STATE

OF

SMALL

BUSINESS

A REPORT

OF THE

PRESIDENT

1998

Together with the Office of Advocacy’s Annual

Report on Small Business and Competition

United States Government Printing Office

Washington: 1999
ISSN: 0735–1437

ISBN: 0–16–050423–6

For sale by the U.S. Government Printing Office

Superintendent of Documents

Mail Stop: SSOP

Washington, DC 20402–9328
THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION* 7

Executive Summary 11

Chapter 1 The State of Small Business 23

Chapter 2 New Data for Analysis of Small Business Job Creation 47

Chapter 3 The New American Evolution: the Role and Impact of Small Firms 75

Chapter 4 Characteristics of Small Business Owners and Employees 95

Chapter 5 Financing Small Business, 1997 143

Appendix A Supplementary Tables 181

Appendix B Procurement 235

THE ANNUAL REPORT ON FEDERAL PROCUREMENT PREFERENCE GOALS 253

GLOSSARY 305

CONTENTS OF PREVIOUS EDITIONS 309

INDEX 315

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

and The Annual Report on Federal Procurement Preference Goals, see pages 17 and 255.
OF

SMALL

BUSINESS

A REPORT

OF THE

PRESIDENT
To the Congress of the United States: 

I

am pleased to present my sixth annual report on the state of small business. In 1997, the year covered by this report, 23.7 million business tax

returns were filed and a record 885,416 new small employers opened

their doors. Industries dominated by small firms created jobs at a rate almost

60 percent faster than those dominated by large businesses. Consumer confidence hit a 28-year high—an important trend for small businesses, which

depend on consumer purchases of goods and services for more than twothirds of their jobs.

What makes the American economy work? One of the essential elements

is small business—a dynamic agent for change in the innovative process. Small

businesses are the door to economic self-sufficiency and market power for

countless individuals who start with little more than a dream. And they create

jobs for the entire spectrum of American workers—the old, the young, men and

women, minorities of all ethnic backgrounds, those at the top of the economic

ladder and those struggling to find work.

America’s Innovators

Agreat strength of small business is its role in renewing the American economy. New and small firms play a key role in the experimentation and

innovation that leads to technological change and economic growth. They are

continual sources of new ideas that might otherwise remain untapped—and

their experimental efforts are an essential part of the organic and ever-changing American economy. 

In the research and development stages, before any product is developed or marketed, small high-technology businesses can find themselves in

dire need of capital. At this stage, the Government can provide an important

bridge by simply directing some of its already planned research to small

business sources. 

Small business’ share of Federal research and development has been

increasing steadily in recent years, thanks in part to programs like the Small

Business Innovation Research (SBIR) Program. The SBIR program, which

encourages small businesses to help meet our Nation’s need for groundbreaking research, has resulted in more than $7.7 billion in research awards going

to small firms over the first 15 years of the program. 
4 The State of Small Business

a differencein the early stages. Financing can be especially costly or more

difficult for small firms to find. 

Banks are important sources for small firms, but the banking market has

been changing rapidly, and small firms are watching to see how the trends in

mergers and acquisitions will affect their access to capital. Through studies

based on new information available through new Community Reinvestment Act

requirements, my Administration has been monitoring these trends carefully.

I am proud that we have been able to bring new investment to areas that

are especially in need of capital through our empowerment zones and enterprise communities. We’ve also begun a new markets initiative—a public/private

partnership to provide tax credits, investment capital and credit, and technical

assistance to stimulate business formation and job creation in inner city areas.

Relieving Tax and Regulatory Burdens

Taxation and regulation, applied equally to large and small entities, can be

more burdensome to small businesses, which have fewer resources to

meet the same overhead costs of their larger counterparts.

I’m pleased that we’ve been able to reduce the burdens on small firms,

first of all by eliminating the budget deficit that has burdened us all. 

And today more than 90 percent of small businesses can take advantage

of tax reductions through the increased small business expensing limit and

capital gains tax relief targeted to small firms.

Through the implementation of the Small Business Regulatory

Enforcement Fairness Act, my Administration has made progress in fine-tuning new rules or exempting small businesses from the most burdensome regulations. The law also provides for regulatory compliance assistance and

legal remedies when agencies fail to address small business concerns in the

regulatory process. 

The Government as Consumer

One of the most direct ways for the Government to move capital to small

firms is through its purchases of goods and services. And the level of procurement from small, minority-owned, and women-owned businesses is rising. In fiscal year 1997, small businesses won $63.7 billion in contract awards

from the Federal Government, up from the previous year. In December 1997,

we increased from 20 to 23 percent the percentage of goods and services that

Federal agencies must purchase from small firms, so we expect future reports

to reflect more Federal dollars purchasing goods from small firms.
as never before. In 1997, an estimated 8 million women and 3.2 million

minorities owned small, noncorporate businesses. Of the self-employed, more

than one-third were women; African American, Hispanic, and Asian American

minorities each owned between 5 and 6 percent of noncorporate businesses. 

We’ve heard it before and it’s still true—small businesses are dynamic job

creators. In 1997, industries dominated by small firms created almost twothirds of the new jobs. The people who work in America’s small businesses

represent the full spectrum of the American populace. In 1997, the small business workforce consisted of 45.5 percent women, 13.1 percent Hispanics, 9.7

percent African Americans, and 4.5 percent Asian Americans, Pacific

Islanders, American Indians or Aleut Eskimos. Small businesses hire both older

and younger workers in disproportionate numbers, and they put to work more

employees who have been on public assistance.

I am pleased that small businesses are taking a leadership role in moving

workers off welfare and on to productive and more satisfying lives in the workforce. Our welfare to work initiative is working: through the nonprofit Welfare

to Work partnership, thousands of businesses of all sizes have hired many

thousands of former welfare recipients. 

But small businesses were already doing that, and I am confident they will

continue to be a force for change, providing opportunities for Americans,

whatever their circumstances, into the new millennium.

THE WHITE HOUSE

A Report of the President 5
SMALL

BUSINESS

AND COMPETITION

U.S. SMALL BUSINESS

ADMINISTRATION

OFFICE OF ADVOCACY
The United States Small Business Administration herewith submits its 1998Report on Small Business and Competition in accordance with the Small

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

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

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

this important sector of the economy.

Respectfully submitted,

AIDA ALVAREZ JERE W. GLOVER

Administrator Chief Counsel for Advocacy
y gpyj

real gross domestic product increased by 3.9 percent. The unemployment

rate fell from 5.4 percent in 1996 to 4.9 percent in 1997. Consumer prices

remained stable, while corporate profits and employment compensation

both increased.

A record 885,416 new small firms with employees opened their doors in

1997 and new incorporations hit a record high for the third straight year. More

than 23.6 million business tax returns were filed. Business bankruptcies

remained low for the fourth consecutive year.

Corporate profits increased in 1997 for the seventh year in a row.

Employment compensation and proprietorship earnings also increased

significantly.

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

almost 60 percent faster than large-business-dominated industries. However,

more than one-third of the job increase was in sectors dominated by neither

small nor large firms. Of particular note, 1997 saw a revival in manufacturing

employment—more than 229,000 new jobs in all industries.

Consumer confidence in December 1997 reached 134.5, the highest reading in 28 years and a harbinger of continued good economic news for 1998.

The Consumer Confidence Index is important to small firms: more than twothirds of small firm jobs come from consumer purchases of goods or services.

New Data for Analysis of Small Business 

Job Creation

S mall businesses created three-fourths of the net new jobs from 1990 to

1995. Overall, employment in establishments owned by small firms grew

10.5 percent over the period, compared with 3.7 percent employment growth

in establishments owned by firms with more than 500 employees. 

How does it happen, then, that while small firms had much higher job

growth rates than large firms, their share of overall employment actually fell

slightly, from 53.7 percent in 1990 to 52.5 percent in 1995? 

To understand this paradox is to understand why static data cannot be

used to measure dynamic change. The static data usually used to portray small

and large businesses’ relative shares of employment are based on snapshots at

two points in time. These data do not give a clue to the immense dynamic

activity behind the scenes—activity that turns high-growth small firms into

large firms. 

With the Business Information Tracking Series (BITS) file, a new longitudinal database covering all U.S. establishments with employees, it is now
period of observation.

The database also allows businesses to be tracked in more detail, including their locations and industries. Over the 1990-1995 period, establishments

in the smaller firm size classes grew fastest in services, agricultural services,

and transportation, communications, and public utilities. 

Why Small Firms Are Important

Aquiet evolution has revolutionized the American economy in its transition

from the industrial age to the information age. The purpose here is to document the role of small- and medium-sized enterprises in the new American

evolution by asking a fundamental question, “Are small firms important?” 

The response to this question requires an understanding of change in the

economy as a dynamic process. Viewed through an evolutionary lens, small

firms make two indispensable contributions to the American economy: 

• First, they are an integral part of the renewal process that pervades and

defines market economies. New and small firms play a crucial role in

experimentation and innovation that leads to technological change and

productivity growth. In short, small firms are about change and competition because they change market structure. The U.S. economy is a

dynamic organic entity always in the process of becoming, rather than

an established one that has arrived. 

