier for contra

tors to do business with the government as well as making it simpler a

more efficient for agencies to solicit and process procurements.

The reform legislation requires that all federal purchases between $2,5

and $100,000 be reserved for small businesses, unless the contracting offic

is unable to obtain offers from two or more small businesses that are compe

tive with price, quality, and delivery dates. 

Also under FASA, all federal purchases of $2,500 or less are now cons

ered “micro-purchases,” no longer set aside for small businesses. For su

micro-purchases, the government agency will rely on the judgment of its co

tracting officers to make off-the-shelf purchases, just like any consumer. This 

a significant change in that small businesses will no longer have exclusive a

cess to this small-purchase market; however, the extreme simplicity associat

with such small government buys may make micro-purchases attractive 

small businesses to target and aggressively pursue.

The Federal Acquisition Computer Network

FASA also established the Federal Acquisition Computer Network (FACNE

which will require the government to change its acquisition process fro

one driven by paperwork to an expedited process based on electronic da

interchange.

The FACNET system is intended to provide a single face to industry and 

common governmentwide electronic procurement process. A fully imp

mented electronic commerce system should greatly simplify purchasing p

cedures, promote greater customer service and increase cost-effectivene

The FACNET system will open many new markets to competitive small bu

nesses, even if those businesses are located in remote or rural areas. For e

ample, under the new system, a small engineering business in Nashua, Ne

Hampshire, can learn about and bid on a small Pentagon-based defense co

312 The Annual Report on Small Business and Competition
q

FASA and FARA establish a statutory preference for commercial items. T

laws expand the scope of products and services that qualify for treatment 

commercial items and strongly encourage agencies to buy commercially re

ognized end-items and components. The new government emphasis on a

quiring items from commercial sources to the maximum extent practicab

gives small businesses opportunities to satisfy federal needs with “off-th

shelf” products and services. The government, like any consumer, can no

purchase materials by shopping around for the best price from the best sour

and purchasing only as many as it needs — so a $10 hammer will cost $1

New Opportunities for Women-Owned Businesses

FASA establishes a new 5 percent governmentwide procurement goal f

women-owned businesses. Women-owned businesses are specifically inco

porated into the procurement preference goaling process established 

statute for all government agencies. Each federal agency is required to esta

lish a goal for participation of small business concerns owned and controll

by women at not less than 5 percent of the total value of the agency’s prim

and subcontract awards for the fiscal year.

Although the new legislation makes it very clear that government age

cies are expected to expand procurement opportunities for women, it do

not require that contracts be set aside exclusively for women. Agencies w

however, have a mandate to look for qualified women-owned business

when filling contractual needs. Business ventures owned by women shou

capitalize on this opportunity and aggressively market their products and se

vices to the federal government.

Modified Source Selection Requirements

FARA, although retaining the Competition in Contracting Act requirement f

full and open competition, provides contracting officers more latitude in i

plementing competition requirements. Contracting officers can use their d

cretion in deciding how most efficiently to fulfill the government’s procu

ment requirements. As a result, contracting officers have greater authority 

limit competition and, in some circumstances, to use simplified procedur

that do not require full and open competition.

Conclusion

Fiscal years 1994 and 1995 were banner years for small government contra

tors. In FY 1995, small firms won $66.7 billion in federal contracts or 33 pe

cent of the total contracts awarded, up from $61.7 billion or 31.4 percent 

The State of Small Business 3
sources is giving small businesses new opportunities to satisfy governme

needs. It will be up to small firms to make the new law work for them, and 

appears that many small firms are taking that approach. 

314 The Annual Report on Small Business and Competition
Table C.2 Federal Contract Actions Over $25,000, 

FY 1979–FY 1995 317

Table C.3 Distribution of Small Business Share of Dollars in 

Contract Actions Over $25,000 by Procuring 

Agency Source, FY 1995 318

Table C.4 Procurement Dollars in Contract Actions Over 

$25,000 by Major Agency Source, FY 1979–FY 1995 319

Table C.5 Small Business Share of Dollars in Contract Actions 

Over $25,000 by Major Procuring Agency, 

Fiscal Years 1994 and 1995 320

Table C.6 Distribution of Prime Contract Actions Over 

$25,000 by Major Product or Service Category, 

FY 1994 and FY 1995 322

Table C.7 Small Business Share of Dollars in Contract Actions 

Over $25,000 by Major Product or Service Category, 

FY 1994 and FY 1995 323

Table C.8 Small Business Innovation Research Program, 

FY 1983–FY 1994 324

Table C.9 Total Federal Contract Actions to Small, WomenOwned, and Minority-Owned Businesses, FY 1995 325

Table C.10 Annual Change in the Dollar Volume of Contract 

Actions Over $25,000 Awarded to Small, WomenOwned, and Minority-Owned Businesses, 

FY 1980–FY 1995 326

Procurement 315
Total 202,301,613 42,929,278 21.2

Actions Under $25,000 21,449,638 11,122,015 51.9

Actions Over $25,000* 180,851,975 31,807,263 17.6

*Actions over $25,000 are reported individually.

Source: Federal Procurement Data System, Federal Procurement Report (Washington, D.C.:

U.S. Government Printing Office, January 29, 1996).

316 The Annual Report on Small Business and Competition
1995 180,851,975 31,807,263 17.6

1994 174,687,951 28,423,033 16.3

1993 178,336,979 27,947,441 15.7

1992 177,786,381 28,229,749 15.9

1991 189,602,220 28,847,358 15.2

1990 171,300,890 25,401,626 14.8

1989 168,694,981 23,716,171 14.1

1988 174,097,585 25,671,318 14.7

1987 181,538,592 27,927,719 15.4

1986 183,650,227 28,780,092 15.7

1985 187,985,466 26,702,695 14.2

1984 167,933,486 25,506,023 15.2

1983 155,588,106 22,080,024 14.2

1982 152,397,884 23,558,563 15.5

1981 128,864,744 20,068,789 15.6

1980 100,893,385 15,326,121 15.2

1979 88,293,438 14,012,838 15.9

Note: Starting in FY 1983, the dollar threshold for reporting detailed information on DOD

procurement actions increased from $10,000 to $25,000. For civilian agencies, a similar change

was made starting in FY 1986.

Source: Federal Procurement Data System, Federal Procurement Report (Washington, D.C.:

U.S. Government Printing Office, February 7, 1995 and January 29, 1996); and idem, “Special

Report S89522C” (prepared for the U.S. Small Business Administration, Office of Advocacy, June

12, 1989).

Procurement 317
Dollars) (Percent)

Total, All Agencies 31,807,263 100.0

Department of Defense 19,300,799 60.7

General Services Administration 1,842,670 5.8

Department of Transportation 1,536,321 4.8

Department of Agriculture 1,065,595 3.4

Department of Health & Human Services 1,043,057 3.3

National Aeronautics and Space Administration 1,031,819 3.2

Department of Veterans Affairs 950,658 3.0

Tennessee Valley Authority 941,405 3.0

Department of the Interior 715,254 2.2

Department of Justice 656,126 2.1

Department of the Treasury 517,373 1.6

Department of Energy 486,278 1.5

Department of Commerce 325,994 1.0

Agency for International Development 271,664 0.9

Department of State 260,345 0.8

Environmental Protection Agency 214,465 0.7

Department of Labor 170,928 0.5

Federal Emergency Management Agency 71,146 0.2

Department of Education 66,941 0.2

Social Security Administration 66,648 0.2

Smithsonian Institution 66,323 0.2

Nuclear Regulatory Commission 41,218 0.1

United States Information Agency 32,947 0.1

Office of Personnel Management 27,683 * 

Department of Housing & Urban Development 26,710 * 

Securities and Exchange Commission 12,829 *

National Science Foundation 9,592 *

Federal Energy Regulatory Commission 8,665 *

National Archives and Records Administration 5,020 *

Executive Office of the President 4,864 *

National Labor Relations Board 4,104 * 

Small Business Administration 3,738 * 

Railroad Retirement Board 3,235 * 

Corporation for National and Community Service 3,186 *

Federal Trade Commission 3,126 *

Peace Corps 2,416 * 

U.S. Trade & Development Agency 2,191 * 

National Gallery of Art 1,826 * 

U.S. Soldiers & Airmen’s Home 1,734 *

National Mediation Board 1,615 *

Equal Employment Opportunity Commission 1,580 *

Federal Communications Commission 1,511 *

Commodity Futures Trading Commission 1,506 *

U.S. Arms Control & Disarmament Agency 1,221 *

Interstate Commerce Commission 780 *

Consumer Product Safety Commission 588 *

National Foundation on the Arts 485 *

International Trade Commission 451 *

Federal Election Commission 288 *

Pennsylvania Avenue Development Corporation 206 *

National Foundation on the Humanities 77 *

Selective Service System 35 *

Federal Maritime Commission 27 *

*Less than 0.05 percent.

Source: Federal Procurement Data System, Federal Procurement Report (Washington, D.C.:

U.S. Government Printing Office, January 29, 1996).

318 The Annual Report on Small Business and Competition
Procurement 319

1995 180.9 65.5 9.3 6.5 18.7

1994 174.7 67.4 10.2 6.5 15.9

1993 178.3 68.1 10.3 6.6 15.0

1992 177.8 67.7 10.4 6.8 15.1

1991 189.6 71.1 9.7 6.2 13.0

1990 171.3 74.9 9.3 6.7 9 . 1

1989 168.7 75.1 10.4 5.8 8 . 7

1988 174.1 77.5 8.3 4.8 9 . 4

1987 181.5 78.6 7.7 4.2 9 . 5

1986 183.7 79.6 7.3 4.0 9 . 1

1985 188.0 80.1 7.7 4.0 8 . 2

1984 167.9 79.3 7.8 3.9 9 . 0

1983 155.6 79.2 8.3 4.0 8 . 5

1982 152.4 80.0 9.1 3.5 7 . 4

1981 128.9 75.4 9.1 3.7 11.8

1980 100.9 75.7 8.4 4.3 11.6

1979 88.3 72.7 10.4 4.2 12.7

Note: Starting in FY 1983, the dollar threshold for reporting detailed information on DOD

procurement actions increased from $10,000 to $25,000. For civilian agencies, a similar change

was made starting in FY 1986. 

Source: Federal Procurement Data System, Federal Procurement Report (Washington, D.C.:

U.S. Government Printing Office, February 7, 1995 and January 29, 1996); and idem, “Special

Report 87458A” (prepared for the U.S. Small Business Administration, Office of Advocacy, May

19, 1988).
320 The Annual Report on Small Business and Competition Table C.5 Small Business Share of Dollars in Contract Actions 

1994 and 1995 FY 1995 

(Thousands of D

Total 

Total, All Agencies 1 180,851,975 Department of Agriculture 2,472,968 Department of Commerce 805,303 Department of Defense 118,430,244 Department of Education 387,752 Department of Energy 16,882,560 Department of Health and

Human Services 2,951,778 

Department of Housing and 

Urban Development 213,185 

Department of the Interior 1,506,552 Department of Justice 1,863,581 Department of Labor 800,718 Department of State 740,334 Department of Transportation 3,559,964 Department of the Treasury 1,884,154 Department of Veterans Affairs 2,605,312 Environmental Protection Agency 927,060 Equal Employment Opportunity

Commission 30,925 
Procurement 321

Federal Emergency Management Agency 251,180 Federal Energy Regulatory Commission 26,242 General Services Administration 5,362,074 National Aeronautics and

Space Administration 11,740,715 

National Archives and Records

Administration 17,889 

National Science Foundation 172,288 Nuclear Regulatory Commission 72,276 Office of Personnel Management 65,561 Securities and Exchange Commission 23,585 Smithsonian Institution 100,838 Social Security Administration 204,530 

Tennessee Valley Authority2 5,293,855 U.S. Information Agency 71,603 U.S. International Development

Cooperation Agency 1,300,448 

NA = Not available.1A total of 64 agencies are represented in the total dollars for FY 1995; th

individual contract actions over $25,000 in FY 1995. 2 The Federal Procurement Data System did not publish data separately for 

Source: Federal Procurement Data System, Federal Procurement Report (W

29, 1996).
322 The Annual Report on Small Business and Competition

Total 100.0 100.0 

Research and Development 15.8 15.7 

Construction 9.0 9.1 

Services 39.2 39.5

Supplies and Equipment 36.0 35.7

Source: Federal Procurement Data System, Federal Procurement Report (Washington, D.C.:

U.S. Government Printing Office, February 7, 1995 and January 29, 1996).
Procurement 323

Business Business

Thousands Share Thousands Share

Product/Service Category of Dollars (Percent) of Dollars (Percent)

Research and 

Development

Total 27,199,193 27,794,302 

Small Business 2,777,191 10.2 3,115,031 11.2

Construction

Total 14,547,164 14,780,000

Small Business 6,544,348 45.0 7,053,464 47.7

Services

Total 64,805,252 67,621,190

Small Business 10,547,834 16.2 12,023,639 17.8

Supplies and Equipment

Total 59,122,224 59,858,589

Small Business 8,057,564 13.6 8,972,398 15.0

Source: Federal Procurement Data System, Federal Procurement Report (Washington, D.C.:

U.S. Government Printing Office, February 7, 1995 and January 29, 1996).
324 The Annual Report on Small Business and Competition

Year Proposals Awards Proposals Awards of Dollars

Total 218,165 27,909 22,324 9,484 5,553.7

1995 20,185 3,085 2,856 1,263 864.5

1994 25,588 3,102 2,244 928 717.6

1993 23,640 2,898 2,532 1,141 698.0

1992 19,579 2,559 2,311 916 508.4

1991 20,920 2,553 1,734 788 483.1

1990 20,957 2,346 2,019 837 460.7

1989 17,233 2,137 1,776 749 431.9

1988 17,039 2,013 1,899 711 389.1

1987 14,723 2,189 2,390 768 350.5

1986 12,449 1,945 1,112 564 297.9

1985 9,086 1,397 765 407 199.1

1984 7,955 999 559 338 108.4

1983 8,814 686 127 74 44.5

Note: Phase I evaluates the scientific and technical merit and feasibility of an idea. Phase II

expands on the results and further pursues the development of Phase I. Phase III commercializes

the results of Phase II and requires the use of private or non-SBIR federal funding. The Phase II

proposals and awards in FY 1983 were pursuant to predecessor programs that qualified as SBIR

funding.

Source: U.S. Small Business Administration, Office of Innovation, Research and Technology

(annual reports for FY 1983–FY 1994).
Procurement 325

Total 202,301,613 180,851,975 21,449,638

Small Business 42,929,278 31,807,263 11,122,015

Percent of Total 21.2 17.6 51.9

Women-Owned Business 3,621,427 2,820,248 801,179

Percent of Total 1.8 1.6 3.7

Minority-Owned Business 11,209,525 10,519,469 690,056

Percent of Total 5.5 5.8 3.2

Source: Federal Procurement Data System, Federal Procurement Report (Washington, D.C.:

U.S. Government Printing Office, January 29, 1996).
Table C.10 Annual Change in the Dollar Volume of Contract A

Minority-Owned Businesses, FY 1980–FY 1995 (Thousands of D

Total, All Business

j

Small Business

Change From Change Fr

Prior Year Prior Yea

Total Total 

(Thousands Thousands Percent (Thousands Thousands 

of Dollars) of Dollars of Dollars) of Dollars 

1995 180,851,975 6,164,024 3.6 31,807,263 3,384,230 1994 174,687,951 23,649,028 22.0 28,423,033 475,592 

1993 178,336,979 550,598 0.3 27,947,441 2282,302 

1992 177,786,381 211,815,839 26.2 28,229,749 2617,609 

1991 189,602,220 18,301,330 10.7 28,847,358 3,445,732 1990 171,300,890 2,605,909 1.5 25,401,626 1,685,455 1989 168,694,981 25,402,604 23.1 23,716,171 21,955,147 

1988 174,097,585 27,441,007 24.1 25,671,318 22,256,401 

1987 181,538,592 22,111,635 21.1 27,927,719 -852,373 

1986 183,650,227 24,335,239 22.3 28,780,092 2,077,397 

1985 187,985,466 20,051,980 11.9 26,702,695 1,196,672 

1984 167,933,486 12,345,380 7.9 25,506,023 3,425,999 1983 155,588,106 3,190,222 2.1 22,080,024 21,478,539 1982 152,397,884 23,533,140 18.3 23,558,563 3,489,774 

1981 128,864,744 27,971,359 27.7 20,068,789 4,742,668 1980 100,893,385 — -— 15,326,121 —- 

Source: Federal Procurement Data System, “Special Report S89522C” (pr

1989); and idem, Federal Procurement Report (Washington, D.C.: U.S. Governm

3, 1994, February 7, 1995 and January 29, 1996).

326 The Annual Report on Small Business and Competition
REPORT ON

FEDERAL

PROCUREMENT

PREFERENCE

GOALS

FISCAL YEARS

1994 AND 1995

THE OFFICE OF

GOVERNMENT CONTRACTING

U.S. SMALL BUSINESS

ADMINISTRATION

page 327 = no folio page 328 = bla
page 329 = no folio page 330 = bla

SBA Guidance 3

The Report for Fiscal Year 1994 3

Synopsis 3

Small Business Prime Contract Awards 3

Small Business Subcontract Awards 3

Minority Small Business Awards: The 8(a) Program 3

Small Disadvantaged Business Prime Contracts 3

Small Disadvantaged Business Subcontracts 3

Women-Owned Small Business Prime Contracts 3

Women-Owned Small Business Subcontracts 3

The Report for Fiscal Year 1995 3

Synopsis 3

Small Business Prime Contract Awards 3

Small Business Subcontract Awards 3

Minority Small Business Awards: The 8(a) Program 3

Small Disadvantaged Business Prime Contracts 3

Small Disadvantaged Business Subcontracts 3

Women-Owned Small Business Prime Contracts 3

Women-Owned Small Business Subcontracts 3

Appendix: Guidance on Goal Setting Under

Procurement Preference Programs 3

Tables 3
Introduction

The policy of the United States, as stated in the Small Business Act, is thsmall businesses and small businesses owned and controlled by socia

and economically disadvantaged individuals are to have the maximum pra

ticable opportunity to participate in the performance of contracts let by t

federal government. To that end, Public Law 95-507 requires the head 

each federal agency, after consultation with the SBA, to establish realis

goals for the award of contracts to small and small disadvantaged business

It is important to note that goals differ from agency to agency. This 

true, in part, because each agency has a different procurement mix based 

its specific agency mission. For example, while few small businesses produ

the aircraft purchased by the Department of Defense, many small business

supply the commodities purchased by the General Services Administratio

such as paper clips, paper, computers, etc. It is therefore appropriate to 

tablish different percentage goals for agencies with different mixes of pu

chased products.

In establishing goals, agencies consider a variety of factors, includi

historical performance, changes in mission or anticipated budget, and anti

pated major acquisitions that may affect the procurement mix. If the reco

mended goals are not at levels consistent with the Small Business Admin

tration’s analysis, the SBA will not concur with the agency, and a goal a

more appropriate level will be negotiated.

SBA Guidance

Each year, federal agencies provide to the SBA estimates of the total dol

amount of (1) all prime contracts to be awarded during the year and (2) su

contracts to be awarded by all of the agency’s “reporting prime contractors

All goals are expressed in terms of numbers, dollars, and percentages. Whe

there is variance, up or down, from the projected base amounts upon whi

goals are established, the percentage goal is the controlling factor and is us

to measure actual attainment. The categories are:

• Prime contract awards to small businesses;

• Prime contract awards under the authority of Section 8(a) of the Sm

Business Act;

page 331 = no folio

1 “Reporting prime contractors” are defined in the federal government’s Standard Form 2

See the appendix for detailed instructions provided to agencies.
women;

• Subcontracts awarded by prime contractors to small businesses;

• Subcontracts awarded by prime contractors to small business

owned and controlled by socially and economically disadvantag

individuals;

• Subcontracts awarded by prime contractors to small businesses own

and controlled by women.

If consultations between the SBA and an agency fail to result in a mu

ally agreed upon goal, the Office of Federal Procurement Policy (OFPP) at t

Office of Management and Budget (OMB) makes the final determination 

the goal.

At the end of each fiscal year, P.L. 95–507 requires the head of ea

agency to report to the SBA administrator on the agency’s achievement 

goals for the year, with appropriate justifications for failure to meet speci

goals.2

Agencies must also consult with the administrator of the General Servic

Administration (GSA) and set goals for prime contract awards to business co

cerns in labor surplus areas, as authorized in Public Law 96–302.

Women-owned small businesses benefited significantly from procu

ment reform in 1994. The Federal Acquisition Streamlining Act of 1994 (P

103–355 signed October 13, 1994) for the first time requires a 5 percent go

ernmentwide goal for women-owned small businesses. Women-owned sm

businesses are specifically incorporated into the procurement preferen

goaling process and are added as a class for subcontract plan goals. This 

percent goal is to be in effect for the FY 1996 goaling process.

The SBA’s detailed analysis and comments cover only the 19 fede

agencies with the largest contracting budgets. These 19 agencies represent a

proximately 99 percent of federal procurement awards reported to the SB

Tabular data on many of the smaller agencies’ goals and achievements a

also included.

2 Public Law 100–656 requires that the President include this information in each annual 

port to Congress on the state of small business.

332 The Annual Report on Federal Procurement Preference Goals
Synopsis

By law, federal agencies are required to give small and small disadvataged businesses the “maximum practicable opportunity” to participa

in federal contracts for goods and services. To this end, agencies consult a

nually with the U.S. Small Business Administration (SBA) and set goals f

the percentage of dollars to be awarded through prime contracts or subco

tracts to small firms, small disadvantaged firms (including those participati

in the 8(a) program), women-owned firms, and firms in designated “lab

surplus areas.” At the end of the year, agencies report to the SBA on th

success in meeting the goals. Last year SBA assigned account executives 

the largest federal agencies. These individuals are charged with the respon

bility of developing proactive strategies that will open new areas of oppor

nity to the small business community.

In fiscal year 1994, the executive branch of the federal government e

ceeded its overall small business prime contract goal of 22.9 percent 

awarding 24.2 percent ($42.3 billion) of a total of $174.6 billion in fede

prime contracts to small business. Federal agencies also exceeded the 1

percent goal for 8(a) firms, awarding 3.2 percent ($5.5 billion); and the 1

percent goal for women-owned business prime contracts, awarding 2.0 p

cent ($3.5 billion) of the $174.6 billion in total federal prime contracts. Fe

eral agencies also exceeded the 1.7 percent goal for women-owned busine

subcontracting by achieving 2.5 percent ($1.5 billion) of a total of $57.5 b

lion in subcontracting dollars. These results were possible because of t

outstanding efforts of many individual agencies.

In three categories, however, the overall federal effort fell short of 

tablished goals. For prime contracts to small disadvantaged businesses, t

goal was 4.3 percent; agencies achieved 3.0 percent. For subcontracting d

lars to small businesses, agencies nearly achieved the goal of 38.4 perce

awarding 38.3 percent to small firms. For subcontracting dollars to small d

advantaged businesses, the goal was 5.7 percent, with agencies achieving 5

percent.

In this report, the SBA summarizes federal agency performance in me

ing their goals and provides detailed comments on the 19 federal agenc

with the largest contracting budgets. In the goal-setting process, agenc

are encouraged to set aggressive goals and make strong efforts to meet the

most were able to do that in most categories. 

page 333 = no fol
$, p(

and 2). Both the total dollar amount and the percentage awarded to sm

businesses exceeded the projected goals: small firms gained $5.6 billion mo

than had been estimated, and 1.3 percentage points more than the over

share goal of 22.9 percent. 

Of the 19 agencies with the largest contracting budgets, 13 exceed

their percentage goals for FY 1994, five by more than $100 million. The D

partment of Defense (DOD) awarded $24.8 billion or 22.1 percent of t

$112.0 billion in contracts to small businesses. The DOD exceeded its 19

percent goal by 2.4 percentage points, and the additional amount awarded 

small businesses exceeded $5.1 billion. 

Nine of the 19 agencies set more aggressive goals in FY 1994 than in 

1993 and five of those—the Departments of Commerce (DOC), Defen

Health and Human Services (HHS), Labor (DOL), and Veterans Affairs (VA)

exceeded their goals.

Agency Shortfalls

The Small Business Administration is charged in P.L. 95–507 with the respo

sibility of analyzing and commenting on shortfalls by major reporting age

cies. Seven of the 19 major agencies missed their percentage goals for prim

contract awards to small businesses: the Departments of Agriculture (USD

Energy (DOE), Justice (DOJ), and State, and the General Services Administ

tion Non-Federal Supply Schedules, the Tennessee Valley Authority (TVA

and the U.S. Agency for International Development (USAID). This group 

cludes three of the agencies that had set more aggressive goals than in 

1993. 

Department of Agriculture

The U. S. Department of Agriculture missed its small business prime contra

goal of 53.1 percent by 10.9 percentage points. However, Agriculture e

ceeded its small business prime contract dollar goal of $1.5 billion by $100

million. 

Department of Energy

The Department of Energy missed its small business prime contract goal 

5.5 percentage points and its dollar goal by more than $1.1 billion. The actu

prime contract dollar amount awarded to small businesses in FY 1994 w

$3.3 billion. 

Department of Justice

The Department of Justice missed its small business prime contract goal 

36.5 percent by 1.5 percentage points, but exceeded its dollar goal of $652

334 The Annual Report on Federal Procurement Preference Goals
to reduce the need for housing federal inmates in state and local jails, n

tional implementation of a fingerprinting system, and construction of a ma

departmental facility in West Virginia (an area with a limited number of sm

or minority-owned firms prepared to perform the contracts). These large bu

ness projects increased total procurement dollars expended while decreasi

the percentage of dollars spent with small firms. The department has imp

mented initiatives to improve and meet goals for FY 1995.

Department of State

The Department of State missed its small business prime contract goal of 45

percent by 2.1 percentage points, but increased its small business prime co

tract dollars by $50.9 million. The State Department’s report did not try to 

tribute this slight shortfall to any particular cause, but noted that in imp

menting a multiyear plan to modernize its information systems, the agency 

spending a greater share of its budget on ADP hardware.

General Services Administration (Non-Federal Supply Schedule)

The General Services Administration missed its small business Non-Fede

Supply Schedule goal of 36.0 percent by 2.4 percentage points, but exceed

its dollar goal by $219.5 million. The actual dollar amount awarded for sm

business prime contracts in FY 1994 was $2.2 billion. GSA’s report says t

dollars committed by the agency significantly exceeded projected obligatio

because of the award of several major construction projects that were not 

cluded in the base at the time the goals were established. A large number 

the projects were not available for award to small businesses because of th

high dollar value and correspondingly high bonding requirements. The inc

sion of these high dollar value projects in the base resulted in a decrease 

the percentage of awards to small, small disadvantaged, and women-own

businesses, even though the total dollars awarded to those businesses e

ceeded projections.

Tennessee Valley Authority

The Tennessee Valley Authority missed its small business prime contract go

of 41.0 percent by 22.2 percentage points. TVA’s report says that in order 

take advantage of efficiencies and low acquisition costs, it was necessary 

TVA to consolidate many of its small requirements into large multi-year co

tracts. Because of a lower-than-anticipated percentage of small, disadva

taged, and women-owned businesses competing for and winning these co

tracts, TVA failed to meet many of the small business goals.

Fiscal Years 1994 and 1995 3
its dollar goal of $144.6 million by $66.0 million. 

Small Business Subcontract Awards 

Federal prime contractors awarded $57.5 billion in federal funds to subco

tractors in FY 1994 (Tables 3 and 4). Of the total, $22.0 billion—38.3 p

cent—went to small firms. This share was only one-tenth of a percenta

point lower than projected. Subcontracts totaled $6.7 billion more than e

pected and the dollar share to small businesses was nearly $2.5 billion mo

than projected.

Prime contractors to the 19 agencies with the largest contracting budg

awarded 99.8 percent of the total small business subcontract dollars. Twe

of the 19 agencies—the Departments of Commerce, Education (DOEd), E

ergy, Health and Human Services, Housing and Urban Development, Justic

Transportation (DOT), Treasury, the Environmental Protection Agency (EP

the National Aeronautics and Space Administration (NASA), the Tenness

Valley Authority, and the U.S. Agency for International Development—e

ceeded their both their percentage and their dollar goals for subcontracting 

small business. 

The largest single agency percentage increase over the projected to

came from the Department of Education, which awarded 71.0 percent 

small firms—31.0 percentage points more than projected. The next larg

percentage gain was from the Department of Housing and Urban Develo

ment (HUD). HUD subcontracted 43.2 percent—21.2 percentage points mo

than projected.

The largest dollar increase over the projected total came from the Depa

ment of Defense, which missed its projected small business share by 0.4 p

centage point, but increased its dollar total for small business by $1.7 billi

to $17.4 billion. The second largest dollar share gain was from the Nation

Aeronautics and Space Administration, which awarded $1.5 billion to sm

business—$421.0 million more than projected.

Of all the agencies, the Department of Labor set the highest percenta

goal for small business at 63.5 percent. Labor achieved 60.7 percent—2

percentage points under the projected amount.

Eight agencies increased their percentage goals over FY 1993: six e

ceeded them. Seven other agencies that did not increase their goals achiev

a larger percentage of subcontract dollars for small firms than in FY 1993.

Agency Shortfalls

Seven of the 19 agencies missed their percentage goals for subcontract doll

to small business. Of these, the Departments of Defense, Interior (DOI), Lab

and State nevertheless awarded more in dollars than had been projected 

336 The Annual Report on Federal Procurement Preference Goals
seven agencies that did not achieve their goals, had adopted more challen

ing goals than in FY 1993. 

The Small Business Administration has reviewed the reports of the sev

agencies that had shortfalls: the Departments of Agriculture, Defense, Interi

Labor, State, Veterans Affairs, and the General Services Administration. 

Department of Agriculture

The U.S. Department of Agriculture missed its small business subcontracti

goal by 17.1 percentage points and its dollar goal by $114.2 million. T

actual dollar amount subcontracted to small business in FY 1994 was $

million. 

Department of Defense

The Department of Defense almost achieved its goal of 38.7 percent, su

contracting 38.3 percent to small firms. The DOD exceeded its dollar go

by more than $1.7 billion, awarding nearly $17.4 billion in subcontracts 

small firms.

Department of the Interior

The Department of the Interior failed to reach its small business subcontra

goal of 55.0 percent by 5.0 percentage points, but exceeded its dollar goal 

$38.5 million by $21.6 million. The department’s report stresses that t

agency cannot directly influence subcontract awards, but DOI strongly e

courages their large prime contractors to set aggressive small business su

contracting goals.

Department of Labor

Although the Department of Labor failed by 2.8 percentage points to me

its small business subcontract goal of 63.5 percent, it increased subco

tracted dollars to small business from $73.7 million in FY 1993 to $89

million in FY 1994. In addition, Labor’s total subcontract dollars we

higher than predicted. 

Department of State

The Department of State missed its small business subcontracting goal of 45

percent by 6.2 percentage points, but exceeded its dollar goal by $5.3 m

lion. According to the agency’s report, most of the subcontract dollars we

through general contractors to host country companies to construct, repair, 

renovate U.S. embassies. 

Department of Veterans Affairs

The Department of Veterans Affairs failed to meet its small business subco

tract goal of 40.0 percent by 16.2 percentage points. VA also failed by $65

Fiscal Years 1994 and 1995 3
General Services Administration

The General Services Administration failed to meet both its small busine

subcontracting percentage goal (by 5.5 percentage points) and its dollar go

(by $226.0 million). The agency’s report said that during this period, some 

the small business subcontractors declared bankruptcy, merged with oth

companies, or were bought out by larger businesses. Economic difficult

also caused some large contractors to reduce their discretionary spending a

to produce more of their product in house. Also, many large construction p

jects were awarded in FY 1994: these projects would have excellent subco

tracting opportunities, but not before FY 1995. GSA also noted that t

agency has very little leverage to negotiate higher subcontracting goals 

public utility contracts. 

Minority Small Business Awards: The 8(a) Program 

Through the 8(a) program, the federal government contracts with small co

panies owned and controlled by socially and economically disadvantaged 

dividuals. Under the program, the U.S. Small Business Administration acts 

a prime contractor, entering into contracts with other federal agencies a

then negotiating subcontracts with participating small 8(a) companies. 

The federal government awarded $5.5 billion (3.2 percent) of the to

amount awarded in prime contracts through the SBA to small disadvantag

businesses in the 8(a) program in FY 1994 (Tables 5 and 6). Both the to

amount and the percentage awarded to 8(a) firms exceeded the projected f

ures: 8(a) companies gained $2.7 billion more than had been estimated, a

1.5 percentage points more than the overall goal of 1.7 percent. 

The 19 federal agencies with the largest contracting budgets award

97.7 percent of the total 8(a) contract dollars. The U.S. Department of D

fense generated 49.9 percent of the 8(a) dollars in FY 1994, proportio

ately considerably less than its 67.1 percent share of all federal prime co

tract dollars.

Thirteen of the 19 key agencies met or exceeded their goals for 8(a) co

tracts: the Departments of Agriculture, Commerce, Defense, Educatio

Health and Human Services, Housing and Urban Development, Interi

State, Transportation, Treasury, and Veterans Affairs, the General Services A

ministration (Federal Supply Service Schedule), and the National Aeronaut

and Space Administration. Especially notable were the efforts of the Depa

ments of the Treasury, Transportation, and Housing and Urban Developme

The Department of Defense has, by specific legislation, a goal of 5.0 p

cent for participation of small disadvantaged businesses, and it does not p

vide separate goals for 8(a) and other SDB awards. When both 8(a) and SD

338 The Annual Report on Federal Procurement Preference Goals
goals for contracts to 8(a) firms: the goal was 9.7 percent ($145.0 million), t

achievement, 14.8 percent ($194.6 million). 

Several agencies achieved relatively smaller increases in 8(a) percentag

than dollars because of increases in total prime contract dollars. The Depa

ment of Housing and Urban Development exceeded its projected goal of 3

percent by 4.3 percentage points and increased dollars by $29.0 million—7

percent of total dollars. Similarly, the Department of State exceeded its p

jected goal of 8.7 percent by 3.8 percentage points and increased dollars 

$36.0 million. The Department of Commerce exceeded its goal of 8.0 perce

by 2.6 percentage points and increased dollars by $23.4 million. 

Agencies in the “all other” category exceeded their aggregate 9.3 perce

goal by 4.0 percentage points and their total dollar goal by $43.4 millio

with contracts to 8(a) firms totaling $124.3 million (Table 6). Several of the

agencies significantly exceeded their 8(a) share and dollar goal figures: t

Corporation for National Service (formerly ACTION) exceeded its goal of 3

percent ($260,000) by 51.6 percentage points and increased dollars by $2

million. The Equal Employment Opportunity Commission exceeded its goal 

6.0 percent ($540,000) by 19.4 percentage points, or $1.8 million. The Exec

tive Office of the President exceeded its goal of 10.0 percent ($2.0 million) 

11.2 percentage points, or $2.4 million. The Federal Communications Co

mission exceeded its goal of 12.9 percent ($765,600) by 26.4 percenta

points and increased dollars by $14.8 million. The National Labor Relatio

Board exceeded its goal of 22.0 percent ($848,000) by 25.6 percentage poi

and increased dollars by $2.1 million; and the Small Business Administrati

exceeded its goal of 37.0 percent ($10.2 million) by 7.3 percentage poi

and increased dollars by $4.4 million. 

Agency Shortfalls

Seven of the 19 largest agencies failed to achieve their percentage goals 

8(a) contracts: the Departments of Energy, Justice, and Labor; the Environme

tal Protection Agency; the General Services Administration (Non-Federal Su

ply Schedule); the Tennessee Valley Authority; and the U.S. Agency for Int

national Development. Of these, three—the Departments of Energy a

Justice and the General Services Administration—had increased their go

from the FY 1993 level. 

Department of Energy

The Department of Energy missed its 8(a) goal of 4.0 percent by 2.0 perce

age points and its dollar goal by $379.5 million. Energy’s report says the 8

prime goal for FY 1994 was 250 percent greater than the 8(a) accomplishme

for FY 1993. The department fell short of achieving this goal by less than h

a percentage point. Efforts included expansion of the 8(a) program for use 

Fiscal Years 1994 and 1995 3
serve purchases at any value for competition exclusively among disadvantag

or women-owned businesses. Further, all procurement requests over $3 milli

were sent to headquarters for additional set-aside consideration.

Department of Justice

The Department of Justice missed its 8(a) goal of 6.5 percent by six-tenths o

percentage point, but exceeded its dollar goal by $800,000. The actual d

lars awarded to 8(a) firms totaled $116.9 million. Justice’s report says that d

ing FY 1994 the department spent more money with small businesses a

small 8(a) firms than projected. Although DOJ missed the percentage go

slightly, the agency exceeded the monetary goal. DOJ expended significa

funds with firms classified as “other than small” for major projects such as j

cell construction to alleviate the overcrowding in federal prisons and to 

duce the need for housing federal inmates in state and local jails; continu

tion of the national implementation of a fingerprinting system; and a ma

departmental facility currently under construction in West Virginia, an ar

with a limited number of small and/or minority-owned firms. These lar

business projects increase the total procurement dollars expended, at t

same time decreasing the percentages of dollars spent with small firms.

Department of Labor

The Department of Labor missed its 8(a) goal of 4.4 percent by seve

tenths of a percentage point and its dollar goal of $33.8 million by $2

million. 

Environmental Protection Agency

The Environmental Protection Agency missed its 8(a) goal of 8.0 percent 

3.2 percentage points and its dollar goal of $104.0 million by $39.0 millio

The agency’s Office of Small and Disadvantaged Business Utilizati

(OSDBU) is working with EPA program offices to identify major new procu

ments for 8(a) and small business set-asides in FY 1995. The Superfund p

gram office is supporting this effort by structuring some of its large procu

ments for performance by 8(a) firms and small businesses. This will allo

more small firms to become prime contractors.

Tennessee Valley Authority

The Tennessee Valley Authority missed its 8(a) goal of 2.5 percent by 2.3 p

centage points and its dollar goal of $42.5 million by $36.5 million. Total d

lars awarded were $6.0 million. To take advantage of low acquisition costs

was necessary for TVA to consolidate many of its small requirements in

large multi-year contracts. Because of a lower-than-anticipated percentage 

small, disadvantaged, and women-owned businesses competing for and w

ning the contracts, TVA failed to meet many of its small business goals.

340 The Annual Report on Federal Procurement Preference Goals
lion by $14.2 million. 

Small Disadvantaged Business Prime Contracts

In FY 1994, the federal government awarded $5.1 billion, or 3.0 percent 

the total $174.6 billion in prime contract dollars to small disadvantaged bu

nesses (Tables 7 and 8). These figures do not include contracts award

through the 8(a) program. The total missed the projected 4.3 percent share 

1.3 percentage points; the dollar amount missed the projected total by a

proximately $1.8 billion. The goal and achievement figures are not stric

comparable, however, because while the Department of Defense does n

break out 8(a) contracts in its 5 percent goal for small disadvantaged busine

contracts, the agency does report achievements for 8(a) and other SDB awa

separately. DOD awarded $2.8 billion in the 8(a) category.

All but $30.9 million of the SDB prime contract dollars were generat

by the 19 agencies with the largest contracting budgets. More than $130

million of the increase over the projected total came from the Department 

Transportation. 

Thirteen of the 19 agencies met or exceeded their goals in the SDB prim

category: the Departments of Agriculture, Commerce, Defense, Health a

Human Services, Housing and Urban Development, Justice, Labor, Sta

Transportation, Treasury and Veterans Affairs; the National Aeronautics a

Space Administration; and the U.S. Agency for International Developme

The Department of Housing and Urban Development achieved the high

percentage goal for SDBs: 8.7 percent ($59.8 million) of its $685.3 million 

prime contract dollars went to small disadvantaged businesses. The Depa

ments of Transportation and Veterans Affairs, in addition to the U.S. Agen

for International Development, exceeded their percentage goals, and to

dollars were more than double their established goals. 

Not only did nine of the 19 key agencies set more aggressive goals in 

1994, but six of these—the Departments of Commerce, Labor, Treasury, a

Veterans Affairs, the National Aeronautics and Space Administration, and t

U.S. Agency for International Development—met or exceeded their goals. 

Agency Shortfalls

The SBA has reviewed and provided specific comments on the reports of t

six major agencies that did not achieve their goals for FY 1994: the Depa

ments of Education, Energy, and Interior, the Environmental Protecti

Agency, the General Services Administration (FSS and NFSS), and the Te

nessee Valley Authority.

Fiscal Years 1994 and 1995 3
$10.8 million by $1.8 million, awarding a total of $9.0 million.

Department of Energy

The Department of Energy missed its small disadvantaged business prime co

tract goal of 6.0 percent by 3.2 percentage points and its dollar goal of $1

billion by $598.9 million. The total dollars awarded were $481.1 million. T

agency nevertheless made an extraordinary effort, taking aim at an FY 19

goal that was more than 200 percent greater than the accomplishment for 

1993. A departmental decision to reduce support service contracting by up 

20 percent also adversely affected Energy’s SDB results.

Department of the Interior

The Department of the Interior missed its small disadvantaged business prim

contract goal of 4.0 percent by four-tenths of a percentage point and its dol

goal of $51.3 million by $1.6 million. The total dollars awarded were $49

million. The DOI report mistakenly indicated that the 4.0 percent goal h

been met; the actual percentage achieved was 3.6 percent. 

Environmental Protection Agency

The Environmental Protection Agency missed its small disadvantaged busine

prime contract goal of 2.0 percent by four-tenths of a percentage point and 

dollar goal of $26.0 million by $3.9 million. EPA’s report mistakenly indicat

that the agency had met the 2.0 percent goal; the actual achievement was 1

percent.

General Services Administration

The General Services Administration missed its small disadvantaged busine

prime contract Federal Supply Service Schedule goal of 2.5 percent by on

tenth of a percentage point, and its Non-Federal Supply Service Schedule go

of 2.5 percent by two-tenths of a percentage point. GSA, however, exceed

its dollar goal for the Federal Supply Service Schedule of $6.9 million by $2

million, and the Non-Federal Supply Service Schedule of $135.7 million 

$12.9 million. GSA’s report says that the total dollars committed by t

agency significantly exceeded projected obligations because several ma

construction projects were not included in the base at the time goals were 

tablished. Many of these projects were not available for award to small bu

nesses because of the high dollar value and correspondingly high bonding 

quirements of the projects. The inclusion of these high-dollar-value projects 

the base of dollars obligated resulted in a decrease in the percentage 

awards to small, small disadvantaged and women-owned businesses, ev

though the total dollars awarded to those businesses exceeded projections.

342 The Annual Report on Federal Procurement Preference Goals
gpy pgpg

$59.5 million by $16.2 million. Dollars awarded totaled $43.3 million. 

Small Disadvantaged Business Subcontracts

Prime contractors to the federal government awarded almost $3.2 billion, 

5.5 percent, of the total subcontract awards to small disadvantaged busine

subcontractors in FY 1994 (Tables 9 and 10). This achievement fell short 

the 5.7 percent goal by two-tenths of a percentage point. The small disadva

taged business subcontracting dollar goal of $2.9 billion was exceeded 

$248.3 million. 

Prime contractors to the 19 agencies with the largest contracting budg

awarded 99.8 percent of the dollar value of these awards. 