• Second, small firms are the essential mechanism by which millions

enter the economic and social mainstream of American society. Small

businesses enable millions, including women, minorities, and immigrants, to access the American Dream. A great source of American

strength has always been the dream of economic growth, equal

opportunity, upward mobility. In this evolutionary process, community plays the crucial and indispensable role of providing the “social

glue” and networking opportunities that bind small firms together in

both high tech and “Main Street” activities. The American economy is

a democratic system, as well as an economic system, that invites

change and participation.

The crucial barometer for economic and social well-being is the continued high level of creation of new and small firms in all sectors of the economy by all segments of society. 

12 The Annual Report on Small Business and Competition
working years. Ownership opens doors for women and minorities to move

into the economy less encumbered by traditional barriers to economic

achievement. 

Small firms are also more likely than large businesses to hire individuals

that are on the margin of the labor force. By giving entry-level positions to the

young and individuals on public assistance, for example, they help create the

skills needed to move the society and economy forward. To understand these

small business contributions, it is useful to look at the characteristics of small

business owners, their businesses, and the small business labor force.

In 1997, according to Current Population Survey data, 11.5 million

Americans had some self-employment earnings. A total of 7.2 million men;

4.3 million women; 500,000 Asians, Pacific Islanders, American Indians, and

Aleut Eskimos; almost 700,000 blacks; 10.3 million whites; and almost

700,000 Hispanics were self-employed. 

Women- and minority-owned businesses are rising in importance in our

nation’s economy. They are represented in every type of industry and in every

form of business. Based on data from the Census Bureau’s Survey of WomenOwned Businesses and Survey of Minority-Owned Business Enterprises, the

U.S. Small Business Administration’s Office of Advocacy estimates that in

1997 there were almost 8 million women-owned businesses (8.5 million with

C corporations) and 3.2 million minority-owned businesses. Their numbers

have been increasing steadily, and more rapidly, than those in the economy

as a whole. 

Small businesses also employ thousands of individuals of all races, genders, and ages. In 1997, the small business work force consisted of 54.5 percent males, 45.5 percent females. It represented diverse ethnic and racial

groups: 4.5 percent Asians, Pacific Islanders, American Indians, and Aleut

Eskimos; 9.7 percent blacks; 85.8 percent whites; and 13.1 percent Hispanics.

Small businesses hire a larger proportion of younger and older workers, parttime employees, employees with lower educational attainment, and individuals that receive public assistance than large businesses.

Small Business Financing

The U.S. financial markets continued to perform well in 1997, despite some

uncertainty stemming from the Asian financial crisis. Overall borrowing

showed stronger growth than expected, increasing by 5.0 percent, compared

with 3.6 percent in 1996. Large increases in the demand for credit from the business and state and local government sectors were only slightly offset by decreases in demand from households and the federal government. The business sector

Executive Summary 13
and growth in assets. A total of 7.9 million small business loans of less than

$1 million were outstanding from 9,293 reporting banks as of June 1997. The

number of the smallest business loans—those under $100,000—increased

very significantly, by 27 percent, in 1997. The percentage increase in the dollar amount was far less, an indication that more of the larger loans in this category may have been cleared from the books and more very small loans

extended. Total assets continued to be concentrated in the largest banks, partly because of the overall growth of banking assets over time and partly

because of increased merger and acquisition activity.

While the number of loans made through the SBA’s loan guaranty programs declined in 1997, the dollar amount increased significantly, from $7.7

billion to $9.5 billion. The large increase was made possible by reduced subsidy rates, which enabled more SBA-guaranteed lending at the same total subsidy level authorized by the Congress.

Equity markets continued to be favorable for small businesses in 1997.

The initial public offering market stepped back from the boom of the previous

year, but the average offering size increased slightly for small IPOs, from $19

million to $20.4 million in 1997. Fundraising by venture capital funds prospered, and disbursements by small business investment companies increased

significantly—by 25 percent. 

Recent analysis of the National Survey of Small Business Finances

(NSSBF) indicates that in 1993 small businesses accounted for about 25 percent of credit market debt in the United States. According to the NSSBF data,

some 5 million small firms in the Dun & Bradstreet small business population

had $668 billion outstanding in six traditional types of financing. Lines of

credit were the most significant for small firms, accounting for 42 percent, or

$280 billion. Nearly three-quarters of women-owned firms had access to some

type of credit in 1993. Women-owned firms were more likely than firms overall to use personal credit cards and loans from the owners themselves.

Relatively fewer minority-owned firms—two-thirds—used some type of credit

in 1993. Only 13.9 percent of minority-owned firms said they used owner

loans, but more than one-third used personal credit cards and more than onequarter used business credit cards. 

Procurement from Small Firms

The federal government spends about $200 billion a year on the procurement of goods and services. Small firms annually receive more than 20

percent of all prime contract dollars and another 10–14 percent of the federal

14 The Annual Report on Small Business and Competition
have had an unprecedented impact on the federal procurement process.

Additional reforms were enacted in December 1997 in the HUBZone and

contract bundling legislation.

The 1994 and 1996 laws were designed to make the government operate

more like a commercial buyer and make it easier and more appealing for businesses to participate in government markets. Many of the implemented

changes are benefiting small firms, although some longstanding small business

protections have been weakened or eliminated in the process.

In FY 1997, small businesses won $63.7 billion in federal contract

awards, including $41.2 billion in direct contract awards from the federal government and an additional $22.5 billion in subcontracts from prime contractors working directly for the federal government.

The $63.7 billion total represents 32.6 percent of the $195.3 billion in

contract actions awarded by the federal government in FY 1997, a slight

decrease from the previous year’s 34 percent small business share. Prime contract dollars awarded to small businesses increased very slightly, from $41.1

billion in FY 1996 to $41.3 billion in FY 1997. The overall share decreased by

more than 1 percent because a smaller share of subcontract dollars were

awarded to small firms.

The percentage of prime contracts awarded in FY 1997 to small minorityand women-owned businesses remained at levels consistent with FY 1996. In

FY 1997, minority-owned firms were awarded $11.1 billion in prime contracts

or 5.7 percent of total federal contract dollars. Women-owned firms were

awarded $3.6 billion in prime contracts or 1.8 percent of federal buys for the

same period.

Executive Summary 15
The Number of Small Businesses 25

Business Formation and Dissolution 25

New Business Incorporations 27

Business Bankruptcies and Failures 30

Business Earnings 30

Employment Growth in 1997 32

Job Creation in Small- and Large-Business-Dominated Sectors 36

Industries Generating the Most New Jobs 39

Fastest Growing Industries 39

The Changing Industrial Structure: Job Losses by Sector 42

Industries Losing the Most New Jobs 42

Industries with the Fastest Rates of Employment Loss 42

Chapter 2 New Data for Analysis of Small Business Job Creation 47

Background 47

The Magnitude of Change 49

Establishment Change 49

Employment Change 50

Where the Jobs are Generated 51

Expansions and Contractions 56

Firm and Establishment Births and Deaths 56

Employment Changes Across Industries 62

Firm Size Changes 62

Appendix A: The New BITS File 70

Strengths of the BITS 70

Weaknesses in the BITS 71

Appendix B: Alternative Methods of Classifying Growth 

by Size of Business 71

Chapter 3 The New American Evolution: 

The Role and Impact of Small Firms 75
Small Firms in Economic Theory 83

The Static View 83

Dynamic Theory 85

Community 86

Innovation, New Firm Startups, and Job Creation 87

Innovation 87

New Firm Startups 88

Job Creation 89

Entrepreneurship, Women, Minorities, and Immigrants 91

Women Business Owners 91

Ethnic Entrepreneurship 92

Evolution, Community, and the Global Economy 93

Chapter 4 Characteristics of Small Business Owners and Employees 95

Characteristics of Business Owners 96

The Self-Employed 96

Small Business Owners 99

Characteristics of Businesses 99

How Firms Were Acquired 99

Firm Age 101

Survival Rates 102

Industry Distribution 102

Home-Based Businesses 103

Franchising 103

Exporting 104

Women’s Business Ownership 104

Women-Owned Sole Proprietorships 107

Women’s Self-Employment 111

Characteristics of Women-Owned Firms 112

Minority Business Ownership 120

Minority Self-Employment 120

Characteristics of Minority-Owned Firms 123

Characteristics of Small Business Employees 128

Women 128

Minorities 132

18 Table of Contents
Small Business Employee Benefits 136

Chapter 5 Financing Small Business, 1997 143

Credit Conditions for U.S. Businesses in 1997 144

Uses of Funds by Major Sectors 144

Small Business Borrowing in 1997 145

Lending to Small Businesses by Commercial Banks 150

Lending under the SBA’s Guarantee Programs 154

Lending by Finance Companies 155

Borrowing in the Public Issue Markets 155

Venture Capital Funds 157

Patterns of Small Business Financing in 1993 158

Financing of Women-Owned Firms 165

Financing of Minority-Owned Firms 173

Appendix A Supplementary Tables 181

Appendix B Procurement 235

Sources of Small Business Awards by Agency/Department 236

Small Business Share of Purchasing Agency

Awards 236

Product/Service Categories 237

Size of Federal Contract Actions 238

Small Business Innovation Research 239

Procurement from Minority- and Women-Owned

Businesses 240

Changes in the Procurement Markets 241

Appendix B Tables 243

Glossary 305

Contents of Previous Editions 309

Index 315

Table of Contents 19
Aida Alvarez and Chief Counsel for Advocacy Jere W. Glover. Bruce D. Phillips

directed the Office of Economic Research. The project was managed by

Kathryn J. Tobias, senior editor. Significant editorial contributions were made

by John Ward, Robert Kleinsteuber, and Phaedra Brotherton. Harriett A. Lyles

provided staff suppport. Specific sections were written or prepared by the following staff:

Chapter 1 Bruce D. Phillips

Chapter 2 Alicia Robb

Chapter 3 Zoltan Acs

Chapter 4 Brian Headd and Alicia Robb

Chapter 5 Charles Ou and Robert Berney

Appendix A Brian Headd

Appendix B Major Clark

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

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

Economic Advisers, and the Office of Management and Budget. Thanks are

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

Acknowledgments 21
The State of Small Business

Synopsis

Nineteen ninety-seven was an excellent year for the economy and for

small business. The economy gained more than 3 million payroll jobs and

real gross domestic product increased by 3.9 percent. The unemployment

rate fell from 5.4 percent in 1996 to 4.9 percent in 1997. Consumer prices

remained stable, while corporate profits and employment compensation

both increased. 

A record 885,416 new small firms with employees opened their doors in

1997 and new incorporations hit a record high for the third straight year.

More than 23.6 million business tax returns were filed. Business bankruptcies

remained low for the fourth consecutive year.

Corporate profits increased in 1997 for the seventh year in a row.

Employee compensation and proprietorship earnings also increased

significantly.

The industries dominated by small firms added jobs to the economy at a

rate almost 60 percent faster than large-business-dominated industries.

However, more than one-third of the job increase was in sectors dominated

by neither small nor large firms. Of particular note, 1997 saw a revival in

manufacturing employment—more than 162,000 new jobs in all industries.

Consumer confidence in December 1997 reached 136.2, the highest reading in 28 years and a harbinger of continued good economic news for 1998.

The consumer confidence index is important to small firms: more than twothirds of small firm jobs come from consumer purchases of goods or services.

Introduction

The economy continued to grow in 1997 for the sixth consecutive year.1

Major economic indicators reflected steady and sustainable economic

growth (Table 1.1). Small businesses contributed to and shared in the benefits of the growing economy.

The production of goods and services, adjusted for inflation, grew 3.9

percent in 1997, while the unemployment rate declined from 5.4 to 4.9

percent. The economy added 3.08 million private sector jobs to nonfarm

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

Report of the President: Transmitted to the Congress February 1999 (Washington, D.C.: U.S. Government

Printing Office, 1999).
payrolls. Compensation of employees increased by 6.3 percent, a significant

gain. This expansion occurred without igniting inflation: the Consumer Price

Index rose by only 2.3 percent and long-term interest rates declined.

While the federal deficit declined almost 80 percent to $21.9 billion (the

lowest since the 1960s), corporate profits grew by 9.0 percent and nonfarm

proprietors’ income—an important measure of the health of the small business

sector—rose from $488.8 billion to $515.8 billion, an increase of 5.5 percent.

The Conference Board’s index of consumer confidence rose to 136.2 in

December 1997, an increase of 22.0 percentage points since December 1996

and the highest level since 1969.2

24 The Annual Report on Small Business and Competition

Real Gross Domestic Product 6,994.8 7,269.8 3.9

(Billions of 1992 Dollars)

Unemployment Rate (Percent) 5.4 4.9 9.3

Nonagricultural Employment 126.7 129.6 2.3

(Millions of Workers)

Compensation of Employees 4,409.0 4,687.2 6.3

(Billions of Dollars)

Nonfarm Proprietors' Income 488.8 515.8 5.5

(Billions of Dollars)

Corporate Profits 750.4 817.9* 9.0

(Billions of Dollars)

Consumer Price Index 156.9 160.5 2.3

(Urban) (1982–1984=100)

Consumer Confidence Index 114.2 136.2 19.3

Federal Surplus or Deficit 107.5 21.9 79.6

(Billions of Dollars)

Interest Rates on:

U.S. Treasury Security Yield—30 year 6.71 6.61 1.5

U.S. Treasury Security Yield—3 month 5.02 5.07 1.0

Federal Funds 5.30 5.46 3.0

High-Grade Corporate Securities 7.37 7.26 1.4

Housing Starts 1,476.8 1,474.0 0.2

(Thousands)

* With inventory valuation and capital consumption adjustments.

Source: Council of Economic Advisers, Economic Indicators, January 1998 and GDP from the U.S.

Department of Commerce, Bureau of Economic Analysis, March 1999.

2 The Conference Board, Consumer Confidence Index, February 1998.
3.5 percent per year. Of the total, about 6 million are small employer busi

nesses with between one and 500 workers. About 15,000 employ more than

500 workers and the remainder have no employees.

Business Formation and Dissolution

Arecord 885,416 new small firms with employees opened their doors in1997—a significant 5.1 percentage point increase over 1996 (Table 1.3

and Chart 1.1).3 The number of these firms has increased fairly steadily over

the past decade, reaching successive new highs in 1993, 1994, 1995, 1996

and 1997. Over the 1982–1997 period, the total number of firms with

employees increased at a rate of just over 1.9 percent per year.4

Although the net annual increase between 1982 and 1997 averages just

1.9 percent, the level of activity in business formation and closure is actually

much higher. Each year about 14 percent of small firms with employees drop

from the unemployment insurance rolls, while the number of new and successor firms added is equal to about 16 percent of the total. Thus, the net

annual gain is just under 2 percent.

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

dynamic economy. Changing tastes and preferences, new technologies, and

changes in demography and geography are all accommodated by the entry

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

the marketplace with new products and services, at new locations, and with

new and different methods of distribution.

The formation and dissolution of businesses varies by region across the

United States (Table 1.4). Region IX (the Pacific states of California, Arizona,

Hawaii, and Nevada) showed the largest net growth in the number of firms

during 1997, posting a net gain of more than 4.5 percent. Regions III, IX, and 

The State of Small Business 25

3 See Chapter 2 for a discussion of new Census firm-size data on establishments and employment. No such data are available; however, for 1997; the latest available are for 1995. The United

States has no formal annual survey of new business formation. For this 1997 review, three proxies

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

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

employees are available through the reports of employment and unemployment insurance tax liabilities to state employment security agencies. Casual business activities are less likely to be

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

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

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

count for the same year (Table A.6). Data from the Bureau of the Census are available only after a

two-year delay, while the employment security data are available on a current basis, which makes

these data particularly useful. 4 Data on mergers and acquisitions are not broken out separately in data provided by the

Department of Labor.
26 The Annual Report on Small Business and Competition

1996 5,005 1,679 16,471 23,155 2.66

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 —.

Compound Average Annual 

Growth Rate (Percent) 3.9 1.0 3.7 3.5

P=Projected from the SOI Bulletin, Fall 1997, 225, Table 21. Data exclude tax-exempt organizations.

Source: U. S. Department of the Treasury, Internal Revenue Service, Statistics of Income Bulletin (Fall 1997),

Table 21.

Table 1.3 Change in the Number of U.S. Businesses with Employees, 

Fiscal Years 1982–1997 (Thousands)

Sum: New Net Annual

Firms at Successor New and Termi- Percent

Year End of Year Firms Firms Successor nations Increase

1997 6,330 168 885 1,053 857 2.25

1996 6,191 176 842 1,018 850 1.40

1995 6,105 164 819 983 864 1.16

1994 6,035 137 807 944 803 2.29

1993 5,900 136 758 894 803 1.88

1992 5,791 138 737 875 819 0.89

1991 5,740 140 726 866 820 0.89

1990 5,689 146 769 915 838 2.18

1989 5,568 153 745 898 830 1.00

1988 5,513 153 733 886 763 1.72

1987 5,420 163 748 911 724 3.63

1986 5,230 175 725 899 809 1.71

1985 5,142 166 715 880 748 2.66

1984 5,009 164 691 855 680 3.56

1983 4,837 171 633 804 728 1.26

1982 4,777 185 595 781 717 1.55

Average 5,579 158 746 904 791 1.88

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Labor, Employment and Training Administration, based upon state employment security agencies’ quarterly

unemployment insurance reports, 1997.
X all exceeded the average growth rate in new firms by wide margins. Regions

II, V, and VIII had the largest percentage increases in terminations.

The level of dissolution almost always mirrors the level of firm formation.

In every region except Region IX, the number of firm dissolutions was well

within 10,000 firms of the number of business formations.

New Business Incorporations

Corporations represent more than 60 percent of businesses with employees

and account for nearly 90 percent of the nation’s sales and employment.5 The

number of new business incorporations increased by 1.9 percent in 1997 to

798,917—another new record (Table 1.5).

Region IX led the nation in the growth in new incorporated firms in 1997,

with an increase of 7.1 percent, about three times the national rate (Table 1.6).

Nevada and Washington led Regions IX and X with double-digit increases in

new incorporations.

The State of Small Business 27

600

630

660

690

720

750

780

810

840

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

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

of Labor, Employment and Training Administration. Thousands of Firms

Years

5 The business incorporation series of the Dun and Bradstreet Corporation measures firms that

choose to incorporate in each state and operate as corporations.
U.S. Total 6,330,117 2.25 885,416 5.11 857,073 0.85

Region I 381,532 2.61 44,399 7.98 43,886 1.02

Region II 658,868 0.16 83,965 0.14 89,375 9.61

Region III 601,659 1.54 80,414 11.62 78,244 9.92

Region IV 1,096,404 2.16 162,752 7.84 168,028 7.21

Region V 1,071,850 1.17 117,535 1.09 114,671 9.91

Region VI 637,532 1.83 85,855 0.49 89,955 2.05

Region VII 301,785 3.52 31,942 1.68 39,684 1.14

Region VIII 255,823 3.99 41,266 3.78 34,585 12.10

Region IX 1,001,210 4.51 178,428 8.35 143,102 5.54

Region X 323,454 3.58 58,860 8.86 55,543 1.65

Note: Firms represent the number of establishments owned by a parent company within a state. Because

existing firms appear as “new firms” when they enter a new state, the number of new firms nationwide is overcounted. A termination is a firm that ceases to exist. A buyout or merger would create a termination and a successor firm. Successor firms are not listed. SBA regions are defined as follows: Region I: Connecticut, Maine,

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

District of Columbia, Maryland, Pennsylvania, Virginia, West Virginia; Region IV; Alabama, Florida, Georgia,

Kentucky, Mississippi, North Carolina, South Carolina, Tennessee; Region V: Illinois, Indiana, Michigan, Minnesota,

Ohio, Wisconsin; Region VI: Arkansas, Louisiana, New Mexico, Oklahoma, Texas; Region VII: Iowa, Kansas,

Missouri, Nebraska; Region VIII: Colorado, Montana, North Dakota, South Dakota, Utah, Wyoming; Region IX:

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

Source: U.S. Small Business Administration, Office of Advocacy, from annual data provided by the U.S.

Department of Labor, Employment and Training Administration.

28 The Annual Report on Small Business and Competition

Table 1.5 New Business Incorporations, 1981–1997

Year Incorporations Percent Change

1997 798,917 1.9

1996 786,482 2.4

1995 768,180 3.6

1994 741,657 5.0

1993 706,537 6.0

1992 666,800 6.1

1991 628,580 2.9

1990 647,366 4.3

1989 676,567 1.2

1988 685,095 0.1

1987 685,572 2.4

1986 702,101 5.0

1985 668,904 5.3

1984 634,991 5.8

1983 600,400 5.9

1982 566,942 2.5

1981 581,661 —.

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

Bradstreet Corporation, New Business Incorporations (various issues).
The State of Small Business 29

Table 1.6 Measures of Business Formation by SBA Region, 1996 and 1997

New Employer Firms New Business Incorporat

1996 1997 Percent Change 1996 1997 

U.S. Total 842,357 885,416 5.1 786,482 798,917 Region I 41,116 44,399 8.0 27,071 25,492 

Region II 84,086 83,965 0.1 109,283 108,746 

Region III 72,043 80,414 11.6 112,287 113,385 Region IV 150,918 162,752 7.8 185,744 193,360 Region V 118,829 117,535 1.1 122,527 120,805 

Region VI 85,440 85,855 0.5 67,726 68,525 Region VII 31,415 31,942 1.7 22,963 23,338 Region VIII 39,762 41,266 3.8 29,843 30,830 Region IX 164,681 178,428 8.3 83,210 89,108 Region X 54,067 58,860 8.9 25,828 25,328 

Note: Because existing firms appear as “new firms” when they open an establishment in a new state, the number of new firms nationwide is overcounted. SBA 

as follows: Region I: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont; Region II: New Jersey, New York; Region III: Delaware, DMaryland, Pennsylvania, Virginia, West Virginia; Region IV: Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee; RegioMichigan, Minnesota, Ohio, Wisconsin; Region VI: Arkansas, Louisiana, New Mexico, Oklahoma, Texas; Region VII: Iowa, Kansas, Missouri, Nebraska; VIII: ColorDakota, South Dakota, Utah, Wyoming; Region IX: Arizona, California, Hawaii, Nevada; and Region X: Alaska, Idaho, Oregon, Washington.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by The U.S. Department of Labor, Employment and Training Administ

Bradstreet Corporation.
Maine and New York showed declines in the number of new incorporations in

1996. It appears that these states did not sustain the very high business formation rates of the recent past.

Business Bankruptcies and Failures

Over the 1994–1996 period, the levels of both failures and bankruptcies

remained relatively steady, and down sharply from the periods of increasing

failures and bankruptcies at the beginning of the decade (Table 1.7 and Chart

1.2). With record levels of new business formation from 1993 to 1997, it is

hardly surprising to find some increases in both bankruptcies and failures in

1997. The largest source of changes in the levels of business failures and bankruptcies are the levels of new business formation, frequently with a lag of two

or three years.

Business bankruptcies rose 1.2 percent in 1997 across the United States,

excluding Guam, the Virgin Islands and Puerto Rico.6 Business failures as

reported by the Dun and Bradstreet Corporation increased 15.9 percent in

1997. Failures rose by more than 25 percent in the services and transportation sectors, areas of much new business activity over the last several years.

Single-digit increases or declines in failures were found in the Southeast and

mid-Atlantic regions. Other regions reported increases in failures of 12–39

percent (Table 1.8).

Most firms dissolve in their early years. For a given cohort, about 20 percent of the remaining firms dissolve in each of the first and second years after

startup. The rate of dissolution decreases year by year; by the ninth or tenth

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

all new firms are in operation after five years.7

The business termination rate dropped for the second year in a row in

1997 (Table 1.9 and Chart 1.3).

Business Earnings

Corporate profits for all businesses increased in 1997 for the eighth consecutive year, the longest string of increases in at least two decades (Table

1.10). The 9.0 percent increase in corporate profits builds upon increases of

11.6 percent, 17.9 percent, 15.8 percent and 15.1 percent in 1996, 1995,

30 The Annual Report on Small Business and Competition

6 Business failure data are not available for those areas on a comparable basis; therefore the data

are not shown. 7 Based upon research conducted by Alfred Nucci and published as a working paper by the U.S.

Bureau of the Census, Center for Economic Studies.
The State of Small Business 31

1996 53,214 5.3

1995 50,516 0.6

1994 50,845 17.7

1993 61,799 11.5

1992 69,848 1.1

1991 70,605 10.5

1990 63,912 2.3

1989 62,449 0.6

1988 62,845 22.9

1987 81,463 1.9

1986 79,926 12.2

1985 71,277 11.0

1984 64,211 2.9

Percent

Year Failures Change

1997 83,384 15.9

1996 71,931 1.0

1995 71,194 0.5

1994 71,558 16.8

1993 85,982 11.4

1992 97,069 10.1

1991 88,140 45.8

1990 60,432 20.0

1989 50,361 11.8

1988 57,099 6.8

1987 61,236 0.6

1986 61,601 7.6

1985 57,253 9.9

1984 52,078 —.

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

Dun and Bradstreet Corporation, Business Failure Record (various issues); for bankruptcies, from data provided

by the Administrative Office of the U.S. Courts, Statistical Analysis and Reports Division.
1994 and 1993. Employee compensation increased 6.3 percent in 1997, the

largest increase since 1990.

Nonfarm proprietors’ income, an important measure of the health of the

small business sector, rose by 5.5 percent during 1997.8 Approximately 85 percent of small businesses are legally organized as proprietorships or partnerships.

Employment Growth in 1997

From December 1996 to December 1997, private nonfarm employment

grew by 2.9 percent, or 2.97 million jobs, rising to 104.1 million (Table

1.11). Service jobs accounted for 45 percent of that growth (1.35 million jobs),

followed by retail trade at 19 percent (568,000). Manufacturing, construction,

transportation, finance, and wholesale trade contributed 6–8 percent each,

and agricultural services and mining contributed the remaining jobs.