Seven of the 19 agency prime contracting groups met or exceeded th

established goals in the SDB subcontracting category: prime contractors 

the Departments of Defense, Energy, Housing and Urban Development, Sta

Transportation, and Veterans Affairs, and the U.S. Agency for Internation

Development. Prime contractors to the Department of Transportation doubl

both the share and dollar goals, increasing dollars from $25.7 million 

$52.7 million. Prime contractors to the Department of Defense increased d

lars to SDBs from $2.0 billion to $2.3 billion.

Agency Shortfalls

Twelve of the 19 key agencies failed to achieve their established percenta

goals for SDB subcontracting: the Departments of Agriculture, Commerce, E

ucation, Health and Human Services, Interior, Justice, Labor, and Treasury, t

Environmental Protection Agency, the General Services Administration, t

National Aeronautics and Space Administration, and the Tennessee Val

Authority. The Department of Health and Human Services came within on

tenth of a percentage point of achieving its goal. 

Department of Agriculture 

The U.S. Department of Agriculture missed its small disadvantaged busine

subcontracting goal of 5.0 percent by 1.4 percentage points and its dollar go

of $14.3 million by $10.5 million. Dollars awarded totaled $3.8 million.

Department of Commerce

The Department of Commerce missed its small disadvantaged business su

contracting goal of 8.0 percent by four-tenths of a percentage point but e

ceeded its dollar goal of $8.4 million by $3.1 million. 

Fiscal Years 1994 and 1995 3
ceeded its dollar goal of $900,000 by $1.5 million. 

Department of Health and Human Services

The Department of Health and Human Services missed its small disadva

taged business subcontracting goal of 8.4 percent by one-tenth of a perce

age point, but exceeded its dollar goal of $21.0 million by $10.2 million.

Department of the Interior

The Department of the Interior missed its small disadvantaged business su

contracting goal of 7.8 percent by 1.1 percentage points, but exceeded 

dollar goal of $5.5 million by $2.5 million. 

Department of Justice

The Department of Justice missed its small disadvantaged business subco

tracting goal of 5.5 percent by 1.7 percentage points and its dollar goal 

$24.6 million by $5.1 million. The total dollar amount subcontracted to sm

disadvantaged businesses was $19.5 million. During FY 1994 the Justice D

partment expended more money with small businesses and small Section 8

firms than projected. DOJ expended significant funds with firms classified 

“other than small” for major projects such as jail cell construction to allevia

the overcrowding in federal prisons and to reduce the need for housing fe

eral inmates in state and local jails; continuation of the national implemen

tion of a fingerprinting system; and a major departmental facility curren

under construction in West Virginia, an area with a limited number of sm

and/or minority firms. Adding these large business projects increases the to

and decreases the percentage spent with small firms.

Department of Labor

The Department of Labor missed its small disadvantaged subcontracting go

of 14.5 percent by five-tenths of a percentage point, but exceeded its dol

goal of $18.4 million by $2.1 million. The total dollar amount subcontract

to small disadvantaged businesses was $20.5 million. 

Department of the Treasury

The Department of the Treasury missed its small disadvantaged business su

contract goal of 5.0 percent by three-tenths of a percentage point, but e

ceeded its dollar goal of $18.8 million by $2.4 million. The Department of t

Treasury took aggressive initiatives to improve the SDB prime contracting a

subcontracting program. In May 1994, 23 of Treasury’s prime contracto

signed a “Partnership Pledge” to form strategic alliances with small, minori

and women-owned businesses, identify and eliminate internal impediments 

the maximum practicable use of small women-owned businesses as subco

344 The Annual Report on Federal Procurement Preference Goals
other aggressive concept that has emphasized the importance of subcontra

ing with small minority businesses is the inclusion of the subcontracting pl

as an evaluation factor in major solicitations.

Environmental Protection Agency

The Environmental Protection Agency missed its small disadvantaged busine

subcontract goal of 12.0 percent by nine-tenths of a percentage point, but e

ceeded its dollar goal of $19.8 million by $9.3 million. EPA’s report indica

that the agency met the 12.0 percent goal; however, the actual achieveme

was 11.1 percent.

General Services Administration

The General Services Administration missed its small disadvantaged busine

subcontracting goal of 5.5 percent by 1.7 percentage points and its dollar go

of $165.0 million by $57.8 million. According to the GSA report, contracto

informed the agency that, because of economic problems, some of the sm

business vendors went bankrupt, merged with other companies, or we

bought out by large business concerns in fiscal year 1994. Some of the co

tractors reduced their discretionary spending in fiscal year 1994 in order 

economize. GSA’s prime contractors also produced more in house rather th

subcontracting out. Many large construction projects were awarded in fisc

year 1994 that would have excellent subcontracting opportunities for sm

business concerns, but not until fiscal year 1995. Public utility contracts ha

historically posed a problem for the small, small disadvantaged and wome

owned business programs. Because of the nature of public utility services, G

maintains very little leverage to negotiate higher subcontracting goals in t

small and disadvantaged business categories for these contracts.

National Aeronautics and Space Administration

The National Aeronautics and Space Administration missed its small disa

vantaged business subcontract goal of 12.5 percent by 2.8 percentage poi

and its dollar goal of $436.2 million by $19.4 million. NASA’s report says th

with the exception of subcontracting by large prime contractors to small d

advantaged businesses, the agency exceeded all of its goals. It should 

noted that 78 percent of the missed goal was attained even after the goal w

increased by 74 percent over the previous year’s goal.

Tennessee Valley Authority

The Tennessee Valley Authority missed its small disadvantaged business su

contracting goal of 10.0 percent by 5.2 percentage points and its dollar go

of $23.0 million by $3.6 million. Achieving subcontracting goals is difficu

according to TVA, because many of the agency procurements that have su

contracting requirements are for major components in the repair and main

Fiscal Years 1994 and 1995 3
Women-Owned Small Business Prime Contracts 

The federal government awarded $3.5 billion in prime contracts to wome

owned businesses in fiscal year 1994 (Tables 11 and 12). The total exceed

the projected 1.9 percent share of prime contract dollars by one-tenth o

percentage point; the dollar amount exceeded the projected total by $391

million.

The Federal Acquisition Streamlining Act of 1994 (P.L. 103-355) esta

lished a five percent government-wide goal for women-owned business

Women-owned businesses were specifically incorporated into the procu

ment preference goaling process. Women-owned businesses were also add

as a class for subcontract plan goals. 

In addition, a definition of “women-owned businesses” was establishe

A “small business concern owned and controlled by women” is defined a

small business concern that is (or the stock of which is) at least 51 perce

owned by one or more women, and whose management and daily busine

operations are controlled by one or more women.

All except $48.7 million (1.4 percent) of the total amount in prime co

tracts to women-owned businesses was generated by the 19 agencies with t

largest contracting budgets. Some $357 million of the increase over the p

jected total came from the Department of Defense. 

Eleven of the 19 largest agencies met or exceeded their women-own

business prime percentage goals. They are: the Departments of Agricultu

Defense, Health and Human Services, Housing and Urban Development, 

terior, State, Transportation, Treasury, and Veterans Affairs, in addition to t

General Services Administration and the National Aeronautics and Spa

Administration.

Of the 19 largest agencies, the Department of Housing and Urban Dev

opment contracted the largest share of its prime contract dollars to wome

owned businesses—8.1 percent. Of all the reporting agencies, the Nation

Endowment for the Humanities achieved the highest percentage in this ca

gory, at 30.0 percent of its prime contract dollars.

Agency Shortfalls

The SBA reviewed the reports of the seven major agencies that fell short 

their percentage goals for FY 1994. They are the Departments of Commerc

Education, Justice, and Labor, in addition to the Environmental Protecti

Agency, the Tennessee Valley Authority, and the U.S. Agency for Internation

Development.

346 The Annual Report on Federal Procurement Preference Goals
goal of $27.9 million by $600,000. 

Department of Education

The Department of Education missed its women-owned small business prim

contract goal of 3.5 percent by eight-tenths of a percentage point and its d

lar goal of $10.0 million by $1.1 million. 

Department of Energy

The Department of Energy missed its women-owned small business prim

contract goal by 1.1 percentage point and its dollar goal by more than $221

million. 

Department of Justice

The Department of Justice missed its women-owned small business prim

contract goal of 3.0 percent by six-tenths of a percentage point and its dol

goal of $53.6 million by $6.4 million. Justice’s report says in the area 

women-owned small businesses, the department achieved 88 percent of 

goal. DOJ expended significant amounts of money with firms classified 

“other than small” for major projects, such as jail cell construction, continu

tion of the national implementation of a fingerprinting system, and constru

tion of a departmental facility in West Virginia, an area with a limited numb

of small and/or minority firms.

Department of Labor

The Department of Labor missed its women-owned small business prime co

tract goal of 4.2 percent by 2.2 percentage points and its dollar goal of $32

million by $15.2 million. 

Environmental Protection Agency

The Environmental Protection Agency missed its women-owned small bu

ness prime contract goal of 2.0 percent by six-tenths of a percentage po

and its dollar goal of $26.0 million by $7.5 million. EPA’s report says acti

has been taken by the agency’s Office of Small and Disadvantaged Busine

Utilization to increase the dollar value of requirements placed with 8(a) a

women-owned firms. EPA worked with EPA program offices to ident

major new procurements for 8(a) and small business set-asides in FY 199

EPA has succeeded in gaining support of the Superfund program officials 

structure some of their large procurements for performance by 8(a) fir

and small businesses. The restructuring of these procurement packages w

allow for more small firms, including women-owned firms, to becom

prime contractors.

Fiscal Years 1994 and 1995 3
pgpy pgp

its dollar goal of $23.8 million by $9.7 million. The TVA reported that 

order to take advantage of efficient and low acquisition costs, it was necessa

to consolidate many of small requirements into large multi-year contracts. B

cause of a lower than anticipated percentage of small, disadvantaged, a

women-owned businesses competing and winning these contracts, TVA fail

to meet many of the small business goals.

U.S. Agency for International Development

The U.S. Agency for International Development missed its women-own

small business prime contract goal of 4.4 percent by 3.0 percentage poin

but exceeded its dollar goal of $18.2 million by $3.5 million. 

Women-Owned Small Business Subcontracts

The federal government awarded $1.5 billion in subcontracts (2.5 percent) 

women-owned businesses in fiscal year 1994 (Tables 13 and 14). The total e

ceeded the 1.7 percent goal for women-owned small business subcontra

dollars by eight-tenths of a percentage point. The dollar amount exceeded t

projected total by $565.6 million. 

All except $1.6 million (0.1 percent of the total) was generated by the 

agencies with the largest contracting budgets. Some $374.6 million of the 

crease over the projected total came from the Department of Defense.

Fourteen of the 19 largest agencies met or exceeded their women-own

small business subcontracting goals: the Departments of Agriculture, Defen

Education, Energy, Interior, Justice, State, Transportation, Treasury, and t

Veterans Affairs, in addition to the Environmental Protection Agency, the Ge

eral Services Administration, the National Aeronautics and Space Administ

tion, and the U.S. Agency for International Development.

Of the 19 largest agencies, the Department of Transportation’s prime co

tractors achieved the highest percentage in subcontracting to women-own

firms—6.8 percent. Of all the reporting agencies, prime contractors to the E

ecutive Office of the President awarded the largest percentage—11.6 p

cent—of their subcontract dollars to women-owned firms.

Agency Shortfalls

The SBA reviewed the reports of the five major agencies that fell short of th

percentage goals for FY 1994. They are the Departments of Commerc

Health and Human Services, Housing and Urban Development, and Lab

and the Tennessee Valley Authority.

348 The Annual Report on Federal Procurement Preference Goals
ceeded its dollar goal of $3.2 million by $900,000, awarding $4.1 million 

subcontracts to women-owned firms. 

Department of Health and Human Services

The Department of Health and Human Services missed its women-own

small business subcontracting goal of 1.0 percent by five-tenths of a perce

age point and its dollar goal of $2.5 million by $800,000. HHS met all of 

procurement preference goals for FY 1994 with the exception of the subco

tracting awards to women-owned businesses. Although the departme

achieved just 50 percent of the subcontracting goal to women-owned bu

nesses, HHS continues to commit maximum participation to women-own

businesses in all aspects of its procurement programs.

Department of Housing and Urban Development

The Department of Housing and Urban Development missed its wome

owned small business subcontracting goal of 6.0 percent by two-tenths o

percentage point and its dollar goal of $7.3 million by $3.5 million. 

Department of Labor

The Department of Labor missed its women-owned small business subco

tracting goal of 5.0 percent by four-tenths of a percentage point, but exceed

its dollar goal of $6.3 million by $400,000. 

Tennessee Valley Authority

The Tennessee Valley Authority missed its women-owned small business su

contracting goal of 5.0 percent by 2.6 percentage points and its dollar go

of $11.5 million by $1.7 million. TVA’s report says that in order to take a

vantage of low acquisition costs, it was necessary to consolidate many sm

requirements into large multi-year contracts. Because a lower than anti

pated percentage of small, disadvantaged, and women-owned business

competed for and won these contracts, TVA failed to meet many of its sm

business goals.

Fiscal Years 1994 and 1995 3
Synopsis

By law, federal agencies are required to provide small and small disadva

taged businesses the “maximum practicable opportunity” to participa

in federal contracts for goods and services. To this end, agencies consult a

nually with the U.S. Small Business Administration and set goals for the p

centage of dollars to be awarded through prime contracts or subcontracts 

small firms, small disadvantaged firms (including those participating in t

8(a) program), small women-owned firms, and firms in designated “lab

surplus areas.” At the end of the year, agencies report to the SBA on th

success in meeting the goals. SBA has assigned account executives to t

largest federal agencies. These individuals work with the agencies to devel

proactive strategies that will open new areas of opportunity to the sm

business community.

In fiscal year 1995, the executive branch of the federal government e

ceeded all of its small business prime contract goals with the exception 

the small disadvantaged business goal. The agencies exceeded their over

small business prime contract goal of 22.6 percent by awarding 24.9 perce

($43.2 billion) of the $173.6 billion total dollars awarded in fiscal year 19

to small business. The agencies also exceeded the 8(a) goal of 1.7 percent 

awarding 3.7 percent ($6.5 billion) in 8(a) contracts and the women-own

small business goal of 2.1 percent by awarding 2.3 percent ($3.9 billio

Federal agencies, however, failed to achieve the small disadvantaged bu

ness prime contract goal of 4.3 percent, awarding just 3.2 percent ($5.5 b

lion) in prime contracts to small disadvantaged businesses.

Federal agencies also exceeded all of the small business subcontracti

goals. The federal government’s large business prime contractors subco

tracted $56.9 billion to small businesses in fiscal year 1995. They award

41.9 percent ($23.8 billion) of the subcontracting total to small business

exceeding the 37.8 percent goal. They also awarded 6.6 percent ($3.8 b

lion)—more than the 5.7 percent goal—to small disadvantaged business

and 3.0 percent ($1.7 billion) to women-owned small business subcontra

tors, exceeding the 2.4 percent goal.

In this report, the SBA summarizes federal agency performance in me

ing their goals and provides detailed comments from the 19 federal agenc

with the largest contracting budgets. In the goal-setting process, agenc

are encouraged to set aggressive goals and make strong efforts to meet the

most were able to do that in most categories. 

350 The Annual Report on Federal Procurement Preference Goals
$, p(

and 2). Both the total dollar amount and the percentage awarded to sm

businesses exceeded the projected goals: small firms gained $6.5 billion mo

than had been estimated, and 2.3 percentage points more than the over

share goal of 22.6 percent. 

Of the 19 agencies with the largest contracting budgets, 11 exceed

their percentage goals for FY 1995, eight by more than $100 million. The D

partment of Defense awarded $25.3 billion, or 23.0 percent of the $110.0 b

lion in contracts to small business. The DOD exceeded its 20.6 percent go

by 2.4 percentage points, and the additional amount awarded to small bu

ness exceeded $3.8 billion. 

Eleven of the 19 agencies set more aggressive goals in FY 1995 than 

FY 1994 and three of those—the Departments of Commerce and Defen

and the General Services Administration—exceeded their goals.

Agency Shortfalls

The Small Business Administration is charged in P.L. 95-507 to analyze a

comment on shortfalls by major reporting agencies. Eight of the 19 ma

agencies missed their percentage goals for prime contract awards to sm

businesses: the Departments of Agriculture, Education, Health and Hum

Services, and Labor, and the Environmental Protection Agency, the Nation

Aeronautics and Space Administration, the Tennessee Valley Authority, a

the U.S. Agency for International Development. This group includes six of t

agencies that had set more aggressive goals than in FY 1994. 

Department of Agriculture

The U.S. Department of Agriculture missed its small business prime contra

goal of 51.0 percent by 8.6 percentage points and its dollar goal by $27

million. The actual dollar amount awarded by the USDA in prime contracts 

small business in FY 1995 was $1.3 billion. In an agency analysis of the l

two years’ failure record, the USDA found that there had been an increase 

the use of full and open competition, in which small businesses have be

less successful competing against large firms. The agency had also expand

the use of credit cards (to $60 million in charges) and third party drafts 

$58.7 million) and was unable to track small business participation in the

transactions; the result is a significant impact on USDA’s ability to moni

and report small business achievements.

Department of Education

The Department of Education missed its small business prime contract goal 

28.0 percent by 2.7 percentage points. Although the Department of Educati

did not meet its percentage goal, it exceeded its prime contract dollars 

small business by $8.6 million, awarding a total of $95.4 million. 

Fiscal Years 1994 and 1995 3
exceeded the dollar goal of $1.1 billion by more than $130 million. 

Department of Labor

The Department of Labor failed to reach its small business prime contract go

of 24.9 percent by 2.6 percentage points, but increased its prime contract d

lars to small business by $2.7 million. Small business prime contract doll

totaled nearly $195 million. 

Environmental Protection Agency

The Environmental Protection Agency missed its small business prime co

tract goal of 25 percent by 1.9 percentage points and its dollar goal by $85

million. EPA’s report indicated that the percentages were lower and attribut

the shortfall in small business procurement to lower budgets in several ma

program offices.

National Aeronautics and Space Administration

The National Aeronautics and Space Administration failed to meet its sm

business prime contract goal of 10.5 percent by three-tenths of a perce

age point and its dollar goal of $1.1 billion by $86.8 million. NASA’s to

dollar awards fell short of the estimated amount of $10.6 billion by $5

million. 

Tennessee Valley Authority

The Tennessee Valley Authority missed its small business prime contract go

of 30.0 percent by 12.3 percentage points and its dollar goal of $583.5 m

lion by $58.8 million. TVA’s estimate of total dollar awards was low at $1

billion; the agency actually awarded nearly $3 billion. 

U.S. Agency for International Development

The U.S. Agency for International Development failed to meet its small bu

ness prime contract goal of 35.2 percent by 16.3 percentage points, but e

ceeded its dollar goal of $152.7 million by $118 million. USAID underes

mated its total dollar awards by nearly $1 billion. 

Small Business Subcontract Awards 

Federal prime contractors awarded $56.9 billion in federal funds to subco

tractors in FY 1995 (Tables 3 and 4). Of this total, $23.8 billion—41.9 p

cent—went to small firms. This share was 4.1 percentage points higher th

projected. Subcontracts totaled $5.6 billion more than expected and the d

lar share to small business was nearly $4.5 billion more than projected.

352 The Annual Report on Federal Procurement Preference Goals
Departments of Agriculture, Commerce, Defense, Education, Energy, Housi

and Urban Development, Justice, Labor, State, Transportation, Treasury, a

Veterans Affairs, and the General Services Administration—either met or e

ceeded their percentage goals for subcontracting to small business; nine 

those agencies also exceeded their dollar goals. 

The largest single agency percentage increase over the projected to

came from the Department of Housing and Urban Development, whi

awarded 42.4 percent, or 17.4 percentage points more than projected, 

small business. The next largest percentage gain was from the Department 

Energy, which subcontracted 56.3 percent to small firms—16.3 percenta

points more than projected.

The largest dollar increase over the projected total came from the Depa

ment of Defense, which increased its dollar total for small business by $3

billion, to $19.2 billion. The second largest dollar share gain was from t

National Aeronautics and Space Administration, which awarded $1.6 billi

to small business—$357.0 million more than projected.

Of all the agencies, the Department of Labor set the highest percenta

goal for small business at 62.5 percent—and achieved even more—63

percent.

Nine agencies increased their percentage goals over FY 1994; five 

these exceeded their goals. Six other agencies that did not increase their go

still achieved a larger percentage of subcontract dollars for small firms than 

FY 1994.

Six of the 19 agencies missed their percentage goals for subcontract d

lars to small business. Of these, the Department of Interior, the U.S. Agen

for International Development, the Environmental Protection Agency, the N

tional Aeronautics and Space Administration, and the Tennessee Valley A

thority, while missing their percentage goals, awarded more in dollars th

had been projected. The Department of the Interior, USAID, and NASA a

achieved a higher percentage of subcontract dollars for small business than 

FY 1994. Four of the six agencies that did not achieve their goals had adopt

more challenging goals than in FY 1994: the Department of Health a

Human Services, USAID, EPA, and NASA.

Agency Shortfalls

The U.S. Small Business Administration has reviewed the reports of the 

agencies that had shortfalls: the Departments of Health and Human Servic

and Interior, the Agency for International Development, the Environmen

Protection Agency, the National Aeronautics and Space Administration, a

the Tennessee Valley Authority.

Fiscal Years 1994 and 1995 3
The dollar amount subcontracted to small business in FY 1995 was $115

million. HHS exceeded its goals in both FY 1993 and FY 1994.

Department of the Interior

The Department of the Interior failed to reach its small business subcontra

ing goal of 45.0 percent by 3.1 percentage points, but exceeded its dollar go

of $22.5 million by $55.6 million. Interior’s report stresses that the agen

cannot directly influence subcontract awards, but DOI continues to strong

suggest to their large prime contractors that small business subcontracti

goals be aggressive.

Environmental Protection Agency

The Environmental Protection Agency failed to reach its small business su

contract goal by 15.2 percentage points, but exceeded its dollar goal by $31

million, awarding a total of $115.1 million. EPA exceeded its goals in both 

1993 and FY 1994.

National Aeronautics and Space Administration

The National Aeronautics and Space Administration came very close to 

small business subcontract goal, but missed it by four-tenths of a percenta

point. NASA exceeded its dollar goal by $357.0 million. Actual subcontra

dollars awarded to small businesses in FY 1995 totaled $1.6 billion. 

Tennessee Valley Authority

The Tennessee Valley Authority missed its small business subcontract goal 

eigth-tenths of a percentage point but exceeded its dollar goal by $45.5 m

lion. TVA notes that its procurements are for major components in the rep

and maintenance of its power-producing facilities and that small firms oft

are not available to bid on these requirements.

U.S. Agency for International Development

The U.S. Agency for International Development failed to meet its small bu

ness subcontract goal of 54.4 percent by 5.6 percentage points, but exceed

its dollar goal by $46.6 million. USAID awarded $50.8 million in small bu

ness subcontracts in FY 1995. The agency’s report states that its new au

mated system captures more complete and accurate subcontract data than 

previous years.

Minority Small Business Awards: The 8(a) Program 

The 8(a) program provides federal government contracts to small compan

owned and controlled by socially and economically disadvantag

354 The Annual Report on Federal Procurement Preference Goals
program. 

The federal government awarded $6.5 billion (or 3.7 percent) of the to

amount awarded in prime contracts through the SBA to small disadvantag

businesses in the 8(a) program in FY 1995 (Tables 5 and 6). Both the to

amount and the percentage awarded to 8(a) firms exceeded the projected f

ures: 8(a) firms gained $3.6 billion more than had been estimated and 2

percentage points more than the overall goal of 1.7 percent. 

Eleven of the 19 key agencies met or exceeded their goals for 8(a) co

tracts: the Departments of Commerce, Defense, Education, Health a

Human Services, Housing and Urban Development, Interior, State, Tran

portation, Treasury, and Veterans Affairs; and the National Aeronautics a

Space Administration. Especially notable were the efforts of the Departme

of Commerce, Housing and Urban Development, Interior, State, and t

Treasury.

The Department of Defense has, by specific legislation, a goal of 5.0 p

cent for participation of small disadvantaged business. DoD sets a single go

for SDB participation, rather than separating goals for 8(a) and other SD

awards. DoD achieved 6.2 percent for both types of awards, exceeding its 5

percent goal by 1.2 percentage points. 

The Department of the Treasury exceeded its percentage goal and t

dollar amount for contracts to 8(a) firms, from a goal of 10.7 percent ($160

million) to an actual 8(a) share of 16.2 percent ($207.1 million). 

Of all the agencies, the Department of Transportation set the highest p

centage goal for 8(a) at 11.5 percent. Transportation achieved 15.3 percent

3.8 percentage points more than the projected amount.

Fourteen agencies increased their percentage goals over FY 1994 a

eight exceeded them. 

Agency Shortfalls

Eight of the 19 largest agencies failed to achieve their percentage goals 

8(a) contracts: the Departments of Agriculture, Energy, Justice, and Labo, t

Environmental Protection Agency, the General Services Administration, t

Tennessee Valley Authority, and the U.S. Agency for International Develo

ment. Of these, five—the Departments of Agriculture, Justice, Labor, the Ge

eral Services Administration, and the U.S. Agency for International Develo

ment—had increased their goals from the FY 1994 level.

Department of Agriculture

The U.S. Department of Agriculture missed its 8(a) goal of 5.0 percent by 1

percentage points and its dollar goal of $132.2 million by $21.1 million. 

Fiscal Years 1994 and 1995 3
pgpgy 

The actual dollar amount for 8(a) contracts awarded in FY 1995 was $445

million, up more than $100 million from the $340.5 million of FY 1994. 

Department of Justice

The Department of Justice failed to meet its 8(a) goal of 7.9 percent 

one-tenth of a percentage point and its dollar goal of $155.2 million 

$3.4 million.

Department of Labor

The Department of Labor missed its 8(a) goal of 5.5 percent by 1.1 percenta

points and its dollar goal of $42.1 million by $4.1 million. According 

Labor’s report, the 8(a) dollars awarded represented an increase of 18 perce

over dollars awarded in FY 1994. 

Environmental Protection Agency

The Environmental Protection Agency missed its 8(a) goal of 6.8 percent 

1.5 percentage points and its dollar goal of $95.2 million by $34.5 millio

EPA’s report attributed the lower percentages to decreases in the budgets 

several major program offices, which resulted in relatively fewer new procu

ments being set aside for small business.

General Services Administration

The General Services Administration missed its 8(a) Federal Supply Schedu

goal of 0.1 percent by seven-hundredths of a percentage point. Althou

GSA did not meet its percentage goal, it increased its dollar awards by $2

million.

GSA also missed its non-Federal Supply Schedule 8(a) goal of 4.0 perce

by eight-tenths of a percentage point and its dollar goal of $217.7 million 

$11.4 million. According to the GSA report, some of the services historica

procured from 8(a) firms have been added to the procurement list of suppl

and services required to be purchased from the workshops for the blind a

severely handicapped. Because procurement from the workshops is mand

tory, these requirements can no longer be awarded to 8(a) businesses. In ad

tion, several 8(a) contracts expected to be awarded in fiscal year 1995 we

delayed until fiscal year 1996.

Tennessee Valley Authority

The Tennessee Valley Authority missed its 8(a) goal of 2.5 percent by 1.6 p

centage points and its dollar goal of $48.6 million by $22.6 million. 

356 The Annual Report on Federal Procurement Preference Goals
of $45.1 million by more than $20 million. The 8(a) dollar awards in FY 19

totaled $65.6 million.

Small Disadvantaged Business Prime Contracts

In FY 1995, the federal government awarded $5.5 billion, or 3.2 percent 

the total $173.6 billion in prime contract dollars, to small disadvantaged bu

nesses (Tables 7 and 8). These figures do not include contracts award

through the 8(a) program. The total missed the projected 4.3 percent share 

1.1 percentage points and the projected dollar total by approximately $1

billion. The goal and achievement figures are not strictly comparable, ho

ever, because while the Department of Defense does not break out 8(a) co

tracts in its 5 percent goal for small disadvantaged business contracts, t

agency does report achievements for 8(a) and other SDB awards separate

DOD reported $3.3 billion in the 8(a) category. 

All but $24.6 million of the SDB prime contract dollars were generat

by the 19 agencies with the largest contracting budgets. More than $170

million of the increase over the projected total came from the Department 

Transportation. 

Twelve of the 19 agencies met or exceeded their goals in the SDB prim

category: the Departments of Commerce, Defense, Energy, Health a

Human Services, Housing and Urban Development, Interior, State, Tra

portation, and Veterans Affairs, the General Services Administration, the N

tional Aeronautics and Space Administration, and the U.S. Agency for Intern

tional Development. 

The Department of Housing and Urban Development achieved the hig

est percentage goal for SDBs: 11.9 percent ($79.7 million) of its $668.9 m

lion in prime contract dollars went to small disadvantaged businesses. T

Departments of Transportation and Veterans Affairs and the U.S. Agency 

International Development, exceeded their percentage goals, and their to

dollars were more than double the established goals. 

Eight of the 19 key agencies set more aggressive goals in FY 1995, a

the Department of Energy exceeded its more aggressive goal. 

Agency Shortfalls

The SBA has reviewed and provided specific comments on the reports of t

seven major agencies that did not achieve their goals for FY 1995: the Depa

ments of Agriculture, Education, Justice, Labor, and Treasury, the Environme

tal Protection Agency, and the Tennessee Valley Authority.

Fiscal Years 1994 and 1995 3
dollar goal of $132.2 million by $76.3 million. A USDA analysis of the l

two fiscal years’ performance found there had been an increase in the use 

full and open competition, in which small businesses have been less succe

ful competing against large firms. USDA also expanded the use of credit ca

(to $60 million) and and third-party drafts (to $58.7 million); the result wa

significant impact on USDA’s ability to monitor and report small busine

achievements.

Department of Education

The Department of Education missed its small disadvantaged business prim

contract goal of 4.0 percent by 1.3 percentage points and its dollar goal 

$12.4 million by $2.4 million. 

Department of Justice

The Department of Justice failed to meet its small disadvantaged busine

prime contract goal of 3.0 percent by 1.5 percentage points and its dollar go

of $58.9 million by $28.9 million. 

Department of Labor

The Department of Labor missed its small disadvantaged business prime co

tract goal of 6.2 percent by eight-tenths of a percentage point, but met its d

lar goal of $47.2 million. 

Department of the Treasury

The Department of the Treasury failed to meet its small disadvantaged bu

ness goal of 2.6 percent by 1.0 percentage point and its dollar goal of $39

million by $17.9 million. 

Environmental Protection Agency

The Environmental Protection Agency missed its small disadvantaged busine

prime contract goal of 2.5 percent by seven-tenths of a percentage point a

its dollar goal of $35.0 million by $14.9 million. EPA’s report attributed t

lower percentages to decreases in the budgets of several major program 

fices in FY 1995; the result was fewer new procurements being set aside 

small business. 

Tennessee Valley Authority

The Tennessee Valley Authority missed its small disadvantaged business prim

contract goal of 4.0 percent by 1.9 percentage points and its dollar goal 

$77.8 million by $15.9 million. 

358 The Annual Report on Federal Procurement Preference Goals
cent, of the total subcontract awards to small disadvantaged business subco

tractors in FY 1995 (Tables 9 and 10). 

This achievement exceeded the established 5.7 percent goal by nin

tenths of a percentage point and the dollar goal of $2.9 billion by $817

million. 

Prime contractors to the 19 agencies with the largest contracting budg

awarded 99.7 percent of the dollar value of these awards. 

Ten of the 19 agency prime contracting groups met or exceeded their 

tablished goals in the SDB subcontracting category: prime contractors for t

Departments of Defense, Education, Energy, Labor, State, Transportation, Tre

sury, and Veterans Affairs, the National Aeronautics and Space Administ

tion, and the U.S. Agency for International Development. Prime contractors 

the Department of Transportation achieved twice the level of both their sha

and dollar goals, increasing the dollars to SDBs from $25.4 million to $84

million. Prime contractors to the Department of Defense increased dollars 

SDBs from a goal of $2.0 billion to actual contract dollars worth $2.6 billio

Agency Shortfalls

Nine of the 19 key agencies failed to achieve their established percenta

goals for SDB subcontracting: the Departments of Agriculture, Commerc

Health and Human Services, Housing and Urban Development, Interior, a

Justice, the Environmental Protection Agency, the General Services Admin

tration, and the Tennessee Valley Authority.

Department of Agriculture 

The U.S. Department of Agriculture missed its small disadvantaged busine

subcontracting goal of 5.0 percent by 2.8 percentage points and its dollar go

of $36.2 million by $29.6 million.

Department of Commerce

The Department of Commerce missed its small disadvantaged business su

contracting goal of 15.0 percent by 6.4 percentage points and its dollar go

of $15.1 million by $1.7 million. 

Department of Health and Human Services

The Department of Health and Human Services failed by 2.2 percenta

points to meet its small disadvantaged business subcontracting goal of 8

percent. HHS also missed its dollar goal of $24.6 million by $3.3 million. 

Fiscal Years 1994 and 1995 3
percent and missed its $19.2 million goal by $2.2 million. 

Department of the Interior

The Department of the Interior missed its small disadvantaged business su

contracting goal of 6.5 percent by 1.7 percentage points, but exceeded 

dollar goal of $3.3 million by $5.7 million.

Department of Justice

The Department of Justice missed its small disadvantaged business subco

tracting goal of 10.5 percent by 3.6 percentage points. DOJ also fell short 

the small disadvantaged business subcontracting dollar goal of $42.0 milli

by $27.1 million. 

Environmental Protection Agency

The Environmental Protection Agency missed its small disadvantaged busine

subcontracting goal of 12.0 percent by 3.5 percentage points, but exceed

its dollar goal of $18.0 million by $5.9 million. EPA’s report attributed t

lower percentages to significant decreases in several major program offic

the result was fewer new procurements being set aside for SDBs.

General Services Administration

The General Services Administration failed to meet its small disadvantag

business subcontracting goal of 6.0 percent by 1.2 percentage points a

missed its dollar goal of $133.7 million by $38.0 million. GSA’s report sa

that many large construction projects were awarded and that some of t

small business vendors went bankrupt, merged with other companies, or we

bought out by large business concerns in fiscal year 1995. Public utility co

tracts have historically posed a problem to the small, small disadvantaged a

women-owned business program. Because of the nature of the service 

quired, GSA maintains very little leverage in the utility industry to negotia

higher subcontracting goals in the small and small disadvantaged busine

categories.

Tennessee Valley Authority

The Tennessee Valley Authority missed its small disadvantaged business su

contract goal of 10.0 percent by 6.9 percentage points and its dollar goal 

$25.0 million by $12.1 million. TVA’s report said that achieving subcontra

ing goals for all small businesses is difficult since many of the procureme

that have subcontracting requirements are for major components in the rep

and maintenance of TVA’s power-producing facilities. The availability of sm

firms to bid on these requirements is limited.

360 The Annual Report on Federal Procurement Preference Goals
owned businesses in fiscal year 1995 (Tables 11 and 12). The total exceed

the projected 2.1 percent share of prime contract dollars by two-tenths o

percentage point; the dollar amount exceeded the projected total by $586

million.

The Federal Acquisition Streamlining Act of 1994 (P.L. 103–355) esta

lished a 5 percent government-wide goal for women-owned business

Women-owned businesses were specifically incorporated into the procu

ment preference goaling process and were also added as a class for subco

tract plan goals.

In addition, a definition of “women-owned businesses” was establishe

A “small business concern owned and controlled by women” is defined a

small business concern that is (or the stock of which is) at least 51 perce

owned by one or more women, and whose management and daily busine

operations are controlled by one or more women.

The 19 agencies with the largest contracting budgets generated all exce

$40.6 million (1.0 percent) of the total. The Department of Defense was t

source of $227.7 million of the increase over the projected total. 

Twelve of the 19 largest agencies met or exceeded their women-own

business prime percentage goals: the Departments of Commerce, Defen

Energy, Health and Human Services, Housing and Urban Development, In

rior, State, Transportation, Treasury, and Veterans Affairs, the General Servic

Administration (non-Federal Supply Schedules) and the National Aeronaut

and Space Administration.

Of the 19 largest agencies, the Department of Housing and Urban Dev

opment contracted with women-owned firms for the largest share of its prim

contract dollars—7.5 percent. Of all the reporting agencies, the National E

dowment for the Humanities awarded women-owned firms the highest p

centage—37.4 percent.

Agency Shortfalls

The SBA reviewed the reports of the eight major agencies that fell short 

their percentage goals for FY 1995. They are the Departments of Agric

ture, Education, Justice, and Labor, in addition to the Environmental Prote

tion Agency, the General Services Administration (Non-Federal Supp

Schedules), the Tennessee Valley Authority, and the U.S. Agency for Intern

tional Development.

Department of Agriculture

The U.S. Department of Agriculture missed its women-owned small busine

prime contract goal of 3.5 percent by seven-tenths of a percentage point a

its dollar goal of $92.5 million by $5.1 million. A USDA analysis of the l

two fiscal years’ performance found that there had been an increase in the u

Fiscal Years 1994 and 1995 3
agency reports that this practice has had a significant impact on USDAs ab

ity to monitor and report small business achievements.

Department of Education

The Department of Education failed to achieve its women-owned small bu

ness prime contract goal of 5.0 percent by 1.6 percentage points and its dol

goal of $15.5 million by $2.8 million. 

Department of Justice

The Department of Justice missed its women-owned small business prim

contract goal of 3.0 percent by five-tenths of a percentage point and its dol

goal of $58.9 million by $9.7 million. 

Department of Labor

The Department of Labor missed its women-owned small business prime co

tract goal of 5.2 percent by 2.4 percentage points and its dollar goal of $39

million by $15.7 million. DOL did increase the amount of dollars award

women owned firms by 30 percent over the FY 1994 level.

Environmental Protection Agency

The Environmental Protection Agency missed its women-owned small bu

ness prime contract goal of 5.0 percent by 2.7 percentage points and its dol

goal of $70.0 million by $43.5 million. EPA’s report attributed the lower p

centages to significant decreases in the budgets of several major program 

fices in FY 1995; as a result, fewer new procurements were set aside for sm

businesses.

General Services Administration

The General Services Administration failed to achieve its non-Federal Supp

Schedule women-owned prime contract goal of 3.0 percent by nine-tenths 

a percentage point and its dollar goal of $163.3 million by $27.5 millio

GSA reports it has created more aggressive marketing strategies to educa

women-owned business about contracting with the federal government.

Tennessee Valley Authority

The Tennessee Valley Authority missed its women-owned small busine

prime contract goal of 1.6 percent by one-tenth of a percentage point, but e

ceeded its dollar goal of $31.1 million by $12.7 million. 

U.S. Agency for International Development

The U.S. Agency for International Development missed its women-own

small business prime contract goal of 5.0 percent by 2.7 percentage poin

but exceeded its dollar goal of $21.7 million by $11.4 million. 

362 The Annual Report on Federal Procurement Preference Goals
women-owned businesses in fiscal year 1995 (Tables 13 and 14). The total e

ceeded the 2.4 percent goal for women-owned small business subcontra

dollars by six-tenths of a percentage point. The dollar amount exceeded t

projected total by $487.1 million. 

The 19 agencies with the largest contracting budgets generated all exce

$2.7 million (0.2 percent) of the total. The Department of Defense was t

source of $378.3 million of the increase over the projected total.

Twelve of the 19 largest agencies met or exceeded their women-own

small business subcontracting goals: the Departments of Defense, Educatio

Energy, Health and Human Services, Interior, Labor, State, Transportation, a

Treasury, the General Services Administration, the National Aeronautics a

Space Administration, and the U.S. Agency for International Developme

The Department of Veterans Affairs did not report women-owned small bu

ness subcontracting achievements.

Of the largest 19 agencies, the U.S. Agency for International Develo

ment’s contractors subcontracted with women-owned firms for the larg

share of their prime contract dollars—10.1 percent.

Agency Shortfalls

The SBA reviewed the reports of the seven major agencies that fell short 

their percentage goals for FY 1995: the Departments of Agriculture, Co

merce, Housing and Urban Development, and Justice, the Environmental P

tection Agency, and the Tennessee Valley Authority.

Department of Agriculture

The U.S. Department of Agriculture failed to meet its women-owned sm

business subcontracting goal of 2.0 percent by six-tenths of a percenta

point and its dollar goal of $14.5 million by $10.5 million. 

Department of Commerce

The Department of Commerce missed its women-owned small business su

contracting goal of 5.0 percent by 1.0 percentage point, but exceeded its d

lar goal of $5.0 million by $1.1 million. 

Department of Housing and Urban Development

The Department of Housing and Urban Development failed to achieve 

women-owned small business subcontracting goal of 7.0 percent by 4.5 p

centage points and its dollar goal of $7.1 million by $4.1 million. 

Fiscal Years 1994 and 1995 3
$26.0 million by $17.6 million. 

Environmental Protection Agency

The Environmental Protection Agency failed to meet its women-owned sm

business subcontracting goal of 5.0 percent by 1.3 percentage points, but e

ceeded its women-owned small business subcontracting dollar goal of $7

million by $3.0 million. EPA attributed the lower percentages to significa

decreases in the budgets of several major program offices; the result w

fewer new procurements being set aside for women-owned firms.

Tennessee Valley Authority

The Tennessee Valley Authority missed its women-owned small business su

contracting goal of 5.0 percent by 2.1 percentage points and its dollar goal 

$12.5 million by $600,000. 

364 The Annual Report on Federal Procurement Preference Goals
Guidance on Goal Setting Under 

Procurement Preference Programs

Background

Section 221 of Public Law 95–507 requires the head of each federal agen

after consultation with the Small Business Administration, to establish realis

goals for awarding contracts to small business concerns and to small busine

concerns owned and controlled by socially and economically disadvantag

individuals. Section 221 also directs that all procurements under $25,0

subject to small purchase procedures be set aside for small business.

Executive Order 12138, dated May 18, 1979, established a Nation

Women’s Business Enterprise Policy. Pursuant to this Executive Order, nation

goals have been established for prime contract awards to women-owned firm

Executive Order 12073, dated August 16, 1978, directed the Administ

tor of the General Services Administration to establish goals for procureme

from concerns in labor surplus areas. Public Law 96–302 authorizes both to

and partial labor surplus area set-asides.

Specific Guidance on Goal Setting Under 

Procurement Preference Programs

The head of each federal agency having procurement powers shall submit 

the Administrator of the Small Business Administration not later than Aug

20, 1993, the following information for fiscal year 1994 and not later th

August 19, 1994 the following information for fiscal year 1995:

(1) an estimate of the total dollar amount of all prime contracts regardle

of dollar value to be awarded during the fiscal year, including awards to no

profit organizations, educational institutions, all transportation services, a

real property leases; but excluding foreign military sales, nonappropriat

funds contracts, contracts to be awarded and performed entirely outside t

United States and, except for the General Services Administration (see Spec

Instruction (2), all Federal Supply Service Schedule orders.

(2) a goal for prime contract awards to be made to small business conce

during the fiscal year, expressed in dollars and as a percentage of (1) abov

(Note: This dollar goal includes the dollar goals in (3), (4), and (5) below.)