32 The Annual Report on Small Business and Competition

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Note: A business failure is an establishment that ceases operation with a loss to one or 

more creditors.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by 

the Dun & Bradstreet corporation. Thousands

Years

0

20

40

60

80

8 Nonfarm proprietorship earnings are estimates because the income tax statements on which

they are based are delayed in both their receipt and analysis. As used here, proprietors’ income

includes partnership income as well.
The State of Small Business 33

Table 1.8 Measures of Business Dissolution by SBA Region, 1996 and 1997

Terminations Bankruptcies Fail

Percent Percent 

1996 1997 Change 1996 1997 Change 1996 199

U.S. Total 849,839 857,073 0.9 53,207 53,826 1.2 71,931 83,3Region I 43,441 43,886 1.0 1,953 2,011 3.0 3,064 3,4Region II 81,538 89,375 9.6 4,330 4,265 1.5 7,406 7,6

Region III 86,857 78,244 9.9 5,363 5,600 4.4 6,071 5,9

Region IV 156,726 168,028 7.2 7,357 7,560 2.8 8,090 8,2Region V 127,283 114,671 9.9 8,099 8,274 2.2 8,787 11,4

Region VI 91,839 89,955 2.1 6,353 6,432 1.2 9,318 10,9

Region VII 39,237 39,684 1.1 1,932 1,931 0.1 3,005 3,7

Region VIII 30,851 34,585 12.1 1,763 1,697 3.7 3,173 4,4

Region IX 135,591 143,102 5.5 13,244 12,569 5.1 18,760 22,5

Region X 56,476 55,543 1.7 2,813 3,487 24.0 4,257 5,0

Note: Because existing firms appear as “new firms” when they open an establishment in a new state, the number of new firms nationwide is overcounted. SB

as follows: Region I: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont; Region II: New Jersey, New York; Region III: Delaware, DMaryland, Pennsylvania, Virginia, West Virginia; Region IV: Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee; RegioMichigan, Minnesota, Ohio, Wisconsin; Region VI: Arkansas, Louisiana, New Mexico, Oklahoma, Texas; Region VII: Iowa, Kansas, Missouri, Nebraska; VIII: ColorDakota, South Dakota, Utah, Wyoming; Region IX: Arizona, California, Hawaii, Nevada; and Region X: Alaska, Idaho, Oregon, Washington.

Source: Bankruptcies adapted by the U.S. Small Business Administration, Office of Advocacy, from the Administrative Office of the U.S. Courts, Statistical 

Division. Failures adapted by the U.S. Small Business Administration, Office of Advocacy, from Dun and Bradstreet Corporation, various press releases. TerminaU.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Labor, Employment and Training Administration.
34 The Annual Report on Small Business and Competition

1991 1992 1993 1994 1995 1996 1997

Percent (Terminations/Number of Firms)

Chart 1.3 Business Termination Rate, 1991–1997

Years

Note: A business termination is a closure of a business with employees.

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

of Labor, Employment and Training Administration.

8

10

12

14

16

1996 6,190,907 849,839 13.9

1995 6,105,470 863,699 14.5

1994 6,035,538 803,290 13.6

1993 5,900,156 802,702 13.9

1992 5,791,214 819,336 14.3

1991 5,740,233 820,445 14.4

1990 5,689,402 837,511 14.7

Source: The number of firms and terminations are derived by the U.S. Small Business Administration, Office of

Advocacy, from data provided by the U.S. Department of Labor, Employment and Training Administration, based upon

state employment security agencies’ quarterly unemployment insurance reports.
While the service sector generated the most new jobs, agricultural services—a relatively small but important sector—expanded fastest, by 6.7 percent,

as farm-related industries had an excellent year. Employment in construction

expanded 4.1 percent and transportation, communications and utilities

expanded 3.0 percent, led by significant increases in telecommunications.

Renewed job growth in manufacturing is one of the success stories of

1997. After losing jobs or growing slowly during a period of significant

restructuring over the last several years, the manufacturing sector generated

dramatic job growth in 1997. The job increases were well distributed across

sectors, regardless of firm size dominance.

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

compare sectors dominated by small businesses with those dominated by large

businesses. Some 52.5 percent of all nonfarm private sector employment in

1995 (the latest year for which data are available) was in firms with fewer than

500 employees, down slightly from the 53.1 percent in 1993 (Table 1.12).9

Year Amount Change Amount Change Amount Change

1997 4,687.2 6.3 515.8 5.5 817.9 9.0

1996 4,409.0 4.8 488.8 5.0 750.4 11.6

1995 4,208.9 4.9 465.6 7.1 672.4 17.9

1994 4,012.0 5.2 434.7 3.9 570.5 15.8

1993 3,814.9 4.7 418.4 8.2 492.8 15.1

1992 3,644.9 5.4 386.7 11.4 428.0 4.1

1991 3,457.9 3.1 347.2 2.5 411.3 3.6

1990 3,352.8 6.4 338.6 5.5 397.1 4.5

1989 3,151.6 5.8 321.1 4.3 380.0 –0.5

1988 2,973.9 7.8 307.8 12.5 382.1 14.7

1987 2,757.7 7.2 273.6 7.2 333.2 13.4

1986 2,572.4 6.0 255.3 4.2 293.8 –3.4

1985 2,425.7 7.5 245.0 8.6 304.0 4.8

1984 2,257.0 10.4 225.5 20.0 290.1 23.3

1983 2,044.2 6.0 187.8 13.7 235.2 29.0

1982 1,927.6 165.1 182.3

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: Council of Economic Advisers, Economic Indicators, March 1999.

The State of Small Business 35

9 While small firms continue to generate large numbers of new jobs in the economy, some new

firms become large firms by growing very rapidly. Because of this phenomenon, the “static” share of

small business employment remains constant. For an explanation of the differences between static and

dynamic measures of employment, see Zoltan J. Acs and Bruce D. Phillips, “Why Does the Relative

Share of Employment Stay Constant?” Frontiers of Entrepreneurship Research, 1997 (Wellesley, Mass.:

Babson College, 1998). See also The Small Business Advocate, January/February 1998

(http://www.sba.gov/advo).
small- or large-business-dominated or indeterminate.11 These industries are

then grouped together by firm size dominance within the nine major industry categories.

Job Creation in Small- and 

Large-Business-Dominated Sectors

I

ncreasingly, job growth appears to be tied to high-growth industries regardless of firm size dominance. Small-firm-dominated sectors were responsible

for 1.22 million jobs in 1997—about 60 percent more than sectors dominated by large firms, which created 758,000. Sectors dominated by neither large

nor small firms generated 989,000 new jobs—about one-third of the new

jobs created.

In 1997, small-firm-dominated service industries had the largest employment increase, creating 579,500 new jobs, especially in service sectors like

engineering, public relations, management consulting, amusement and recreation services, and social services (Table 1.11). Within the small-firm-dominated sector, services contributed 47 percent of the employment increase.

Retail trade accounted for 19 percent, with eating and drinking places contributing the most new jobs. The construction sector contributed 15 percent.

The other sectors—agricultural services, mining, manufacturing, transportation and financial services—collectively contributed the remaining 19 percent

of new jobs within small-firm-dominated sectors.

Within large-firm-dominated sectors, growth in service sectors accounted

for 42 percent of the total increase, while retail trade accounted for 27 percent. Increases in large-firm-dominated manufacturing sectors added 85,000

new jobs, particularly in the manufacture of transportation equipment.

Manufacturing increases made up 11 percent of total employment increases

in the large-firm-dominated sector. 

Sectors dominated by neither small nor large firms contributed almost

one-third of new jobs in 1997—about 989,000. Within this indeterminate sector, service industries contributed almost half of the new jobs. Many of the

36 The Annual Report on Small Business and Competition

10 Employment data by firm size are available for no later than 1995. Employment data by industry

but not by firm size are available through 1997. The percentage of employment by firm size is calculated

from the 1995 employment data and is used to classify industries by firm size dominance. 11 Within the major industrial sectors, the individual industries are classified by the percentage of

employment in firms with fewer than 500 employees. The classifications are small-business-dominated

(industries with at least 60 percent of employees in small firms), large-business-dominated (industries

with at least 60 percent of employees in large firms), and indeterminate (industries with between 40 and

60 percent of employment in small and large firms). Because the industries are defined by firm size

dominance, small-business-dominated industries will include large businesses and vice versa.
Table 1.11 Employment Change in Small- and Large-Business-Dominated and Indeterminate Industries by Majo

December 1996—December 1997

Small-Business- Large-Business- 

Total Change Dominated Change Dominated Change In

Jobs Percent Jobs Percent Jobs Percent J

(Thousands) Change (Thousands) Change (Thousands) Change (Tho

Total—All Industries 2,971.0 2.9 1,223.6 3.2 758.2 2.3 9

Agricultural Services 39.2 6.7 30.4 8.4 . — .— 

Mining 2.0 0.4 0.6 1.7 10.3 3.9 

Construction 220.0 4.1 188.2 4.1 . — .— 

Manufacturing 229.0 1.2 51.3 1.6 85.4 1.0 Transportation, Communications,

and Public Utilities 190.0 3.0 29.7 3.4 45.5 1.8 1

Wholesale Trade 188.0 2.9 86.7 2.7 15.9 3.2 Retail Trade 568.0 2.5 228.9 2.0 205.3 2.5 1Finance, Insurance, 

and Real Estate 189.0 2.7 28.3 1.9 95.4 2.6 

Services 1,345.8 3.9 579.5 4.4 321.0 3.7 4

Note: U.S. Department of Labor, Bureau of Labor Statistics (BLS) data do not track firms over time and therefore cannot measure net job creation by firm sizeSources: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Labor, Bureau of Labor Statistics, and the 

Commerce, Bureau of the Census.