(3) a goal for prime contract awards to be made to the Small Business Adm

istration under the authority of Section 8(a) of the Small Business Act as amend

by Public Law 95–507, expressed in dollars and as a percentage of (1) abov

(4) a goal for prime contract awards to be made to small business co

cerns owned and controlled by socially and economically disadvantaged in

viduals, other than 8(a), expressed in dollars and as a percentage of (1) abov

Fiscal Years 1994 and 1995 3
(6) a goal for prime contract awards to business concerns in Labor S

plus Areas (LSA) on the basis of set-asides, expressed in dollars and as a p

centage of (1) above. (This includes all categories of LSA set-asides authoriz

by Public Law 96-302.)

(7) an estimate of the total dollar amount of subcontracts to be award

by all of an agency’s “reporting prime contractors” (as identified in Standa

Form 295) during the fiscal year.

(8) a goal for subcontracts to be awarded by prime contractors to sm

business concerns, expressed in dollars and as a percentage of (7) abov

(NOTE: This dollar amount includes dollar goals in (9) and (10) below.)

(9) a goal for subcontracts to be awarded by prime contractors to sm

business concerns owned and controlled by socially and economically disa

vantaged individuals, expressed in dollars and as a percentage of (7) above.

(10) a goal for subcontracts to be awarded by prime contractors to sm

business concerns owned and controlled by women, expressed in dollars a

as a percentage of (7) above.

(11) a detailed written presentation of the method used to establish t

estimates and goals submitted pursuant to paragraphs (1) through (10), alo

with copies of the historical data upon which the estimates and goals a

based. Information about the types, kinds and numbers of contracts involv

in the estimates submitted pursuant to paragraphs (2) through (10) is require

This information is needed to evaluate the estimates and the goals relat

thereto. In establishing contracting goals, identification and justificati

should be provided for each class of contracts and the projected total val

thereof determined by an agency to have little or no subcontract possibiliti

Special Instructions

(1) Fiscal year 1994 (and fiscal year 1995) goals are expected to refle

measurable improvement.

(2) Federal Supply Service Schedule contracting dollars should not be 

cluded in proposed goals. In line with the policy established in FY 1981, G

will submit separate, consolidated proposed figures and goals, i.e., for ite

(1) through (10) above, for all FSS contracts which will include all order 

quirements of all federal agencies.

(3) All goals are expressed in terms of dollars and percentages. Howev

if there is any variance, up or down, from the projected base amounts up

which goals are established, the percentage goal is the controlling factor a

will be used to measure actual attainment.

(4) Reporting agencies are encouraged to coordinate goals required 

Section 221(g) with the Minority Business Development Plans mandated 

Executive Order 12432 dated July 14, 1983.

366 The Annual Report on Federal Procurement Preference Goals
(6) Purchases paid for with credit cards do not require the reporting 

socio-economic status of the supplier or vendor. Establishing a system to tra

these transactions for procurement preference goal setting and reporti

would not be cost effective and would create an administrative paperwo

burden. Credit card purchases are therefore exempt.

(7) Because of the rapid growth of the women-owned business segme

of the small business community, we will consider the availability of the

firms, in addition to historical data, when negotiating the goal for prime co

tract awards to women-owned business.

Interim Reports

Interim reports on quarterly progress toward procurement preference goals a

no longer required.

Referrals to OFPP

The Administrator of the Small Business Administration shall, within 30 da

of receipt of the agency goals, respond to each agency expressing agreeme

or indicating reasons for disagreement. If interagency consultation fails to 

solve differences, such cases of disagreement shall be submitted by the A

ministrator of the Small Business Administration to the Administrator of t

Office of Federal Procurement Policy for final determination.

Reports on Agency Achievements Against Established Goals

1. The head of each federal agency having procurement powers shall report 

the Administrator of the Small Business Administration on the extent of achiev

ments against the goals established in paragraphs (2), (3), (4), (5), (7), (8), (

and (10) and to the Administrator of the General Services Administration on t

extent of achievement against the goals established in paragraph (6). With t

exception of subcontract goals, agency reports of goal achievements shall 

based upon official SF–279/SF–281 data as recorded at the Federal Procureme

Data Center. These reports shall be submitted no later than December 31, 19

for fiscal year 1994 and December 31, 1995 for fiscal year 1995. The repo

shall contain appropriate justification for failure to meet the goals established 

the preceding paragraphs. Section 503 of Public Law 100–656 also requires th

the report to the President noted in paragraph 2 below include the number a

dollar value of contracts awarded to business concerns owned and controll

by economically disadvantaged individuals through noncompetitive negot

tion, competition restricted to small disadvantaged concerns, competition 

stricted to small business concerns, and unrestricted competition. Please be p

pared to provide this information at the end of FY 1994 and FY 1995.

2. The Administrator of the SBA will analyze the reports submitted by t

individual agencies and submit a consolidated report to the President, as 

quired by Section 503 of Public Law 100–656.

Fiscal Years 1994 and 1995 3
Table 1 Small Business Share of Federal Prime Contracts:

Performance by Major Federal Agencies, FY 1994

and FY 1995 3

Table 2 Small Business Share of Federal Prime Contracts:

Performance by Other Federal Agencies, FY 1994 

and FY 1995 3

Table 3 Small Business Share of Federal Subcontracts:

Performance by Prime Contractors to Major Federal

Agencies, FY 1994 and FY 1995 3

Table 4 Small Business Share of Federal Subcontracts: 

Performance by Prime Contractors to Other Federal 

Agencies, FY 1994 and FY 1995 3

Table 5 8(a) Program Share of Federal Prime Contracts: 

Performance by Major Federal Agencies, 

FY 1994 and FY 1995 3

Table 6 8(a) Program Share of Federal Prime Contracts: 

Performance by Other Federal Agencies, FY 1994

and FY 1995 3

Table 7 Small and Disadvantaged Business Share of Federal 

Prime Contracts: Performance by Major Federal 

Agencies, FY 1994 and FY 1995 3

Table 8 Small and Disadvantaged Business Share of Federal 

Prime Contracts: Performance by Other Federal 

Agencies, FY 1994 and FY 1995 3

Table 9 Small and Disadvantaged Business Share of Federal 

Subcontracts: Performance by Prime Contractors to

Major Federal Agencies, FY 1994 and FY 1995 3

Table 10 Small and Disadvantaged Business Share of Federal 

Subcontracts: Performance by Prime Contractors to 

Other Federal Agencies, FY 1994 and FY 1995 3

Table 11 Women-Owned Small Business Share of Federal 

Prime Contracts: Performance by Major Federal 

Agencies, FY 1994 and FY 1995 3

Table 12 Women-Owned Small Business Share of Federal 

Prime Contracts: Performance by Other Federal 

Agencies, FY 1994 and FY 1995 3

368 The Annual Report on Federal Procurement Preference Goals
Table 14 Women-Owned Small Business Share of Federal 

Subcontracts: Performance by Prime Contractors to 

Other Federal Agencies, FY 1994 and FY 1995 3

Fiscal Years 1994 and 1995 3
370 The Annual Report on Federal Procurement Preference Goals Table 1 Small Business Share of Federal Prime Contracts: Performan

(Millions of Dollars) FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 162,441.5 36,732.1 22.6 173,629.2 43,222.5 Department of Agriculture 2,643.8 1,348.3 51.0 3,115.5 1,320.9 Department of Commerce 766.0 306.4 40.0 829.6 428.0 Department of Defense 103,900.0 21,403.4 20.6 110,033.0 25,274.0 Department of Education 310.0 86.8 28.0 376.6 95.4 Department of Energy 16,480.0 3,029.1 18.4 16,375.4 3,304.4 Department of Health and

Human Services 2,818.1 1,099.0 39.0 3,163.0 1,229.9 

Department of Housing and

Urban Development 906.5 353.5 39.0 668.9 316.5 

Department of the Interior 1,292.8 711.0 55.0 1,289.2 769.0 Department of Justice 1,964.0 677.6 34.5 1,941.3 777.4 Department of Labor 766.8 191.5 24.9 871.7 194.2 Department of State 500.0 225.0 45.0 636.1 287.3 Department of Transportation 3,363.1 1,025.7 30.5 2,513.8 1,270.3 Department of the Treasury 1,500.0 470.0 31.3 1,278.5 539.5 Department of Veterans

Affairs 2,000.0 700.0 35.0 4,655.6 1,766.8 

Environmental Protection

Agency 1,400.0 350.0 25.0 1,144.8 264.2 
Fiscal Years 1994 and 1995 371

General Services Administration

Federal Supply

Schedule* 2,465.3 817.1 74.6 2,806.8 760.2 

Non-Federal Supply 

Schedule 5,443.0 1,741.8 32.0 6,531.9 2,472.3 

National Aeronautics and

Space Administration 10,643.0 1,117.0 10.5 10,109.0 1,030.2 

Tennessee Valley Authority 1,945.0 583.5 30.0 2,956.2 524.7 U.S. Agency for International

Development 433.9 152.7 35.2 1,431.1 270.7 

All Others 900.2 342.7 38.1 901.0 326.6 

Note: Dollar or percentage figures may vary slightly because of rounding or neces

agencies. Information not given in written reports was obtained by telephone.

*GSA FSS goal percentages are based on number of contracts awarded.Source: U.S. Small Business Administration, Office of Government Contracting, 1
Table 2 Small Business Share of Federal Prime Contracts: Performan

(Thousands of Dollars)

FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 900,166.8 342,691.1 38.1 900,953.3 326,619.3 Administrative Conference of

the United States

American Battle Monuments

Commission

Board for International

Broadcasting

Commodity Futures Trading

Commission 7,000.0 1,078.0 15.4 10,530.0 1,742.0 

Consumer Product Safety

Commission 2,214.8 1,328.9 60.0 5,912.0 3,055.0 

Corporation for National 

and Community Service 22,586.0 15,797.3 70.0 8,021.0 887.5 

Equal Employment 

Opportunity Commission 9,500.0 5,700.0 60.0 7,001.0 3,866.0 

Executive Office of the

President 21,000.0 11,130.0 53.0 18,415.9 8,285.3 

Export-Import BankFarm Credit Administration Federal Communications

Commission 22,157.0 13,515.8 61.0 41,592.0 23,682.6 

Federal Election Commission 2,075.0 664.0 32.0 3,267.0 1,132.0 Federal Emergency 

Management Agency 200,000.0 60,000.0 30.0 244,754.0 61,670.7 

Federal Energy Regulatory

Commission 19,047.0 4,722.0 24.8 24,682.5 8,034.3 

Federal Maritime Commission 779.0 350.6 45.0 607.2 228.5 Federal Mediation and

Conciliation Service

372 The Annual Report on Federal Procurement Preference Goals
Federal Mine Safety and

Health Review Commission

Federal Trade Commission 6,000.0 3,900.0 65.0 8,726.3 6,003.8 International Trade 

Administration 1,911.0 1,320.1 69.0 1,527.0 1,145.0 

Interstate Commerce 

Commissionn 1,150.0 800.0 66.0 1,328.0 573.0 

Merit Systems 

Protection Board 700.0 609.0 87.0 933.0 549.0 

National Archives and

Records Administration 30,293.0 16,523.9 54.0 

National Capital Planning

Commission 792.0 625.0 78.9 

National Endowment 

for the Arts 900.0 750.0 83.0 1,104.0 1,071.0 

National Endowment 

for the Humanities 1,550.0 1,255.5 81.0 1,227.0 914.0 

National Labor Relations Board 4,430.0 3,265.0 74.0 7,322.0 5,962.0 National Science Foundation 162,900.0 11,000.0 6.9 179,600.0 24,700.0 National Transportation 

Safety Board 2,000.0 900.0 45.0 2,000.0 900.0 

Nuclear Regulatory Commission 85,000.0 40,000.0 47.06 95,288.1 49,098.9 Occupational Safety and Health

Administration 400.0 250.0 63.0 

Office of Personnel 

Management 86,576.0 33,765.0 39.0 97,948.0 49,280.0 

Pennsylvania Avenue 

Development Corporation 2,075.5 1,520.0 73.0 

Securities and Exchange

Commission

Selective Service System 150.0 75.0 50.0 Small Business Administration 27,000.0 14,850.0 55.0 29,477.0 20,251.0 Smithsonian Institution 100,000.0 56,000.0 56.0 113,712.3 53,498.2 U.S. Arms Control and

Disarmament Agency 4,980.0 996.0 20.0 5,526.0 2,077.0 

U.S. Commission on Civil RightsU.S. Information Agency 75,000.0 40,000.0 53.0 

Note: Dollar or percentage figures may vary slightly because of rounding or necessary correcti

given in written reports was obtained by telephone. Where no figures are shown, the agency either did or FY 1995.

Source: U.S. Small Business Administration, Office of Government Contracting, 1996.

Fiscal Years 1994 and 1995 373
374 The Annual Report on Federal Procurement Preference Goals Table 3 Small Business Share of Federal Subcontracts: Performance 

FY 1994 and FY 1995 (Millions of Dollars) FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 51,303.5 19,367.6 37.8 56,861.0 23,821.0 Department of Agriculture 724.7 319.6 44.1 294.8 138.3 Department of Commerce 100.9 40.4 40.0 155.3 78.1 Department of Defense 40,700.0 15,466.0 38.0 45,032.0 19,160.0 Department of Education 7.0 2.8 40.0 8.3 3.3 Department of Energy 800.0 320.0 40.0 1,111.8 626.3 Department of Health and

Human Services 289.0 135.8 47.0 339.5 115.2 

Department of Housing and

Urban Development 101.0 25.3 25.0 120.6 51.1 

Department of the Interior 50.0 22.5 45.0 186.3 78.1 Department of Justice 400.0 208.8 52.2 216.9 128.6 Department of Labor 120.2 75.2 62.5 176.1 111.2 Department of State 34.0 15.3 45.0 40.1 22.6 Department of Transportation 241.7 120.9 50.0 384.9 210.7 Department of the Treasury 325.0 100.0 30.8 579.6 264.1 Department of Veterans

Affairs 800.0 328.0 41.0 315.6 151.7 

Environmental Protection

Agency 150.0 84.0 56.0 282.3 115.1 
Fiscal Years 1994 and 1995 375

General Services 

Administration 2,228.0 713.0 32.0 1,984.0 727.3 

National Aeronautics and

Space Administration 3,834.0 1,265.0 33.0 4,979.0 1,622.0 

Tennessee Valley Authority 250.0 75.0 30.0 412.7 120.5 U.S. Agency for International

Development 7.8 4.2 54.4 104.2 50.8 

All Others 140.2 45.8 32.7 137.0 46.0 

Note: Dollar or percentage figures may vary slightly because of rounding or neces

agencies. Information not given in written reports was obtained by telephone.

Source: U.S. Small Business Administration, Office of Government Contracting, 1
Table 4 Small Business Share of Federal Subcontracts: Performance 

FY 1994 and FY 1995 (Thousands of Dollars)

FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 140,162.9 45,848.0 32.7 137,027.1 46,027.1 Administrative Conference of

the United States

American Battle Monuments

Commission

Board for International

Broadcasting

Commodity Futures Trading

Commission

Consumer Product Safety

Commission

Corporation for National &

Community Service 864.6 636.6 74.0

Equal Employment Opportunity

Commission

Executive Office of the

President 201.0 90.5 45.0 2,927.6 303.3 

Export-Import Bank Farm Credit Administration Federal Communications

Commission

Federal Election Commission Federal Emergency Management

Agency 8,500.0 2,635.0 31.0 5,240.0 2,330.0 

Federal Energy Regulatory

Commission 2,189.0 743.0 33.9 5,001.7 2,255.0 

Federal Maritime Commission 

376 The Annual Report on Federal Procurement Preference Goals
Federal Mediation and

Conciliation Service

Federal Mine Safety and

Health Review Commission

Federal Trade CommissionInternational Trade AdministrationInterstate Commerce 

Commission

Merit Systems

Protection Board 

National Archives and 

Records Administration 1,634.3 1,452.9 89.0 1,300.0 1,200.0 

National Capital Planning

Commission

National Endowment 

for the Arts 

National Endowment 

for the Humanities

National Labor Relations Board National Science Foundation 105,700.0 31,200.0 29.5 102,200.0 32,600.0 National Transportation 

Safety Board

Nuclear Regulatory Commission 3,000.0 1,950.0 65.0 1,983.0 1,269.0 Occupational Safety and 

Health Administration

Office of Personnel Management 15,074.0 5,940.0 39.4 18,343.0 6,163.0 Pennsylvania Avenue Development Corporation Securities and Exchange

Commission

Selective Service SystemSmall Business AdministrationSmithsonian Institution 2,000.0 800.0 40.0 1,331.8 1,106.8 U.S. Arms Control and

Disarmament Agency

U.S. Commission on Civil RightsU.S. Information Agency 1,000.0 400.0 40.0 1,000.0 600.0 

Note: Dollar or percentage figures may vary slightly because of rounding or necessary corrections 

written reports was obtained by telephone. Where no figures are shown, the agency either did not goal 

Source: U.S. Small Business Administration, Office of Government Contracting, 1996.

Fiscal Years 1994 and 1995 377
378 The Annual Report on Federal Procurement Preference Goals Table 5 8(a) Program Share of Federal Prime Contracts: Performance 

(Millions of Dollars) FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 162,441.5 2,826.2 1.7 173,629.2 6,466.1 Department of Agriculture 2,643.8 132.2 5.0 3,115.5 111.1 Department of Commerce 766.0 84.3 11.0 829.6 136.6 Department of Defense 103,900.0 01 0 110,033.0 3,307.0 

Department of Education 310.0 23.3 7.5 376.6 33.3 Department of Energy 16,480.0 494.4 3.0 16,375.4 445.2 Department of Health and

Human Services 2,818.1 253.6 9.0 3,163.0 311.4 

Department of Housing and

Urban Development 906.5 54.4 6.0 668.9 70.4 

Department of the Interior 1,292.8 90.5 7.0 1,289.2 141.4 Department of Justice 1,964.0 155.2 7.9 1,941.3 151.8 Department of Labor 766.8 42.1 5.5 871.7 38.0 Department of State 500.0 44.0 8.8 636.1 96.0 Department of Transportation 3,363.1 386.8 11.5 2,513.8 383.7 Department of the Treasury 1,500.0 160.0 10.7 1,278.5 207.1 Department of Veterans

Affairs 2,000.0 90.0 4.5 4,655.6 217.4 

Environmental Protection

Agency 1,400.0 95.2 6.8 1,144.8 60.7 
Fiscal Years 1994 and 1995 379

General Services Administration

Federal Supply Schedule2 2,465.3 0.62 0.1 2,806.8 3.5 

Non-Federal Supply 

Schedule 5,443.0 217.7 4.0 6,531.9 206.3 

National Aeronautics and

Space Administration 10,643.0 298.0 2.8 10,109.0 342.4 

Tennessee Valley Authority 1,945.0 48.6 2.5 2,956.2 26.0 U.S. Agency for International

Development 433.9 45.1 10.4 1,431.1 65.6 

All Others 900.2 110.2 12.2 901.0 111.2 

Note: Dollar or percentage figures may vary slightly because of rounding or nec

agencies. Information not given in written reports was obtained by telephone.

1The Department of Defense (DOD) has, by specific legislation, a goal of 5 perc

never chosen to recognize or provide separate goals for 8(a) and other SDB awards, SDB participation.

2GSA FSS goal percentages are based on number of contracts awarded.

Source: U.S. Small Business Administration, Office of Government Contracting, 1
Table 6 8(a) Program Share of Federal Prime Contracts: Performance 

(Thousands of Dollars)

FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 900,166.8 110,196.0 12.2 900,953.3 111,247.9 Administrative Conference 

of the United States

American Battle Monuments

Commission

Board for International

Broadcasting

Commodity Futures Trading

Commission 7,000.0 82.0 1.2 10,530.0 953.0 

Consumer Product Safety

Commission 2,214.8 553.7 25.0 5,912.0 1,476.0 

Corporation for National 

and Community Service 22,586.0 15,797.3 70.0 

Equal Employment 

Opportunity Commission 9,500.0 950.0 10.0 7,001.0 943.0 

Executive Office of the

President 21,000.0 4,620.0 22.0 18,415.9 3,379.7 

Export-Import BankFarm Credit Administration Federal Communications

Commission 22,157.0 3,323.6 15.0 41,592.0 13,296.9 

Federal Election Commission 2,075.0 0 0 3,267.0 0 Federal Emergency 

Management Agency 200,000.0 20,000.0 10.0 244,754.0 16,803.3 

Federal Energy Regulatory

Commission 19,047.0 3,540.0 18.6 24,682.5 5,737.8 

Federal Maritime Commission 779.0 0 0 607.2 0 Federal Mediation and

Conciliation Service

Federal Mine Safety and

Health Review Commission

380 The Annual Report on Federal Procurement Preference Goals
Federal Trade Commission 6,000.0 720.0 12.0 8,726.3 1,195.3 

International Trade Administration 1,911.0 269.5 14.0 Interstate Commerce 

Commission 1,150.0 0 0 1,328.0 0 

Merit Systems 

Protection Board 700.0 0 0 933.0 43.0 

National Archives and 

Records Administration 30,293.0 3,675.4 12.0 

National Capital Planning

Commission 792.0 75.0 9.5 

National Endowment 

for the Arts 900.0 200.0 22.0 1,104.0 315.0 

National Endowment for the

Humanities 1,550.0 0 0 1,227.0 0 

National Labor Relations 

Board 4,430.0 949.0 21.0 7,322.0 4,386.0 

National Science 

Foundation 162,900.0 3,200.0 2.0 179,600.0 3,500.0 

National Transportation 

Safety Board 2,000.0 400.0 20.0 2,000.0 Not Rep

Nuclear Regulatory 

Commission 85,000.0 22,000.0 25.88 95,288.1 28,007.0 

Occupational Safety and 

Health Administration 400.0 0 0 

Office of Personnel 

Management 86,576.0 3,896.0 4.5 97,948.0 5,952.0 

Pennsylvania Avenue 

Development Corporation 2,075.5 505.0 24.0 

Securities and Exchange

Commission

Selective Service System 150.0 10.5 7.0 Small Business 

Administration 27,000.0 10,260.0 38.0 29,477.0 12,397.0 

Smithsonian Institution 100,000.0 10,000.0 10.0 113,712.3 12,459.9 U.S. Arms Control and

Disarmament Agency 4,980.0 169.0 3.4 5,526.0 403.0 

U.S. Commission on Civil

Rights

U.S. Information Agency 75,000.0 5,000.0 6.6 

Note: Dollar or percentage figures may vary slightly because of rounding or necessary corre

not given in written reports was obtained by telephone. Where no figures are shown, the agency for FY 1994 or FY 1995.

Source: U.S. Small Business Administration, Office of Government Contracting, 1996.

Fiscal Years 1994 and 1995 381
382 The Annual Report on Federal Procurement Preference Goals Table 7 Small and Disadvantaged Business Share of Federal Prime C

FY 1994 and FY 1995 (Millions of Dollars) FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 162,441.5 6,914.0 4.3 173,629.2 5,487.0 Department of Agriculture 2,643.8 132.2 5.0 3,115.5 55.9 Department of Commerce 766.0 30.6 4.0 829.6 55.2 Department of Defense1 103,900.0 5,298.9 5.1 110,033.0 3,555.0 Department of Education 310.0 12.4 4.0 376.6 10.0 Department of Energy 16,480.0 543.8 3.3 16,375.4 533.9 Department of Health and

Human Services 2,818.1 84.5 3.0 3,163.0 94.0 

Department of Housing and

Urban Development 906.5 87.9 9.7 668.9 79.7 

Department of the Interior 1,292.8 51.7 4.0 1,289.2 54.9 Department of Justice 1,964.0 58.9 3.0 1,941.3 30.0 Department of Labor 766.8 47.2 6.2 871.7 47.2 Department of State 500.0 25.0 5.0 636.1 44.7 Department of Transportation 3,363.1 33.6 1.0 2,513.8 203.9 Department of the Treasury 1,500.0 39.0 2.6 1,278.5 21.1 Department of Veterans

Affairs 2,000.0 60.0 3.0 4,655.6 146.6 

Environmental Protection

Agency 1,400.0 35.0 2.5 1,144.8 20.1 
Fiscal Years 1994 and 1995 383

General Services Administration

Federal Supply Schedule2 2,465.3 11.82 2.5 2,806.8 12.4 

Non-Federal Supply 

Schedule 5,443.0 163.3 3.0 6,531.9 193.2 

National Aeronautics and

Space Administration 10,643.0 80.0 0.75 10,109.0 127.3 

Tennessee Valley Authority 1,945.0 77.8 4.0 2,956.2 61.9 U.S. Agency for International

Development 433.9 23.9 5.5 1,431.1 115.4 

All Others 900.2 16.5 1.8 901.0 24.6 

Note: Dollar or percentage figures may vary slightly because of rounding or nece

agencies. Information not given in written reports was obtained by telephone.

1The Department of Defense (DOD) has, by specific legislation, a goal of 5 perc

never chosen to recognize or provide separate goals for 8(a) and other SDB awards, SDB participation.

2GSA FSS goal percentages are based on number of contracts awarded.
Table 8 Small and Disadvantaged Business Share of Federal Prime C

FY 1994 and FY 1995 (Thousands of Dollars)

FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 900,166.8 16,451.6 1.8 900,953.3 24,587.0 Administrative Conference 

of the United States

American Battle Monuments

Commission

Board for International

Broadcasting

Commodity Futures Trading

Commission 7,000.0 0 0 10,530.0 0 

Consumer Product Safety

Commission 2,214.8 221.5 10.0 5,912.0 262.0 

Corporation for National 

and Community Service 22,586.0 0 0 8,021.0 30.0 

Equal Employment 

Opportunity Commission 9,500.0 475.0 5.0 7,001.0 590.0 

Executive Office of the

President 21,000.0 840.0 4.0 18,415.9 376.4 

Export-Import BankFarm Credit Administration Federal Communications

Commission 22,157.0 310.2 1.4 41,592.0 199.8 

Federal Election 

Commission 2,075.0 0 0 3,267.0 0 

Federal Emergency 

Management Agency 200,000.0 2,400.0 1.2 244,754.0 7,442.4 

Federal Energy Regulatory

Commission 19,047.0 92.0 0.5 24,682.5 262.4 

Federal Maritime Commission 779.0 0 0 607.2 0 

384 The Annual Report on Federal Procurement Preference Goals
Federal Mediation and

Conciliation Service

Federal Mine Safety and Health

Review Commission

Federal Trade Commission 6,000.0 60.0 1.0 8,726.3 343.4 International Trade Administration 1,911.5 0 0 Interstate Commerce 

Commission 1,150.0 20.0 2.0 1,328.0 47.0 

Merit Systems Protection Board 700.0 7.0 1.0 933.0 8.0 National Archives and 

Records Administration 30,293.0 341.0 1.1 

National Capital Planning

Commission 792.0 50.0 6.3 

National Endowment for the Arts 900.0 25.0 3.0 1,104.0 46.0 National Endowment for 

Humanities 1,550.0 100.0 6.0 1,227.0 29.0 

National Labor 

Relations Board 4,430.0 132.9 3.0 7,322.0 4.0 

National Science Foundation 162,900.0 1,500.0 0.9 179,600.0 1,700.0 National Transportation 

Safety Board 2,000.0 100.0 5.0 2,000.0 100.0 

Nuclear Regulatory 

Commission 85,000.0 300.0 0.35 95,288.1 233.4 

Occupational Safety and 

Health Administration 400.0 100.0 25.0 

Office of Personnel 

Management 86,576.0 4,385.0 5.1 97,948.0 7,013.0 

Pennsylvania Avenue 

Development Corporation 2,075.5 410.0 20.0 

Securities and Exchange

Commission

Selective Service System 150.0 12.0 8.0200.0 16.0 8.0 1Small Business 

Administration 27,000.0 540.0 2.0 29,477.0 2,763.0 

Smithsonian Institution 100,000.0 3,000.0 3.0 113,712.3 2,885.2 U.S. Arms Control and

Disarmament Agency 4,980.0 30.0 0.6 5,526.0 282.0 

U.S. Commission on Civil RightsU.S. Information Agency 75,000.0 1,000.0 1.3 

Note: Dollar or percentage figures may vary slightly because of rounding or necessary corrections 

written reports was obtained by telephone. Where no figures are shown, the agency either did not goal 

Source: U.S. Small Business Administration, Office of Government Contracting, 1996.

Fiscal Years 1994 and 1995 385
386 The Annual Report on Federal Procurement Preference Goals Table 9 Small and Disadvantaged Business Share of Federal Subcon

Agencies, FY 1994 and FY 1995 (Millions of Dollars) FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 51,303.5 2,941.2 5.7 56,861.0 3,758.7 Department of Agriculture 724.7 36.2 5.0 294.8 6.6 Department of Commerce 100.9 15.1 15.0 155.3 13.4 Department of Defense 40,700.0 2,035.0 5.0 45,032.0 2,600.0 Department of Education 7.0 0.5 6.5 8.3 0.6 Department of Energy 800.0 68.8 8.6 1,111.8 107.2 Department of Health and

Human Services 289.0 24.6 8.5 339.5 21.3 

Department of Housing and

Urban Development 101.0 19.2 19.0 120.6 17.0 

Department of the Interior 50.0 3.3 6.5 186.3 9.0 Department of Justice 400.0 42.0 10.5 216.9 14.9 Department of Labor 120.2 15.4 12.8 176.1 28.0 Department of State 34.0 1.7 5.0 40.1 3.4 Department of Transportation 241.7 25.4 10.5 384.9 84.9 Department of the Treasury 325.0 16.3 5.0 579.6 40.5 Department of Veterans

Affairs 800.0 48.0 6.0 315.6 48.9 

Environmental Protection

Agency 150.0 18.0 12.0 282.3 23.9 
Fiscal Years 1994 and 1995 387

General Services 

Administration 2,228.0 133.7 6.0 1,984.0 95.7 

National Aeronautics and

Space Administration 3,834.0 402.6 10.5 4,979.0 598.9 

Tennessee Valley Authority 250.0 25.0 10.0 412.7 12.9 U.S. Agency for International

Development 7.8 0.9 11.5 104.2 22.0 

All Others 140.2 9.5 6.8 137.0 9.6 

Note: Dollar or percentage figures may vary slightly because of rounding or neces

agencies. Information not given in written reports was obtained by telephone.

Source: U.S. Small Business Administration, Office of Government Contracting, 1
Table 10 Small and Disadvantaged Business Share of Federal Subco

Agencies, FY 1994 and FY 1995 (Thousands of Dollars)

FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 140,162.9 9,477.2 6.8 137,027.1 9,648.3 Administrative Conference 

of the United States

American Battle Monuments

Commission

Board for International

Broadcasting

Commodity Futures Trading

Commission

Consumer Product Safety

Commission

Corporation for National Service 864.6 352.8 41.0Equal Employment Opportunity

Commission

Executive Office of the

President 201.0 46.2 23.0 2,927.6 52.7 

Export-Import BankFarm Credit Administration Federal Communications

Commission

Federal Election CommissionFederal Emergency 

Management Agency 8,500.0 297.5 3.5 5,240.0 404.0 

Federal Energy Regulatory

Commission 2,189.0 425.0 19.4 5,001.7 768.4 

Federal Maritime Commission Federal Mediation and

Conciliation Service

Federal Mine Safety and Health

Review Commission

388 The Annual Report on Federal Procurement Preference Goals
Federal Trade Commission

International Trade 

Administration

Interstate Commerce 

Commission

Merit Systems 

Protection Board 

National Archives and 

Records Administration 1,634.3 4.7 0.3 

National Capital Planning

Commission

National Endowment

for the Arts

National Endowment 

for the Humanities

National Labor

Relations Board 

National Science 

Foundation 105,700.0 6,700.0 6.3 102,200.0 6,300.0 

National Transportation 

Safety Board 

Nuclear Regulatory 

Commission 3,000.0 375.0 12.5 1,983.0 221.0 

Occupational Safety and 

Health Administration

Office of Personnel

Management 15,074.0 1,131.0 7.5 18,343.0 1,091.0 

Pennsylvania Avenue 

Development Corporation

Securities and Exchange

Commission

Selective Service SystemSmall Business 

Administration

Smithsonian Institution 2,000.0 70.0 3.5 1,331.8 811.2 U.S. Arms Control and

Disarmament Agency

U.S. Commission on Civil RightsU.S. Information Agency 1,000.0 75.0 7.5 

Note: Dollar or percentage figures may vary slightly because of rounding or necessary correct

not given in written reports was obtained by telephone. Where no figures are shown, the agency efor FY 1994 and FY 1955.

Source: U.S. Small Business Administration, Office of Government Contracting, 1996.

Fiscal Years 1994 and 1995 389
390 The Annual Report on Federal Procurement Preference Goals Table 11 Women-Owned Small Business Share of Federal Prime Co

FY 1994 and FY 1995 (Millions of Dollars) FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 162,441.5 3,360.1 2.1 173,629.2 3,946.2 Department of Agriculture 2,643.8 92.5 3.5 3,115.5 87.4 Department of Commerce 766.0 38.3 5.0 829.6 54.4 Department of Defense 103,900.0 1,766.3 1.7 110,033.0 1,994.0 Department of Education 310.0 15.5 5.0 376.6 12.7 Department of Energy 16,480.0 415.0 2.5 16,375.4 505.5 Department of Health and

Human Services 2,818.1 113.2 4.0 3,163.0 816.3 

Department of Housing and

Urban Development 906.5 63.5 7.0 668.9 49.9 

Department of the Interior 1,292.8 53.0 4.1 1,289.2 63.5 Department of Justice 1,964.0 58.9 3.0 1,941.3 49.2 Department of Labor 766.8 39.8 5.2 871.7 24.1 Department of State 500.0 25.0 5.0 636.1 42.2 Department of Transportation 3,363.1 67.3 2.0 2,513.8 96.9 Department of the Treasury 1,500.0 78.0 5.2 1,278.5 66.7 Department of Veterans

Affairs 2,000.0 60.0 3.0 4,655.6 226.7 

Environmental Protection

Agency 1,400.0 70.0 5.0 1,144.8 26.5 
Fiscal Years 1994 and 1995 391

General Services Administration

Federal Supply Schedule* 2,465.3 46.2 6.3 2,806.8 47.8 Non-Federal Supply 

Schedule 5,443.0 163.3 3.0 6,531.9 135.8 

National Aeronautics and

Space Administration 10,643.0 112.0 1.05 10,109.0 159.1 

Tennessee Valley Authority 1,945.0 31.1 1.6 2,956.2 43.8 U.S. Agency for International

Development 433.9 21.7 5.0 1,431.1 33.1 

All Others 900.2 29.5 3.3 901.0 40.6 

Note: Dollar or percentage figures may vary slightly because of rounding or neces

agencies. Information not given in written reports was obtained by telephone.

* GSA FSS goal percentages are based on number of contracts awarded.Source: U.S. Small Business Administration, Office of Government Contracting, 1
Table 12 Women-Owned Small Business Share of Federal Prime Co

FY 1994 and FY 1995 (Thousands of Dollars)

FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 900,166.8 29,466.5 3.3 900,953.3 40,630.2 Administrative Conference 

of the United States

American Battle Monuments

Commission

Board for International

Broadcasting

Commodity Futures Trading

Commission 7,000.0 0 0 10,530.0 681.0 

Consumer Product Safety

Commission 2,214.8 332.2 15.0 5,912.0 994.0 

Corporation for National 

and Commuity Service 22,586.0 2,036.0 9.0 

Equal Employment 

Opportunity Commission 9,500.0 665.0 7.0 7,001.0 397.0 

Executive Office of the

President 21,000.0 1,050.0 5.0 18,415.9 901.2 

Export-Import BankFarm Credit Administration Federal Communications

Commission 22,157.0 88.6 0.4 41,592.0 145.8 

Federal Election Commission 2,075.0 125.0 6.0 3,267.0 195.0 Federal Emergency 

Management Agency 200,000.0 4,400.0 2.2 244,754.0 10,450.5 

Federal Energy Regulatory

Commission 19,047.0 700.0 3.7 24,682.5 1,432.9 

Federal Maritime Commission 779.0 0 0 607.2 0 Federal Mediation and

Conciliation Service

392 The Annual Report on Federal Procurement Preference Goals
Federal Mine Safety and Health

Review Commission

Federal Trade Commission 6,000.0 180.0 3.0 8,726.3 159.8 International Trade Administration 1,911.0 0 0 Interstate Commerce 

Commission 1,150.0 44.0 4.0 1,328.0 16.0 

Merit Systems

Protection Board 700.0 210.0 30.0 933.0 247.0 

National Archives and

Records Administration 30,293.0 2,306.7 7.6 

National Capital Planning

Commission 792.0 42.0 5.3 

National Endowment 

for the Arts 900.0 40.0 4.0 1,104.0 66.0 

National Endowment for the

Humanities 1,550.0 450.0 29.0 1,227.0 459.0 

National Labor Relations Board 4,430.0 672.0 15.0 7,322.0 646.0 National Science Foundation 162,900.0 1,600.0 1.0 179,600.0 1,500.0 National Transportation 

Safety Board 2,000.0 400.0 20.0 2,000.0 200.0 

Nuclear Regulatory

Commission 85,000.0 2,000.0 2.35 95,288.1 1,063.8 

Occupational Safety and 

Health Administration 400.0 70.0 18.0 

Office of Personnel 

Management 86,576.0 3,896.0 4.5 97,948.0 14,084.0 

Pennsylvania Avenue 

Development Corporation 2,075.5 24.0 1.0 

Securities and Exchange

Commission

Selective Service System 150.0 15.0 10.0 Small Business Administration 27,000.0 1,350.0 5.0 29,477.0 1,243.0 Smithsonian Institution 100,000.0 3,000.0 3.0 113,712.3 5,569.2 U.S. Arms Control and

Disarmament Agency 4,980.0 20.0 0.4 5,526.0 179.0 

U.S. Commission on Civil RightsU.S. Information Agency 75,000.0 3,750.0 5.0 

Note: Dollar or percentage figures may vary slightly because of rounding or necessary correct

not given in written reports was obtained by telephone. Where no figures are shown, the agency efor FY 1994 or FY 1995.

Source: U.S. Small Business Administration, Office of Government Contracting, 1

Fiscal Years 1994 and 1995 393
394 The Annual Report on Federal Procurement Preference Goals Table 13 Women-Owned Small Business Share of Federal Subcontr

Agencies, FY 1994 and FY 1995 (Millions of Dollars) FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 51,303.5 1,212.0 2.4 56,861.0 1,699.1 Department of Agriculture 724.7 14.5 2.0 294.8 4.0 Department of Commerce 100.9 5.0 5.0 155.3 6.1 Department of Defense 40,700.0 854.7 2.1 45,032.0 1,233.0 Department of Education 7.0 0.4 6.0 8.3 0.5 Department of Energy 800.0 16.0 2.0 1,111.8 58.9 Department of Health and

Human Services 289.0 2.9 1.0 339.5 7.5 

Department of Housing and

Urban Development 101.0 7.1 7.0 120.6 3.0 

Department of the Interior 50.0 1.0 2.0 186.3 4.6 Department of Justice 400.0 26.0 6.5 216.9 8.4 Department of Labor 120.2 6.0 5.0 176.1 10.0 Department of State 34.0 1.7 5.0 40.1 2.1 Department of Transportation 241.7 7.3 3.0 384.9 21.4 Department of the Treasury 325.0 9.8 3.0 579.6 26.9 Department of Veterans

Affairs 800.0 16.0 2.0 315.6 Not Re

Environmental Protection

Agency 150.0 7.5 5.0 282.3 10.5 
Fiscal Years 1994 and 1995 395

General Services 

Adminstration 2,228.0 66.8 3.0 1,984.0 61.7 

National Aeronautics and

Space Administration 3,834.0 153.0 4.0 4,979.0 215.4 

Tennessee Valley Authority 250.0 12.5 5.0 412.7 11.9 U.S. Agency for International

Development 7.8 0.4 5.0 104.2 10.5 

All Others 140.2 3.4 2.4 137.0 2.7 

Note: Dollar or percentage figures may vary slightly because of rounding or nece

agencies. Information not given in written reports was obtained by telephone.

Source: U.S. Small Business Administration, Office of Government Contracting, 1
Table 14 Women-Owned Small Business Share of Federal Subcontr

Agencies, FY 1994 and FY 1995 (Thousands of Dollars)

FY 1995

Agency Projections

j

Actual Awards

Small Business Share Small Busine

Total Total 

Dollars Dollars Percent Dollars Dollars 

Total 140,162.9 3,379.5 2.4 137,027.1 2,734.5 Administrative Conference 

of the United States

American Battle Monuments

Commission

Board for International

Broadcasting

Commodity Futures Trading

Commission

Consumer Product Safety

Commission

Corporation for National 

and Community Service 864.6 0 0

Equal Employment Opportunity

Commission

Executive Office of the

President 201.0 10.1 5.0 2,927.6 102.6 

Import BankFarm Credit Administration Federal Communications

Commission

Federal Election CommissionFederal Emergency 

Management Agency 8,500.0 255.0 3.0 5,240.0 23.0 

Federal Energy Regulatory

Commission 2,189.0 13.0 0.6 5,001.7 76.5 

Federal Maritime Commission Federal Mediation and

Conciliation Service

396 The Annual Report on Federal Procurement Preference Goals
Federal Mine Safety and Health

Review Commission

Federal Trade CommissionInternational Trade AdministrationInterstate Commerce 

Commission 

Merit Systems Protection Board National Archives and 

Records Administration 1,634.3 2.4 0.1 

National Capital Planning

Commission

National Endowment

for the Arts 

National Endowment for the

Humanities

National Labor 

Relations Board 

National Science Foundation 105,700.0 2,100.0 2.0 102,200.0 1,800.0 National Transportation 

Safety Board 

Nuclear Regulatory 

Commission 3,000.0 100.0 3.33 1,983.0 24.0 

Occupational Safety and Health 

Administration

Office of Personnel 

Management 15,074.0 754.0 5.0 18,343.0 701.0 

Pennsylvania Avenue 

Development Corporation

Securities and Exchange

Commission

Selective Service SystemSmall Business AdministrationSmithsonian Institution 2,000.0 70.0 3.5 1,331.8 7.4 U.S. Arms Control and

Disarmament Agency

U.S. Commission on Civil RightsU.S. Information Agency 1,000.0 75.0 7.5 

Note: Dollar or percentage figures may vary slightly because of rounding or necessary corre

not given in written reports was obtained by telephone. Where no figures are shown, the agency efor FY 1994 or FY 1995.

Source: U.S. Small Business Administration, Office of Government Contracting, 1996.

Fiscal Years 1994 and 1995 397

p. 398 Blank—p. 399 fols.
Actions, reported in bulk: federal procurement contract actions of $25,000 

less. Federal agencies are required to report a summary of such actions 

the Federal Procurement Data Center each quarter.

Actions, reported individually: federal procurement contract actions ov

$25,000. Federal agencies are required to file a detailed report, Standa

Form 2790, for each of these contract actions with the Federal Procu

ment Data Center. Prior to FY 1983 for the Department of Defense, a

FY 1986 for civilian agencies, the dollar threshold for reporting detail

information on procurement contracts was $10,000.

Bankruptcy: condition in which a business cannot meet its debt obligatio

and petitions a federal district court for either reorganization of its de

or liquidation of its assets.

Business birth (entry): formation of a new establishment or enterprise.

Business dissolution: for enumeration purposes, the absence from any curre

record of a business that was present in the prior time period.

Business failure: the closure of a business causing a loss to at least one credit

Capital expenditures: business spending on additional plant, equipment, a

inventory.

Code of Federal Regulations: codification of the general and permanent ru

of the federal government published in the Federal Register.