The State of Small Business 37
Table 1.12 Estimated Employment in Small and Large Businesses by Major Industry, December 1997 (Thousand

Total Small Business Large B

Percent Percent 

Employment of Total Employment Small Employment 

Total, All Industries 104,564.0 100.0 54,982.3 52.5 49,581.7 Agricultural Services 626.5 0.6 557.0 88.9 69.5 Mining 572.0 0.5 221.6 38.7 350.4 Construction 5,640.0 5.4 5,036.9 89.3 603.1 Manufacturing 18,698.0 17.9 7,197.4 38.5 11,500.6 Transportation, Communications,

and Public Utilities 6,555.0 6.3 2,381.4 36.3 4,173.6 

Wholesale Trade 6,748.0 6.5 4,524.1 67.0 2,223.9 Retail Trade 23,109.0 22.1 12,016.2 52.0 11,092.8 Finance, Insurance, and

Real Estate 7,131.0 6.8 3,065.5 43.0 4,065.5 

Services 35,484.5 33.9 19,982.1 56.3 15,502.4 

Note: U.S. Department of Labor, Bureau of Labor Statistics (BLS) data can not measure net job creation by firm size, as they do not track firms over time. Ho

data provided by BLS and the most recent percentages of small (fewer than 500 employees) and large business employment from the Bureau of Census, this taemployment in small and large businesses by major industry.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Labor, Bureau of Labor Statistics and the 

Commerce, Bureau of the Census.

38 The Annual Report on Small Business and Competition
A look at the small- and large-business-dominated industries that created

the most jobs and grew the fastest provides some insight into patterns of

employment growth in the United States in 1997.

Industries Generating the Most New Jobs

The 10 small-business-dominated sectors generating the most new jobs created about 1.14 million, or 38 percent of the total employment increase

(Table 1.13). Six of the 10 sectors were in service industries—frequently in

the “producer services” group that includes engineering and management

services, with 188,500 new jobs, and management and public relations with

81,000. Positions in amusement and recreation services, social services, and

doctors’ offices and clinics also increased significantly. Special trade

contractors (electricians, plumbers) added more than 158,000 new positions

in 1997. The distributive trade for durable goods created more than 150,000

new jobs. Eating and drinking places—always a prolific job creator—added

about 138,000 new jobs.

More than half of the new jobs in large-firm-dominated sectors in 1997

came from four sectors: the personnel and help supply agencies (277,000 new

jobs in the two industries combined), general merchandise stores (116,000),

and department stores (105,000). The air transportation sector (both manufacturing and transportation of people), hospitals, and food stores also contributed new jobs.

Sectors dominated by neither small nor large firms created significant

numbers of new jobs in health and business services, and in prepackaged software and firms specializing in providing security for homes and businesses.

Fastest Growing Industries

The picture of job growth that emerges from looking at the industries with the

fastest rates of job growth reveals considerable concentration by industrial

sector. In both small- and large-business-dominated sectors, some of the

fastest growing industries were in transportation (aircraft, automobiles, and

trucks), computers and data processing, information retrieval services, and

some parts of the service sector related to recreation, such as physical fitness

facilities, motion picture production, and videotape rental outlets.

Three small-business-dominated business service sectors had rates of

employment growth in excess of 10 percent between December 1996 and

December 1997: public relations services, computer programming services,

and management consulting services (Table 1.14). Mattresses and bedsprings

and employment agencies each grew almost 10 percent, and management

The State of Small Business 39
and public relations, videotape rental, used merchandise stores, miscellaneous automotive dealers, and physical fitness facilities each increased industry employment almost 9 percent in 1997.

The fastest growing large-business-dominated industry in 1997 was also

the smallest in the top ten and a manufacturing industry, raw cane sugar. Three

subsets of the aircraft manufacturing sector were among the fastest growing:

aircraft parts and equipment, not elsewhere classified (a 15.3 percent

increase), aircraft and parts (a 9.8 percent increase), and aircraft manufacture

(a 9.2 percent increase). Other large-firm-dominated business services sectors

that grew very rapidly in 1997 included information retrieval services (10.8

percent), and data processing and preparation (10.2 percent). The rental of

passenger cars increased by 9.4 percent, and employment in motion picture

production rose by 9.0 percent.

40 The Annual Report on Small Business and Competition

Small-Business-Dominated Industries

8700 Engineering and Management Services 2,892.8 3,081.3 188.5 6.5

1700 Special Trade Contractors 3,421.3 3,579.6 158.3 4.6

5000 Wholesale Trade—Durable Goods 3,854.0 4,006.0 152.0 3.9

5800 Eating and Drinking Places 7,500.1 7,637.6 137.5 1.8

7900 Amusement and Recreation Services 1,323.7 1,424.6 100.9 7.6

8300 Social Services 2,433.5 2,526.6 93.1 3.8

8740 Management and Public Relations 908.2 989.3 81.1 8.9

7990 Miscellaneous Amusement and 

Recreation Services 963.2 1,041.4 78.2 8.1

8010 Offices and Clinics of Medical Doctors 1,707.9 1,785.4 77.5 4.5

5940 Miscellaneous Shopping Goods Stores 1,134.7 1,204.3 69.6 6.1

Large-Business-Dominated Industries 

7360 Personnel Supply Services 2,762.7 2,916.8 154.1 5.6

7363 Help Supply Services 2,440.4 2,563.1 122.7 5.0

5300 General Merchandise Stores 3,068.0 3,184.2 116.2 3.8

5310 Department Stores 2,676.5 2,781.3 104.8 3.9

8060 Hospitals 3,839.5 3,919.3 79.8 2.1

3700 Transportation Equipment 1,804.5 1,880.0 75.5 4.2

8062 General Medical and Surgical Hospitals 3,543.5 3,614.6 71.1 2.0

4500 Transportation by Air 1,183.5 1,254.5 71.0 6.0

4510 Air Transportation, Scheduled 1,021.9 1,081.6 59.7 5.8

5400 Food Stores 3,530.7 3,589.2 58.5 1.7

Note: Small-business-dominated industries are industries in which a minimum of 60 percent of

employment is in firms with fewer than 500 employees. Large-business-dominated industries are industries in

which a minimum of 60 percent of employment is in firms with 500 or more employees. Industries with

between 40 and 60 percent of employment in small and large firms are classified as indeterminate.

Source: U.S. Small Business Administration, Office of Advocacy, from employment data provided by

the U.S. Department of Labor, Bureau of Labor Statistics, and firm size data provided by the U.S. Department

of Commerce, Bureau of the Census.
Two other large-firm-dominated industries merit mention in this category:

securities and commodities brokers, which expanded 8.1 percent in response to

the continued favorable performance in the equity markets, and nondepository

institutions, including mortgage brokers, credit card issuers, and consumer

finance companies, which increased employment 5.4 percent.

The State of Small Business 41

Small-Business-Dominated Industries

8743 Public Relations Services 36.8 42.5 5.7 15.5

7371 Computer Programming Services 284.4 327.1 42.7 15.0

8742 Management Consulting Services 317.5 357.3 39.8 12.5

2515 Mattresses and Bedsprings 32.2 35.4 3.2 9.9

7361 Employment Agencies 322.3 353.7 31.4 9.7

8740 Management and Public Relations 908.2 989.3 81.1 8.9

7840 Videotape Rental 159.5 173.7 14.2 8.9

5590 Automotive Dealers, NEC 9.3 10.1 0.8 8.6

5930 Used Merchandise Stores 109.7 119.1 9.4 8.6

7991 Physical Fitness Facilities 159.2 172.8 13.6 8.5

Large-Business-Dominated Industries 

2061 Raw Cane Sugar 6.4 8.2 1.8 28.1

3533 Oil and Gas Field Machinery 41.8 49.3 7.5 17.9

3715 Truck Trailers 33.6 39.3 5.7 17.0

3728 Aircraft Parts and Equipment, NEC 127.2 146.6 19.4 15.3

7375 Information Retrieval Services 71.2 78.9 7.7 10.8

7374 Data Processing and Preparation 240.6 265.2 24.6 10.2

3720 Aircraft and Parts 480.3 527.2 46.9 9.8

7514 Passenger Car Rental 128.8 140.9 12.1 9.4

3721 Aircraft 255.3 278.8 23.5 9.2

7810 Motion Picture Production and Services 226.6 247.1 20.5 9.0

NEC=Not elsewhere classified.

Note: Small-business-dominated industries are industries in which a minimum of 60 percent of

employment is in firms with fewer than 500 employees. Large-business-dominated industries are industries

in which a minimum of 60 percent of employment is in firms with 500 or more employees. Industries with

between 40 and 60 percent of employment in small and large firms are classified as indeterminate.