Corporation: firm granted a state charter to incorporate, thereby limiting t

liability of its owner(s).

Cost-type contract: a contract that provides for payment to the contractor 

allowable and reasonable costs plus a profit. Under such an arrang

ment, there is less financial risk to the contractor.

Current Population Survey (CPS): monthly survey conducted by the Bureau 

the Census that provides estimates of the number of persons working, t

number unemployed, and related employment data.

Debt capital: business financing that normally requires periodic interest pa

ments and repayment of the principal within a specified time.

8(a) program: program, authorized under the Small Business Act, that dire

federal contracts to small businesses owned and operated by socially a

economically disadvantaged individuals.

Enterprise: aggregation of all establishments owned by a parent company. 

enterprise may consist of a single, independent establishment, or it c

include subsidiaries or other branch establishments under the same ow

ership and control.

page 399 = no fol
Establishment: a single-location business unit, which may be independent

called a single-establishment enterprise—or owned by a parent enterpri

Financial intermediary: a financial institution that acts as the intermediary b

tween borrowers and lenders. Banks, savings and loan associations, 

nance companies, and venture capital companies are major financial 

termediaries in the United States.

Fixed-price contract: a contract that provides for a specified price (or, in som

cases, an adjustable price) for the supplies or services being procure

usually within a stipulated contract period. Under this type or agreeme

maximum risk and responsibility are placed upon the contractor.

Full-time workers: generally, workers who work a regular schedule or mo

than 35 hours per week.

Gross domestic product (GDP): the most comprehensive single measure 

aggregate economic output. Represents the market value of the total o

put of goods and services produced by a nation’s economy.

Incorporation: filing of a certificate of incorporation with a state’s secretary 

state, thereby limiting the business owner’s liability.

Indeterminate industry: industry in which the small or large business share 

employment or sales falls between 40 and 60 percent of total indus

employment.

Informal capital: financing from an informal, unorganized source; includ

informal debt capital such as trade credit or loans from friends and re

tives and informal equity capital from informal investors.

Initial public offering (IPO): a public offering of securities by a first-time issu

Innovation: introduction of a new idea into the marketplace in the form o

new product or service or an improvement in organization or process.

Large-business-dominated industry: industry in which a minimum of 60 p

cent of employment or sales is in firms with more than 500 workers.

Metropolitan Statistical Area (MSA): a geographic area defined by the Off

of Management and Budget as a large population nucleus with at le

50,000 persons, together with adjacent communities that have a high d

gree of economic and social integration with that nucleus.

Minority-owned businesses: for the purposes of the Bureau of the Cens

Characteristics of Business Owners (CBO) survey, businesses owned 

members of the following minority groups: black, Hispanic, and oth

minority (primarily Asian, American Indian, and Alaska native).

400 Glossary
more persons organized for profit that are not specifically classified in t

IRS code as corporations or proprietorships. 

Part-time workers: employees working fewer than 35 hours per week. 

Prime contract: contract awarded directly by the federal government.

Proprietorship: the most common legal form of business ownership; about 

percent of all small businesses are proprietorships. The liability of t

owner is unlimited in this form of ownership.

Public equity markets: organized markets for trading in equity shares such 

common stocks, preferred stocks, and warrants. Includes markets for bo

regularly traded and non-regularly traded securities.

Public offering: a general solicitation for participation in an investment o

portunity. Interstate public offerings are supervised by the Securities a

Exchange Commission.

Short-term interest rates: interest rates for short-term borrowing, usually fo

term of one year or less.

Size standard: standard based on the amount of a business’ annual gross 

ceipts used to determine eligibility for small business set-aside progra

in government procurement.

Small business: a business smaller than a given size as measured by its e

ployment, business receipts, or business assets. The SBA’s Office of Adv

cacy generally uses employment data as a basis for size compariso

with firms having fewer than 100 or fewer than 500 employees defin

as small. 

Small-Business Innovation Development Act of 1982: federal statute requ

ing federal agencies with large extramural R&D budgets to allocate a c

tain percentage of these funds to small R&D firms. 

Small Business Innovation Research (SBIR) program: program mandated 

the Small Business Innovation Development Act of 1982, requiring fe

eral agencies with $100 million or more of extramural R&D obligatio

to set aside 1.25 percent of these funds for small business. The program 

designed to stimulate technological innovation and make greater use 

small businesses in meeting national innovation needs.

Small business investment company (SBIC): privately owned company licens

and funded through the U.S. Small Business Administration and priva

sector sources to provide equity or debt capital to small businesses.

Glossary 4
als, and whose ability to compete is impaired because of diminish

opportunities to obtain capital and credit.

Sole proprietorship: unincorporated, one-owner business, farm, or prof

sional practice. See also proprietorship.

Standard Industrial Classification (SIC) codes: a classification system esta

lished by the federal government that is used to categorize businesses 

type of economic activity.

Subcontract: contract between a prime contractor and a subcontractor or b

tween subcontractors to furnish supplies or services for performance o

prime contract or a subcontract.

Survey of Income and Program Participation (SIPP): a longitudinal surv

conducted by the Bureau of the Census, designed to collect informati

about cash and noncash income, assets and liabilities, and taxes pa

and a variety of labor market data.

402 Glossary
A–76 circular

White House Conference on Small

Business recommendation about,

60, 76, 77

Aastrom Biosciences, Inc.

and Advanced Technology Program,

158

ACCELERATE Technology SBDC, 144

Accounting

employment growth in, 32

Accuwave

and Advanced Technology Program,

160

Adarand vs. Peña decision

White House Conference on Small

Business recommendation about,

61, 74, 78

Advanced Technology Program,

158–162, 159 (chart), 161 (chart)

Advocacy, SBA Office of

and Angel Capital Electronic Network

(ACE-Net), 147–148, 167 

banking studies by, 280–283

role in regulatory relief, 132, 133,

136, 137

White House Conference on Small

Business implementation role, 46

White House Conference on Small

Business recommendations about,

69, 83 

see also Small Business

Administration, U.S.

African Americans

self-employed, 95, 98 (table), 99

(table), 100, 102–103 (table),

116–117 (table)

African-American-owned businesses

by state, 259 (table)

see also Minority-owned businesses

Agency for International Development,

U.S.

contracting by: 8(a) program (1994),

339, 341, (1995), 355, 357; with

small businesses (1994), 334, 336,

(1995), 351, 352; with small

disadvantaged businesses (1994),

341, (1995), 357; with womenowned businesses (1994), 346,

348, (1995), 361, 362

subcontracting by: with small

businesses (1994), 336, (1995),

353, 354–355; with small

disadvantaged businesses (1994),

343, (1995), 359; with womenowned businesses (1994), 348,

(1995), 363

Agriculture, U.S. Department of

contracting by: 308; 8(a) program

(1994), 338, (1995), 355, 356; w

small businesses (1994), 334

(1995), 351; with small

disadvantaged businesses (1994),

341, (1995), 357, 358; with

women-owned businesses (1994

346, (1995), 361–362 

and Small Business Innovation

Research program, 148, 309

subcontracting by: with small

businesses (1994), 337, (1995),

353; with small disadvantaged

businesses (1994), 343, (1995),

359; with women-owned

businesses (1994), 348, (1995),

363

Air Force, U.S. Department of the

and Small Business Innovation

Research program, 149, 153

Alternative minimum tax, 80

Angel Capital Electronic Network (AC

Net), 147–148, 167

Antitrust laws

White House Conference on Small

Business recommendation about

58, 76

Arbitration

White House Conference on Small

Business recommendation about

58, 62, 76, 78

Army Corps of Engineers

White House Conference on Small

Business recommendation about

52, 73

Army, U.S. Department of the

and Small Business Innovation

Research program, 149

Balanced Budget Act, 73, 83

Baldrige National Quality Program, 1

Ballistic Missile Defense Organization

page 403 = no fol
by state, 220 (table)

see also Business closings

Banks

commercial and industrial loans by,

294 (table)

lending to small business: 273–279,

275 (chart), 276 (chart), 277(chart),

278 (chart), 295 (table), 296 (table),

297 (table), 298 (table); by large

banks, 283

loan rates of, 292 (table), 293 (table)

profitability of, 282–283

SBA research on, 280–283

White House Conference on Small

Business recommendation about,

47–48, 70

see also Lending

Biosource International, 146–147

Borrowing

by businesses, 272

by corporations, 290 (table)

by noncorporate businesses, 291

(table)

by sector, 289 (table)

by small businesses, 273

see also Banks, Financing, Lending

Brownfields

White House Conference on Small

Business recommendation about,

52, 73

Building services

employment growth in, 32

Business closings, 26–27 

bankruptcies: 28–29, 32 (table); by

region, 33 (table); by state, 220

(table)

dissolution rates, by firm size, 226

(table)

failure rates, 30 (chart)

failures: 28–29, 32 (table); by region,

33 (table); by state, 222 (table)

terminations: 26 (table); by region, 28

(table); by state, 224 (table)

types of, 29n

Business dissolution, see Business

closings

Business formation, 25–28

incorporations: 27–28, 30 (table); by

region, 31 (table); by state, 216

(table)

African-American-owned, by state,

259 (table)

borrowing by, 291 (table)

Hispanic-owned, by state, 261 (tab

number of: 24–25, 25 (table); by

industry and firm size, 176 (table

212 (table); by industry (2-digit S

code) and firm size, 188 (table); 

receipt size, 174 (table); by state

and firm size (table)

women-owned: by industry, 255

(table); by SBA region, 253 (table

see also Business closings, Business

formation, Self-employed, Small

business

C corporations

White House Conference on Small

Business recommendation about

48, 53, 66, 71, 73, 82

California Manufacturing Technology

Center

and Manufacturing Extension

Partnership, 165

California

bank lending in, 283

Capital

sources of, 287 (table), 290 (table),

291 (table)

see also Banks, Financing, Lending

Capital formation

as White House Conference on Sm

Business issue, 46, 47–49, 68,

70–72, 83

Capital gains taxes

White House Conference on Small

Business recommendations abou

48, 65, 66–67, 71, 80, 82, 83

Certified development companies,

145–146

Chicago Metal Rolled Products

and Manufacturing Extension

Partnership, 165

Child care

employment growth in, 34

Clean Air Act

White House Conference on Small

Business recommendations abou

51, 53, 73

Clean Water Act

404 Index
contracting by: 8(a) program (1994),

338, 339, (1995), 355; with small

businesses (1994), 334, (1995),

351; with small disadvantaged

businesses (1994), 341, (1995),

357; with women-owned

businesses (1994), 346, 347,

(1995), 361

and Manufacturing Extension

Partnership, 162

and Small Business Innovation

Research program, 148, 309

subcontracting by: with small

businesses (1994), 336, (1995),

353; with small disadvantaged

businesses (1994), 343, (1995),

359; with women-owned

businesses (1994), 348, 349,

(1995), 363

Commerce Business Daily, 77

Commercial and industrial loans, see

Lending

Community development

as White House Conference on Small

Business issue, 50–51, 72–73

Community Reinvestment Act

White House Conference on Small

Business recommendation about,

49, 50, 72

Competition in Contracting Act, 313

Comprehensive Environmental

Response, Compensation and

Liability Act

White House Conference on Small

Business recommendation about,

52–53, 73

Comptroller of the Currency, 70

Congress, U.S.

review provisions under Small

Business Regulatory Enforcement

Fairness Act, 137

Construction

employment growth in, 34

federal procurement of, 308

self-employment in, 95

Consumer Price Index, 23, 24 (table)

Contract bundling

White House Conference on Small

Business recommendation about,

60, 77

Copyright law

contracting by, 8(a) program (1994)

339

Corporations

borrowing by, 290 (table)

number of: 25 (table), by receipt siz

174 (table)

profits of, 24, 24 (table), 29, 33

(table)

Council for Adult and Experiential

Learning

and Manufacturing Extension

Partnership, 164

Credit, see Banks, Borrowing,

Financing, Lending

Credit conditions

SBA research on, 280–283

CTM Technology, 145

Current Population Survey

self-employment data in, 113–114

Davis-Bacon Act

White House Conference on Small

Business recommendation about

59, 77

Defense, U.S. Department of

contracting by: 307–308; 8(a)

program (1994), 338, (1995), 355

with small businesses (1994), 334

(1995), 351; with small

disadvantaged businesses (1994),

338–339, 341, (1995), 357; with

women-owned businesses (1994

346, (1995), 361

and Small Business Innovation

Research program, 148, 149, 150

(chart), 151–153, 309

subcontracting by: with small

businesses (1994), 336, 337,

(1995), 353 ; with small

disadvantaged businesses (1994),

343, (1995), 359; with womenowned businesses (1994), 348,

(1995), 363

White House Conference on Small

Business recommendation about

61, 78

Defense Advanced Research Projects

Agency

and Small Business Innovation

Research program, 149

Defense Special Weapons Agency

Index 4
Business recommendation about,

68–69, 83

Diamond Semiconductor Group

and Advanced Technology Program,

159

Disaster relief

White House Conference on Small

Business recommendation about,

58, 76

Earnings

of businesses, 29, 33 (table)

see also Income, Profits, Receipts 

Economic expansion, 23

Economic Growth and Regulatory

Paperwork Reduction Act, 70

Economies of scale, 36–37 

Education, U.S. Department of

contracting by: 8(a) program (1994),

338, (1995), 355; with small

businesses (1995), 351; with small

disadvantaged businesses (1994),

341, 342, (1995), 357, 358; with

women-owned businesses (1994),

346, 347, (1995), 361, 362

and Small Business Innovation

Research program, 148, 309

subcontracting by: with small

businesses (1994), 336, (1995),

353; with small disadvantaged

businesses (1994), 343, 344,

(1995), 359; with women-owned

businesses (1994), 348, (1995),

363

White House Conference on Small

Business recommendation about,

50, 72

8(a) program 

procurement levels (1994), 338–341,

(1995), 355–357, (1994 and 1995),

378 (table), 380 (table)

White House Conference on Small

Business recommendation about,

59, 77 

Electronic data interchange

White House Conference on Small

Business recommendation about,

60, 67, 77, 82

Employee benefits

as White House Conference on Small

Business issue, 44 

indeterminate industries, 36–37, 

(table), 36 (table), 37 (table), 239

(table); large-business-dominated

industries, 34–39, 35 (table), 36

(table) ), 37 (table), 38 (table), 40

(table), 41 (table), 233 (table);

small-business-dominated

industries, 31–32, 34–39, 35

(table), 36 (table), 37 (table), 38

(table), 40 (table), 41 (table), 227

(table)

by state and firm size, 180 (table)

see also Employment change

Employment change, 23, 24 (table),

31–32, 34–39, 35 (table), 36 (tab

37 (table), 38 (table), 40 (table), 4

(table)

fastest growing industries: 39, 40

(table); indeterminate, 270 (table

large-business-dominated, 268

(table); small-business-dominated

266 (table)

industries creating most jobs: 37, 3

(table), 39; indeterminate, 269

(table); large-business-dominated

267 (table); small-businessdominated, 265 (table)

industries losing most jobs: 39, 41

(table)

by industry: indeterminate industrie

244 (table); large-businessdominated industries, 244 (table)

small-business-dominated

industries, 244 (table)

see also Employment

Employment compensation, 23, 24

(table), 29, 33 (table)

Empowerment zones, 72

Endangered Species Act

White House Conference on Small

Business recommendations abou

51, 53, 73

Energy, U.S. Department of, 145

contracting by: 8(a) program (1994

339–340, (1995), 355, 356; with

small businesses (1994), 334; wit

small disadvantaged businesses

(1994), 341, 342, (1995), 357; w

women-owned businesses (1994

346, 347, (1995), 361 

406 Index
353; with small disadvantaged

businesses (1994), 343, (1995),

359; with women-owned

businesses (1994), 348, (1995),

363

Engineering

employment growth in, 32

English language

White House Conference on Small

Business recommendation about,

61, 78

Enterprise communities, 72

Enterprises

by industry and firm size, 176 (table),

188 (table), 212 (table)

by state and firm size, 180 (table)

Entrepreneurship education

White House Conference on Small

Business recommendation about,

50, 72

Environmental policy

as White House Conference on Small

Business issue, 51–53, 73

Environmental Protection Agency

contracting by: 8(a) program (1994),

339, 340, (1995), 355, 356; with

small businesses (1995), 351, 352;

with small disadvantaged

businesses (1994), 341, 342,

(1995), 357, 358; with womenowned businesses (1994), 346,

347, (1995), 361, 362

and Manufacturing Extension

Partnership, 163

and Small Business Innovation

Research program, 148–149, 309

and Small Business Regulatory

Enforcement Fairness Act

provisions, 136

subcontracting by: with small

businesses (1994), 336, (1995),

353, 354; with small disadvantaged

businesses (1995), 359, 360; with

women-owned businesses (1994),

348, (1995), 363, 364

and technology training, 166

White House Conference on Small

Business recommendations about,

51, 52, 53, 73

Equal Access to Justice Act

Commission

contracting by, 8(a) program (1994)

339

Equipment expensing

White House Conference on Small

Business recommendation about

65, 80

Establishments

by industry and firm size, 176 (tabl

188 (table)

Estate tax

White House Conference on Small

Business recommendation about

64, 79

Executive Office of the President

contracting by, 8(a) program (1994)

339

Executive Order 12073, 365

Executive Order 12138, 365

Export assistance

White House Conference on Small

Business recommendations abou

57, 75

Export-Import Bank

White House Conference on Small

Business recommendation about

57, 75

Export Working Capital Program

White House Conference on Small

Business recommendation about

57, 75

Exports, 173 (table)

by state, 263 (table)

see also International trade

Failure rates, 30 (chart)

see also Business closings

Failures, 28–29, 32 (table)

by region, 33 (table)

by state, 222 (table)

see also Business closings

Farmers Home Administration

White House Conference on Small

Business recommendation about

49, 72

Federal Acquisition Computer Netwo

(FACNET), 312

White House Conference on Small

Business recommendation about

60, 77

Index 4
Federal Communications Commission,

82

contracting by, 8(a) program (1994),

339

Federal Procurement Policy, Office of

federal procurement role, 332

Federal Reserve Board

monetary policies of, 271

Federal Trade Commission

and antitrust laws, 76

and franchising, 75

Finance

employment declines in, 36

Finance companies

lending by, 279, 299 (table)

Financing, 271–303

sources of, 273, 287 (table), 290

(table), 291 (table)

see also Banks, Borrowing, Lending

504 loan program, 145, 146 (table)

Flexible manufacturing

White House Conference on Small

Business recommendation about,

68, 83

Florida

bank lending in, 283

Flow Technology, Inc.

and Small Business Innovation

Research program, 156

Ford, Henry, 139

401(k) plans

White House Conference on Small

Business recommendations about,

47, 56, 70, 74

Franchising, 36

White House Conference on Small

Business recommendation about,

58, 75

Gates, William, 140

General Accounting Office

and Small Business Innovation

Research program, 152

General Agreement on Tariffs and Trade

White House Conference on Small

Business recommendation about,

56–57, 75

General Services Administration

contracting by: 308; 8(a) program

(1994), 338, 339, (1995), 355, 356;

with small businesses (1994), 334,

346, (1995), 361, 362

federal procurement role, 332, 365

367

subcontracting by: with small

businesses (1994), 337, 338,

(1995), 353; with small

disadvantaged businesses (1994),

343, 345, (1995), 359, 360; with

women-owned businesses (1994

348, (1995), 363

Government competition with small

business

as White House Conference on Sm

Business issue, 44, 58, 60, 76, 77

Gross domestic product (GDP), 24

(table), 39

sources of, 173 (table)

Health and Human Services, U.S.

Department of

contracting by: 8(a) program (1994

338, (1995), 355; with small

businesses (1994), 334, (1995),

351, 352; with small disadvantag

businesses (1994), 341, (1995),

357; with women-owned

businesses (1994), 346, (1995),

361

and Small Business Innovation

Research program, 148, 309

subcontracting by: with small

businesses (1994), 336, (1995),

353, 354; with small disadvantag

businesses (1994), 343, 344,

(1995), 359; with women-owned

businesses (1994), 348, 349,

(1995), 363

Health care

White House Conference on Small

Business recommendations abou

53–54, 66, 73, 82

Health practitioners

employment growth in, 32

Health services

employment growth in, 34

Hispanic Americans

self-employed, 93 (table), 97 (table)

100

Hispanic-owned businesses

by state, 261 (table)

see also Minority-owned businesse

408 Index
Home-based business

White House Conference on Small

Business recommendation about,

50, 72

Housing and Urban Development, U.S.