Source: U.S. Small Business Administration, Office of Advocacy, from employment data provided by

the U.S. Department of Labor, Bureau of Labor Statistics, and firm size data provided by the U.S. Department

of Commerce, Bureau of the Census.
declines, productivity gains, or exporting of jobs. A range of industries across the

manufacturing, retail trade, and service sectors showed employment declines.

Industries Losing the Most Jobs

In general, job losses in 1997 were confined to well-defined sectors, with largefirm-dominated industries generally losing more jobs than any other category.

At the two- digit SIC code level of detail, the largest job losses occurred in several large-business-dominated and indeterminate textile and apparel sectors. In

particular, apparel and other textile products and textile mill products were

among the largest job losers, dropping a total of about 56,000 jobs. Many of

these jobs may have been exported or replaced as a result of technological

advances. The reasons are not known and are subjects for further research.

Components of these major sectors, such as knitting mills and men’s and boys’

furnishings, are also shedding large numbers of jobs.

Other labor-intensive and historically large-business-dominated apparel

industries—particularly women’s leather footwear and other leather goods, as

well as men’s and boys’ shirts—also continued to downsize. Other large-business-dominated sectors losing at least 5,000 jobs in 1997 included the delivery of electric services—an industry undergoing restructuring—and the mining of crude petroleum, metal and natural gas.

Within small-business-dominated industries, very few sectors lost jobs in

1997, but there were a few. Employment in fresh fruit and vegetable stores

declined by 7,200 jobs; it is likely that supermarkets took over these functions.

Some personal service sectors, such as barber shops, beauty shops, laundries,

and funeral establishments, have been subject to consolidation, and some inefficient units have closed. About 8,200 personal service jobs were lost in 1997.

Industries With the Fastest Rates of Employment Loss 

Eight specific categories of the apparel industry were among the ten four-digit

SIC code industries losing jobs at the fastest rates in 1997 (Table 1.16). These

included women’s footwear, a large-business-dominated sector; two indeterminate industries knitting underwear; and girls’ and children’s blouses and

dresses, a small-business-dominated sector. The manufacture of ordnance, a

large-business-dominated sector, also lost 7.5 percent of its employment in

1997—probably among the final outcomes of the defense diversification

movement of the 1990s.

42 The Annual Report on Small Business and Competition
The State of Small Business 43

Two-Digit SIC Level Industries

2300 2 Apparel and Other Textile Products 837.5 793.2 44.3 5.3 Indeterminate

4900 2 Electric, Gas, and Sanitary Services 875.3 859.9 15.4 1.8 Large

2200 2 Textile Mill Products 614.9 603.3 11.6 1.9 Large

7200 2 Personal Services 1,176.6 1,168.4 8.2 0.7 Small

3100 2 Leather and Leather Products 94.3 88.4 5.9 6.3 Indeterminate

1200 2 Coal Mining 93.6 90.1 3.5 3.7 Large

2900 2 Petroleum and Coal Products 138.0 135.3 2.7 2.0 Large

1000 2 Metal Mining 53.9 52.0 1.9 3.5 Large

2600 2 Paper and Allied Products 679.3 677.5 1.8 0.3 Large

3900 2 Miscellaneous Manufacturing 

Industries 386.3 384.8 1.5 0.4 Small

Three-Digit SIC Level Industries

2320 3 Men’s and Boys’ Furnishings 218.2 203.2 15.0 6.9 Large

7290 3 Miscellaneous Personal Services 137.5 127.1 10.4 7.6 Indeterminate

2250 3 Knitting Mills 174.3 166.7 7.6 4.4 Large

1310 3 Crude Petroleum and Natural Gas 138.3 130.8 7.5 5.4 Large

4910 3 Electric Services 381.1 374.1 7.0 1.8 Large

5620 3 Women’s Clothing Stores 320.3 314.4 5.9 1.8 Large

3940 3 Toys and Sporting Goods 112.2 106.5 5.7 5.1 Indeterminate

3140 3 Footwear, except Rubber 43.5 38.5 5.0 11.5 Large

4920 3 Gas Production and Distribution 145.0 140.0 5.0 3.4 Large

3650 3 Household Audio and 

Video Equipment 83.0 78.4 -4.6 5.5 Large

Four-Digit SIC Level Industries

2339 4 Women’s and Misses’ Outerwear, NEC 156.4 144.0 12.4 7.9 Small

5148 4 Fresh Fruits and Vegetables 108.5 101.3 7.2 6.6 Small

3585 4 Refrigeration and Heating Equipment 142.1 136.9 5.2 3.7 Large

2325 4 Men’s and Boys’ Trousers and Slacks 73.3 69.4 3.9 5.3 Large

2321 4 Men’s and Boys’ Shirts 45.3 41.8 3.5 7.7 Large

2253 4 Knit Outerwear Mills 53.5 50.0 3.5 6.5 Large

3949 4 Sporting and Athletic Goods, NEC 71.7 68.2 3.5 4.9 Indeterminate

3731 4 Ship Building and Repairing 97.7 94.3 3.4 3.5 Large

2341 4 Women’s and Children’s 

Underwear 29.1 25.7 3.4 11.7 Indeterminate

2254 4 Knit Underwear Mills 17.3 14.3 3.0 17.3 Indeterminate

NEC=Not elsewhere classified.

Note: Small-business-dominated industries are industries in which a minimum of 60 percent of

employment is in firms with fewer than 500 employees. Large-business-dominated industries are industries

in which a minimum of 60 percent of employment is in firms with 500 or more employees. Industries with

between 40 and 60 percent of employment in small and large firms are classified as indeterminate.

Source: U.S. Small Business Administration, Office of Advocacy, from employment data provided by

the U.S. Department of Labor, Bureau of Labor Statistics, and firm size data provided by the U.S. Department

of Commerce, Bureau of the Census.
44 The Annual Report on Small Business and Competition

Two-Digit SIC Level Industries

3100 2 Leather and Leather Products 94.3 88.4 5.9 6.3 Indeterminate

2300 2 Apparel and Other Textile Products 837.5 793.2 44.3 5.3 Indeterminate

1200 2 Coal Mining 93.6 90.1 3.5 3.7 Large

1000 2 Metal Mining 53.9 52.0 1.9 3.5 Large

2100 2 Tobacco Products 44.6 43.7 0.9 2.0 Large

2900 2 Petroleum and Coal Products 138.0 135.3 2.7 2.0 Large

2200 2 Textile Mill Products 614.9 603.3 11.6 1.9 Large

4900 2 Electric, Gas, and Sanitary Services 875.3 859.9 15.4 1.8 Large

4600 2 Pipelines, except Natural Gas 14.3 14.2 0.1 0.7 Large

7200 2 Personal Services 1,176.6 1,168.4 8.2 0.7 Small

Three-Digit SIC Level Industries

5450 3 Dairy Products Stores 22.5 18.8 3.7 16.4 Small

2360 3 Girls’ and Children’s Outerwear 32.8 28.6 4.2 12.8 Indeterminate

3140 3 Footwear, except Rubber 43.5 38.5 5.0 11.5 Large

2340 3 Women’s and Children’s Undergarments 39.8 35.3 4.5 11.3 Indeterminate

3170 3 Handbags and Personal Leather Goods 9.9 9.0 0.9 9.1 Indeterminate

7290 3 Miscellaneous Personal Services 137.5 127.1 10.4 7.6 Indeterminate

3480 3 Ordnance and Accessories, NEC 45.2 41.8 3.4 7.5 Large

2320 3 Men’s and Boys’ Furnishings 218.2 203.2 15.0 6.9 Large

3650 3 Household Audio and Video Equipment 83.0 78.4 4.6 5.5 Large

1310 3 Crude Petroleum and Natural Gas 138.3 130.8 7.5 5.4 Large

Four-Digit SIC Level Industries

3144 4 Women’s Footwear, except Athletic 12.6 10.1 2.5 19.8 Large

2254 4 Knit Underwear Mills 17.3 14.3 3.0 17.3 Indeterminate

2361 4 Girls’ and Children’s Dresses and Blouses 12.7 10.6 2.1 16.5 Small

2341 4 Women’s and Children’s Underwear 29.1 25.7 3.4 11.7 Indeterminate

2391 4 Curtains and Draperies 20.0 17.9 2.1 10.5 Small

2342 4 Brassieres, Girdles, and Allied Garments 10.7 9.6 1.1 10.3 Large

3483 4 Ammunition, except for Small Arms, NEC 23.9 21.9 2.0 8.4 Large

2339 4 Women’s and Misses’ Outerwear, NEC 156.4 144.0 12.4 7.9 Small

2321 4 Men’s and Boys’ Shirts 45.3 41.8 3.5 7.7 Large

2331 4 Women’s and Misses’ Blouses and Shirts 26.0 24.0 2.0 7.7 Small

NEC=Not elsewhere classified.