Department of

contracting by: 8(a) program (1994),

338, 339, (1995), 355; with small

disadvantaged businesses (1994),

341, (1995), 357; with womenowned businesses (1994), 346,

(1995), 361

subcontracting by: with small

businesses (1994), 336, (1995),

353; with small disadvantaged

businesses (1994), 343, (1995),

359, 360; with women-owned

businesses (1994), 348, 349,

(1995), 363

Human capital

as White House Conference on Small

Business issue, 46, 53–56, 73–75

Income

business tax returns, 174 (table)

of self-employed, 108, 109, 110, 111

(table), 112, 121 (table)

sole proprietorship, by state, 245

(table)

by state, 251 (table)

of wage-and-salary workers: 108, 109

(table), 110, 111 (table), 121

(table); by state, 245 (table)

of women business owners, 110, 111

(table), 112, 121 (table)

see also Earnings, Profits, Receipts 

Incorporations, 27–28, 30 (table)

by region, 31 (table)

by state, 216 (table)

see also Business formation

Independent contractor classification

White House Conference on Small

Business recommendation about,

64, 80

Indeterminate industries, 35 (table),

36–37, 36 (table), 37 (table)

defined, 31n

see also Employment, Employment

change

Individual Retirement Accounts

and Small Business Innovation

Research program, 153, 156

Initial public offerings, 279–280, 300

(table)

Innovation, 139–167

small business role in, 141–143 

small business share of, 140, 142

(table)

as White House Conference on Sm

Business issue, 44

see also Technology

Insurance availability

as White House Conference on Sm

Business issue, 44

Intellectual property, 166

White House Conference on Small

Business recommendation about

56–57, 67, 75, 82, 

Intellitools

and Small Business Innovation

Research program, 156–157

Interest rates, 24 (table), 271, 272

(chart), 292 (table), 293 (table)

prime rate, 273

Interior, U.S. Department of

contracting by: 308; 8(a) program

(1994), 338, (1995), 355; with

small disadvantaged businesses

(1994), 341, 342, (1995), 357; w

women-owned businesses (1994

346, (1995), 361

and Small Business Innovation

Research program, 309

subcontracting by: with small

businesses (1994), 336, 337,

(1995), 353, 354; with small

disadvantaged businesses (1994),

343, 344, (1995), 359, 360; with

women-owned businesses (1994

348, (1995), 363

Internal Revenue Service, 70

paperwork generated by, 134

and White House Conference on

Small Business recommendations

61, 64, 70, 78, 80

International trade

as White House Conference on Sm

Business issue, 56–57, 75

International Trade Administration, U

Index 4
Judicial review

Small Business Regulatory

Enforcement Fairness Act

provisions for, 134–135

White House Conference on Small

Business recommendation about,

61, 78

Justice, U.S. Department of

contracting by: 8(a) program (1994),

339, 340, (1995), 355, 356; with

small businesses (1994), 334–335;

with small disadvantaged

businesses (1994), 341, (1995),

357, 358; with women-owned

businesses (1994), 346, 347,

(1995), 361, 362

subcontracting by: with small

businesses (1994), 336, (1995),

353; with small disadvantaged

businesses (1994), 343, 344,

(1995), 359, 360; with womenowned businesses (1994), 348,

(1995), 363, 364

Keogh plans

White House Conference on Small

Business recommendation about,

47, 70

Labor, U.S. Department of

contracting by: 8(a) program (1994),

339, 340, (1995), 355, 356; with

small businesses (1994), 334,

(1995), 351, 352; with small

disadvantaged businesses (1994),

341, (1995), 357, 358; with

women- owned businesses (1994),

346, 347, (1995), 361, 362

subcontracting by: with small

businesses (1994), 336, 337,

(1995), 353; with small

disadvantaged businesses (1994),

343, 344, (1995), 359; with

women-owned businesses (1994),

348, 349, (1995), 363

Labor force, 88 (table)

women in, 101

Labor unions

number of, 25

Large-business-dominated industries,

34–39, 35 (table), 36 (table), 37

(table), 38 (table), 40 (table), 41

(table)

defined, 31n

see also Employment, Employment

change

Lending

by banks, 273–279, 295 (table), 29

(table), 297 (table), 298 (table)

commercial and industrial loans,

274–276, 276 (chart), 277 (chart)

278 (chart), 294 (table), 296 (tab

297 (table), 298 (table)

by finance companies, 279, 299

(table)

interest rates, 292 (table), 293 (table

real estate loans, 274–276, 276

(chart), 277 (chart), 278 (chart),

296 (table), 297 (table), 298 (tabl

Small Business Administration

guaranteed loans, 276, 279

Small Business Administration

research on, 280–283

see also Banks, Borrowing, Financi

Liability, see Product liability

Litigation

White House Conference on Small

Business recommendation about

58, 76

Main Street

as White House Conference on Sm

Business topic area, 58, 75–76

Management and Budget, Office of

federal procurement role, 332

Manufacturing Extension Partnership,

83, 162–165, 163 (table), 166

(table)

expansion of, 167

Manufacturing

employment declines in, 36

self-employment in, 95

Meals and entertainment expenses

White House Conference on Small

Business recommendation about

64, 79

Mediation

410 Index
Mining

employment growth in, 36

self-employment in, 95

Minority Small Business Capital

Ownership Development Program

White House Conference on Small

Business recommendation about,

59, 77

Minority-owned businesses

federal procurement from: 310, 311

(chart), 325 (table), 326 (table); 8(a)

program (1994), 338–341, (1995),

354–357, (1994 and 1995), 378

(table), 380 (table); prime contracts

(1994), 341–343, (1995), 357–358,

(1994 and 1995), 382 (table), 384

(table); subcontracts (1994),

343–346, (1995), 359–360, (1994

and 1995), 386 (table), 388 (table)

White House Conference on Small

Business recommendations about,

50, 54–55, 59, 60, 61, 67, 71, 74,

77, 78, 82

see also African-American-owned

businesses, Hispanic-owned

businesses

National Aeronautics and Space

Administration, 145

contracting by: 8(a) program (1994),

338, (1995), 355; with small

businesses (1995), 351, 352; with

small disadvantaged businesses

(1994), 341, (1995), 357; with

women-owned businesses (1994),

346, (1995), 361

and Small Business Innovation

Research program, 148–149, 156,

309

subcontracting by: with small

businesses (1994), 336, (1995),

353, 354; with small disadvantaged

businesses (1994), 343, 345,

(1995), 359; with women-owned

businesses (1994), 348, (1995),

363

National Alliance for Business

and Manufacturing Extension

Partnership, 164

National Defense Authorization Act,

311

National Environmental Policy Act

White House Conference on Small

Business recommendation about

51, 73

National Governors’ Association 

and Manufacturing Extension

Partnership, 163–164

National Information Infrastructure, 1

White House Conference on Small

Business recommendation about

67, 82

National Institute of Standards and

Technology

and Manufacturing Extension

Partnership, 162–163, 164, 167

and technology training, 166

National Labor Relations Act

White House Conference on Small

Business recommendation about

55–56, 74

National Labor Relations Board

contracting by, 8(a) program (1994)

339

National Performance Review, 311

National Science Foundation

and Small Business Innovation

Research program, 148–149, 153

154 (table), 156–157, 309 

National Securities Improvement Act,

71

National Survey of Small Business

Finances, 273

Navy, U.S. Department of the and Sm

Business Innovation Research

program, 149

New firms, see Business formation

New Hampshire, University of, 147

New Jersey

bank lending in, 283

incorporations in, 28

New York

incorporations in, 28

Nonprofit competition

as White House Conference on Sm

Business issue, 44

North American Free Trade Agreemen

White House Conference on Small

Business recommendation about

56–57, 75

North American Securities

Administrators Association, 71

Index 4
and Small Business Innovation

Research program, 309

Occupational Safety and Health

Administration

and Small Business Regulatory

Enforcement Fairness Act

provisions, 136

White House Conference on Small

Business recommendation about,

63–64, 79

Office of Federal Procurement Policy,

77

Office of Management and Budget, 77

and Small Business Regulatory

Enforcement Fairness Act

provisions, 136

Operation Desert Storm

and Small Business Innovation

Research program, 153

Paperwork

cost of, 132

as White House Conference on Small

Business issue, 46, 61–64, 78–79

Partnerships

number of: 25 (table); by receipt size,

174 (table)

Patent Office, U.S.

White House Conference on Small

Business recommendation about,

67, 82

Patents

White House Conference on Small

Business recommendation about,

56–57, 75

Payroll

by industry and firm size, 176 (table) ,

188 (table)

by state and firm size, 180 (table)

Payroll taxes

White House Conference on Small

Business recommendation about,

65–66, 81

Pension funds

White House Conference on Small

Business recommendation about,

68, 83

Pension plans, see Retirement plans 

Physicians’ offices

employment growth in, 32

Conference on Small Business

recommendation, 58–59, 76

8(a) program (1994), 338–341,

(1995), 355–357, (1994 and 199

378 (table), 380 (table)

federal agency goals required,

331–332

federal government totals, 305–306

316 (table), 317 (table)

from minority-owned businesses:

310, 311 (chart), 325 (table), 326

(table); 8(a) program (1994),

338–341, (1995), 354–357, (199

and 1995), 378 (table), 380 (table

prime contracts (1994), 341–343

(1995), 357–358, (1994 and 199

382 (table), 384 (table);

subcontracts (1994), 343–346,

(1995), 359–360, (1994 and 199

386 (table), 388 (table)

by product or service, 308, 322

(table), 323 (table)

reform of federal process, 311–313

simplified procedures, 313

Small Business Administration

oversight role, 331–332, 365–36

from small businesses: 305–307, 30

(chart), 316 (table), 317 (table);

prime contracts (1994), 334–336

(1995), 351–352, (1994 and 199

370 (table), 372 (table);

subcontracts (1994), 336–338,

(1995), 352–354, (1994 and 199

374 (table), 376 (table)

from small disadvantaged businesse

8(a) program (1994), 338–341,

(1995), 354–357, (1994 and 199

378 (table), 380 (table); prime

contracts (1994), 341–343, (1995

357–358, (1994 and 1995), 382

(table), 384 (table); subcontracts

(1994), 343–346, (1995), 359–36

(1994 and 1995), 386 (table), 38

(table)

small purchase threshold, 312

as White House Conference on Sm

Business issue, 46, 58–61, 76–78

from women-owned businesses: 31

311 (chart), 325 (table), 326 (tab

new provisions, 313; prime

contracts (1994), 346–348, (1995

412 Index
(table)

Procurement Marketing and Access

Network (PRO-Net), 77, 83

Product liability

White House Conference on Small

Business recommendation about,

62–63, 78

Profitability

of banks lending to small business,

282–283 

Profits

corporate, 24 (table), 29, 33 (table)

see also Earnings, Income, Receipts

Prompt Payment Act

White House Conference on Small

Business recommendation about,

60, 77

Property insurance

White House Conference on Small

Business recommendation about,

58, 76

Proprietorships, see Sole proprietorships

Quest Integrated, Inc.

and Small Business Innovation

Research program, 156

Racketeer Influenced and Corrupt

Organizations Act, 74

Real estate loans, see Lending

Receipts

by industry and firm size, 176 (table),

188 (table)

of women-owned businesses: by

industry, 256 (table); by SBA

region, 254 (table)

see also Earnings, Income, Profits

Regulation

cost of, 132

as White House Conference on Small

Business issue, 44, 46, 61–64,

78–79

Regulatory analysis

Small Business Regulatory

Enforcement Fairness Act

provisions for, 135–136

Regulatory compliance assistance

Small Business Regulatory

Enforcement Fairness Act

provisions, 137

Regulatory enforcement ombudsman

132–137

White House Conference on Small

Business recommendation about

61, 78

Regulatory relief, 131–138

Relational Technology, Inc.

and Small Business Innovation

Research program, 153, 156

Research

employment growth in, 32

Research and development

expenditures for, 140, 141 (chart)

federal procurement of, 308

government role in, 143

and Small Business Innovation

Research program, 148

and Small Business Technology

Transfer Program, 157

White House Conference on Small

Business recommendation about

60, 77

Research and experimentation tax cre

White House Conference on Small

Business recommendation about

68, 83

Research Applied to National Needs

program, 156

Residential care

employment growth in, 34

Resource Conservation and Recovery

Act

White House Conference on Small

Business recommendation about

51

Retail trade

employment growth in, 34

self-employment in, 95

women’s self-employment in, 105

Retirement funds

White House Conference on Small

Business recommendation about

47, 70

Retirement plans

White House Conference on Small

Business recommendations abou

54, 56, 66, 74, 82

Rule of two

White House Conference on Small

Business recommendation about

60, 77

Index 4
Savannah River Site Laboratory, 145

Savi Technology, Inc., 152–153

School-to-Work Act, 72

Securities and Exchange Commission

White House Conference on Small

Business recommendation about,

47, 49, 70, 71

Securities

White House Conference on Small

Business recommendation about,

68, 83

Self-employed, 85–130

African American, 95, 98 (table), 99

(table), 100, 102–103 (table),

116–117 (table)

age of, 91, 92 (table), 94, 96 (table),

101, 102 (table), 106 (table), 116

(table), 118 (table), 122 (table)

definition of, 87n, 89n

during economic contractions and

expansions, 89

education of, 92 (table), 94, 96

(table), 101, 102 (table), 105, 106

(table), 116 (table), 118 (table), 122

(table)

full-time, 122 (table)

gender characteristics of, 92 (table),

96 (table), 98 (table), 100–101, 104

(table), 105, 106–107 (table), 108,

110, 111 (table), 112, 118–119

(table), 122 (table)

of Hispanic origin, 93 (table), 97

(table), 100

hours worked, 103 (table), 107

(table), 117 (table), 119 (table)

income of, 108–112, 120 (table), 121

(table)

by industry, 92–93 (table), 95, 96–97

(table), 102–103 (table), 105,

106–107 (table), 116–117 (table),

118–119 (table), 122 (table)

marital status of, 92 (table), 94, 96

(table), 102 (table), 105, 106

(table), 116 (table), 118 (table), 122

(table)

number of, 87, 88 (table), 89, 90

(table), 91, 98 (table), 115 (table)

number of children of, 102 (table),

106 (table), 116 (table), 118 (table)

by occupation, 93 (table), 95, 97

(table), 103 (table), 105, 107

(table), 99 (table), 100, 102–103

(table), 116–117 (table), 122 (tab

by region, 124–125 (table), 126–13

(table)

by state, 126–130 (table), 218 (tabl

veteran status of, 92 (table), 94–95,

96 (table), 122 (table)

weeks worked, 103 (table), 107

(table), 117 (table), 119 (table)

Service Contract Act

White House Conference on Small

Business recommendation about

59, 77

Services

employment growth in, 32, 36

federal procurement of, 308

self-employment in, 95

women’s self-employment in, 105

7(a) loan program, 145, 146 (table)

Simple tax

White House Conference on Small

Business recommendation about

65, 80

Simplified employee pension (SEP)

plans

White House Conference on Small

Business recommendation about

47, 70

Small Business Act, 365

Small Business Administration, U.S.

contracting by, 8(a) program (1994)

339

financial support for high technolog

145–147, 146 (table)

innovation programs of 143–148

lending by, 276, 279

procurement guidance from,

331–332, 365–367

White House Conference on Small

Business recommendations abou

49, 50, 71, 72 69, 83

Small Business Development Center

program

technology programs of, 144–145

White House Conference on Small

Business recommendation about

68, 69, 82, 83

Small Business Innovation Developme

Act of 1982, 44, 148, 151

414 Index
expansion of, 166

protection of proprietary information

in, 166

and Small Business Technology

Transfer program, 157

standardized scoring proposed, 167

White House Conference on Small

Business recommendation about,

68, 83

Small Business Investment Company

program, 280

disbursements by, 303 (table)

White House Conference on Small

Business recommendation about,

48, 70

Small Business Jobs Protection Act, 71,

74, 80, 82

Small Business Lending Enhancement

Act, 71

Small Business Regulatory Enforcement

Fairness Act, 78, 133–138

Small Business Technology Transfer

program, 143, 144, 157

White House Conference on Small

Business recommendation about,

68, 83

Small-business-dominated industries,

31–32, 34–39, 35 (table), 36 (table),

37 (table), 38 (table), 40 (table), 41

(table)

defined, 31n

see also Employment, Employment

change

Small businesses

federal procurement from: prime

contracts (1994), 334–336, (1995),

351–352, (1994 and 1995), 370

(table), 372 (table); subcontracts

(1994), 336–338, (1995), 353–355,

(1994 and 1995), 374 (table), 376

(table)

number of, 24–25, 25 (table)

see also Businesses

Small corporate offering registration

White House Conference on Small

Business recommendation about,

49, 71

Small disadvantaged businesses

federal procurement from: 8(a)

program (1994), 338–341, (1995),

355–357, (1994 and 1995), 378

343–346, (1995), 359–360, (199

and 1995), 386 (table), 388 (table

Smithsonian Institution

procurement by, 308

Social Security

White House Conference on Small

Business recommendation about

56, 74

Software, 140

Sole proprietorships

definition of, 89n

earnings of, 29, 33 (table)

income of, 24, 24 (table), 245 (tabl

number of: 25 (table); by receipt siz

174 (table)

receipts of, 86

women-owned: by industry, 255

(table); by SBA region, 253 (table

receipts by industry, 256 (table);

receipts by SBA region, 254 (tabl

South Carolina State University Small

Business Development Center, 14

Special Operations Command, U.S.

and Small Business Innovation

Research program, 149

Specialized Small Business Investmen

Company program

White House Conference on Small

Business recommendation about

48, 70, 82

Standard Industrial Classification (SIC

codes

White House Conference on Small

Business recommendation about

68, 82

State, U.S. Department of

contracting by: 8(a) program (1994

338, 339, (1995), 355; with smal

businesses (1994), 334, 335; with

small disadvantaged businesses

(1994), 341, (1995), 357; with

women-owned businesses (1994

346, (1995), 361

subcontracting by: with small

businesses (1994), 336, 337,

(1995), 353; with small

disadvantaged businesses (1994),

343, (1995), 359; with womenowned businesses (1994), 348,

(1995), 363

State and local funding

Index 4
163

Stock offerings

initial public offerings, 279–280, 300

(table)

White House Conference on Small

Business recommendation about,

49, 71

Sun Microsystems, 142

Superfund

White House Conference on Small

Business recommendation about,

52–53, 73

Supplies and equipment

federal procurement of, 308

Survey of Income and Program

Participation

self-employment data in, 114

Tax returns

number filed, 25 (table)

Taxation

and paperwork, 134

as White House Conference on Small

Business issue, 44, 46, 64–67,

79–82

Taxpayer Relief Act, 71, 72, 73, 74, 79,

80, 81, 82

Technology

as White House Conference on Small

Business issue, 67–68, 82–83

see also Innovation

Technology policy, 165–167

TECSTAR, Inc.

and Manufacturing Extension

Partnership, 165

Telecommunications

White House Conference on Small

Business recommendations about,

67, 82

Tennessee Valley Authority

contracting by: 8(a) program (1994),

339, 340, (1995), 355, 356; with

small businesses (1994), 334, 335,

(1995), 351, 352; with small

disadvantaged businesses (1994),

341, 343, (1995), 357, 358; with

women-owned businesses (1994),

346, 348, (1995), 361, 362

subcontracting by: with small

businesses (1994), 336, (1995),

353, 354; with small disadvantaged

Tort reform

White House Conference on Small

Business recommendation about

62–63, 78

Trademarks

White House Conference on Small

Business recommendation about

67, 82 

Training programs

White House Conference on Small

Business recommendation about

56, 67, 75, 82

Transportation

employment growth in, 35–36

self-employment in, 95

Transportation, U.S. Department of

contracting by: 308; 8(a) program

(1994), 338, (1995), 355; with

small disadvantaged businesses

(1994), 341, (1995), 357; with

women-owned businesses (1994

346, (1995), 361

and Small Business Innovation

Research program, 148, 309

subcontracting by: with small

businesses (1994), 336, (1995),

353; with small disadvantaged

businesses (1994), 343, (1995),

359; with women-owned

businesses (1994), 348, (1995),

363

Treasury, U.S. Department of

contracting by: 8(a) program (1994

338, 339, (1995), 355; with smal

disadvantaged businesses (1994),

341, (1995), 357, 358; with

women-owned businesses (1994

346, (1995), 361 

subcontracting by: with small

businesses (1994), 336, (1995),

353; with small disadvantaged

businesses (1994), 343, 344–345

(1995), 359; with women-owned

businesses (1994), 348, (1995),

363

U.S. Information Agency

procurement by, 308

U.S. trade representative

and intellectual property, 166

416 Index
declines in, 23

rate of, 24 (table)

Unrelated business income tax

White House Conference on Small

Business recommendation about,

60, 77

Unrelated business taxable income

White House Conference on Small

Business recommendation about,

48, 70

Varian Associates

and Advanced Technology Program,

159

Venture capital, 279–280, 301 (table),

302 (table)

and Small Business Innovation

Research program, 149

Veterans

self-employed, 92 (table), 94–95, 96

(table)

Veterans Affairs, U.S. Department of

contracting by: 8(a) program (1994),

338, (1995), 355; with small

businesses (1994), 334; with small

disadvantaged businesses (1994),

341, (1995), 357; with womenowned businesses (1994), 346,

(1995), 361

subcontracting by: with small

businesses (1994), 337–338,

(1995), 353; with small

disadvantaged businesses (1994),

343, (1995), 359; with womenowned businesses (1994), 348,

(1995), 363

Wage-and-salary workers, 85–130

income of: 108, 109 (table), 110, 111

(table), 121 (table); by state, 245

(table)

Westinghouse Savannah River

Company, 145

Wetlands 

White House Conference on Small

Business recommendation about,

52, 73

White House Conference on Small

Business, 1980, 44

White House Conference on Small

Business, 1986, 44

gy , 

technology recommendations of, 1

see also specific topic areas

Wholesale trade

self-employment in, 95

Women

in labor force, 101

self-employed, 92 (table), 96 (table)

98 (table) 100–101, 104 (table),

105, 106–107 (table), 108, 110,

111 (table), 112, 118–119 (table)

122 (table)

self-employment earnings of, 110,

111 (table), 112, 121 (table)

see also Women-owned businesses

Women-owned businesses

federal procurement from: 310, 311

(chart), 325 (table), 326 (table);

prime contracts (1994), 346–348

(1995), 361–362, (1994 and 199

390 (table), 392 (table);

subcontracts (1994), 348–349,

(1995), 363–364, (1994 and 199

394 (table), 396 (table)

income of self-employed, 110, 111

(table), 112, 121 (table)

by industry, 255 (table), 256 (table)

and procurement reform, 313, 332,

346, 361

receipts of: by industry, 256 (table);

by SBA region, 254 (table)

by SBA region, 253 (table)

White House Conference on Small

Business recommendations abou

50, 54–55, 60, 61, 67, 71, 74, 77

78, 82

see also Women

World Trade Organization

White House Conference on Small

Business recommendation about

57, 67, 75, 82

World Wide Web

White House Conference on Small

Business recommendation about, 6

82

XCORP, 145

Index 4