Note: Small-business-dominated industries are industries in which a minimum of 60 percent of

employment is in firms with fewer than 500 employees. Large-business-dominated industries are industries

in which a minimum of 60 percent of employment is in firms with 500 or more employees. Industries with

between 40 and 60 percent of employment in small and large firms are classified as indeterminate.

Source: U.S. Small Business Administration, Office of Advocacy, from employment data provided by

the U.S. Department of Labor, Bureau of Labor Statistics, and firm size data provided by the U.S. Department

of Commerce, Bureau of the Census.
and unemployment fell from 5.4 percent in December 1996 to 4.9 percent in

December 1997. Consumers realized real income gains, as employee compensation rose 6.3 percent while inflation remained at about 2 percent. The

income of smaller sole proprietorships and partnerships also increased 5.5

percent, significantly above the rate of inflation. The rate of consumer confidence was at its highest level since 1969.

The economy had very balanced employment growth in 1997. Smallbusiness-dominated sectors added jobs about 60 percent faster than largebusiness-dominated sectors. Many of these new opportunities were in business service sectors like engineering, management consulting and public relations. In large-firm-dominated sectors, temporary help agencies, information

technology, and leisure-based industries like motion pictures added many

new jobs. For the first time in eight years, the manufacturing sector added jobs

in many areas, particularly in transportation equipment.

As industries in the trade and service sectors restructure, many are no

longer dominated by small or large firms. In 1997, one-third of the new jobs

were created in industries not dominated by small or large business. This is

especially true in segments of the health and business services sector as successful small firms become large firms or are bought out by other organizations of varying sizes.

While new business formation continued to set record levels in 1997,

business failures increased and business bankruptcies—more indicative of

small business distress—rose a modest 1 percent. Business closings are tied

to, and lag behind, business formations; some increases in business dissolution are expected, given the very high levels of business formation over the

last several years.

The State of Small Business 45
New Data for Analysis of 

Small Business Job Creation

Synopsis

Small businesses created three-fourths of the net new jobs from 1990 to

1995. Overall, employment in establishments owned by small firms grew

10.5 percent over the period, compared with 3.7 percent employment

growth in establishments owned by firms with more than 500 employees.

How does it happen, then, that while small firms had much higher job

growth rates than large firms, their share of overall employment actually fell

slightly, from 53.7 percent in 1990 to 52.5 percent in 1995? 

To understand this paradox is to understand why static data cannot be

used to measure dynamic change. The static data usually used to portray

small and large businesses’ relative shares of employment are based on snapshots at two points in time. These data do not give a clue to the immense

dynamic activity behind the scenes—activity that turns high-growth small

firms into large firms. 

With the Business Information Tracking Series (BITS) file, a new longitudinal database covering all U.S. establishments with employees, it is now feasible to study the underlying dynamics of business births, deaths, expansions,

and contractions. The BITS allows the tracking of establishments over time,

including shifts in the firm size classes of growing small businesses or downsizing large businesses. It provides a picture, for example, of how a small

computer firm can expand so quickly it becomes a giant within the period of

observation. 

The database also allows businesses to be tracked in more detail, including their locations and industries. Over the 1990–1995 period, establishments in the smaller firm size classes grew fastest in services, agricultural

services, and transportation, communications, and public utilities. 

Background

Historically, measurement of job generation has been hampered by the lack

of accurate and comprehensive data able to track businesses over time.

Government statistics have typically covered only net changes in employment

totals, usually by industry or region, not by firm size. Net data do not reveal the

large number of jobs created or destroyed. To improve this situation, the 
percent to 52.5 percent, and the share of establishments belonging to small

firms declined from 88.2 percent to 87.7 percent.1 The share of firms that are

small has remained steady at 99.7 percent from 1988 to 1995 (the years for

which data are available). 

However, these static data on the distribution of employment by firm size

do not show the growth and job-creating ability of small firms. This is because

many successful small firms become large firms or are acquired by larger

firms, while many less successful large firms become small firms. The small

firm share of total employment tends to remain relatively constant, regardless

of small firms’ higher growth rates.

Compared with the snapshots depicted in static data, dynamic data are

like a motion picture that captures the wide-ranging movements in the economy. In a dynamic framework, it is possible to see what happens to establishments and jobs over time, including how their firm size classes shift. The

action not seen in the static data, such as births of new establishments, deaths

of existing establishments, and contractions and expansions of continuing

establishments, is occurring simultaneously in different establishments within

a size class.2 Studies have shown a high incidence of establishments jumping

up one or two firm size classes, or falling to smaller size classes. This underlying activity of job creation, destruction, and reorganization of firms is most

illustrative of the dynamic U.S. economy.

The dynamic and continuous “churning” of the business population and

its employment produces the net changes commonly cited to indicate the

overall performance of the U.S. economy. Much of this churning reflects the

reshuffling of factors of production to improve efficiency and competitiveness.

An active economy requires a massive flow of transactions—measured in

dynamic, longitudinal data on jobs—and associated with these, an ongoing

process of firm entry and exit, and labor hiring and firing. Only longitudinal

microdata that track business establishments through time can provide a basis

for measuring and analyzing the gross flows in business establishment populations and their employment. The result is a better understanding of how the

U.S. economy grows and adapts to changes.

48 The Annual Report on Small Business and Competition

1 For the purposes of this discussion, except as noted otherwise, small firms are defined as those

with fewer than 500 employees, large firms as those with 500 or more employees. 2 It is important to note the distinction between the birth of an establishment and the birth of a

firm. A birth of an establishment to an existing firm is not a new firm, but rather an additional location

of the original firm. An establishment birth that is a single independent unit not owned by another firm

is a new firm. Over the 1990–1995 period in the U.S. economy, 78.5 percent of the establishment

births were new firm births and 21.5 percent were births of establishments of existing firms. About 53

percent of the employment generation from establishment births belonged to new firm births and 47

percent belonged to births of establishments in existing firms.
five employees, where much of the dynamics of firm births, deaths, expansions, and contractions occurs.

The development of a new longitudinal file with data on establishments

and the firms that own them, including those with fewer than five employees,

has been a joint project of the U.S. Census Bureau and the U.S. Small Business

Administration’s Office of Advocacy since 1996. This Business Information

Tracking Series (BITS) currently consists of data on all U.S. establishments with

positive payroll in 1990, 1994, and 1995, in all nonfarm sectors of the economy.3 Additional years of data are expected to be added to the file so that

annual longitudinal data will be available for 1989 through 1996.

The Magnitude of Change 

While static data can provide a picture of the relative small and large business shares of the economy at various points in time, they mask the

immense underlying changes—births, deaths, expansions and contractions—

of firms and establishments and the concurrent changes in their employment.

A look, using dynamic longitudinal data, at establishment and employment

change by firm size over two different time spans (1994–1995 and

1990–1995) gives a sense of both the magnitude and the sources of change.

Establishment Change

Over the 1994–1995 period, small firms were responsible for 83.8 percent of

108,000 net new establishments, as well as more than 80 percent of establishment expansions and contractions (Chart 2.1 and Table 2.1). Behind these summary statistics is a motion picture of sweeping change. Of the 5.8 million establishments with employees that existed in 1994, almost 1.8 million (30.7 percent) expanded, 1.5 million (25.5 percent) contracted, and nearly 600,000

went out of business. Just one-third—1.9 million—existed until 1995 without

registering a change in their employment. Nearly 700,000 new establishments

were formed—a number equal to 12.1 percent of the 1994 total.

Over the five-year period, small businesses were responsible for 90.1 percent of the 372,000 new establishments, as well as 86.6 percent of establishment expansions and 83.8 percent of establishment contractions (Table 2.2).

Behind the scenes, of the 5.5 million establishments that existed in 1990, some

1.5 million expanded, 1.4 million contracted, and more than 1.9 million went

out of business by 1995. Only 13.7 percent—760,000—remained unchanged.

The State of Small Business 49

3 The BITS was initially called the Longitudinal Establishment and Enterprise Microdata (LEEM)

file, so a few earlier studies will identify the database by that name.
lishments in existing firms (secondary locations) started up, for a total of

700,000, or 12 percent of the 5.8 million-establishment base (Table 2.1). On the

other side of the ledger, 500,000 original locations and 90,000 secondary locations—10 percent of the total—went out of business. Thus the total turnover in

1994–1995 was almost 1.3 million establishments—1.1 million original locations and 200,000 secondary locations (about 22 percent of the base).

Over the five-year period, 1.8 million new original locations and 500,000

new secondary locations started in 1990 or later and survived through 1995

(Table 2.2). Closings numbered 1.5 million original locations and almost

400,000 secondary establishments. Thus the total 1990–1995 turnover was

4.2 million establishments—3.3 million original locations and almost 900,000

secondary locations (about 76 percent of the 1990 base).

Employment Change

The net change in employment is the difference between job creation and job

destruction. When the difference is positive, it is called job generation. This

job generation is usually given as a percentage of the base year employment.4

The 1994–1995 job generation totaled 3.7 percent of the 1994 base year

employment (Chart 2.2 and Table 2.1). Small firms increased jobs by 5.1 percent, compared with 2.1 percent in large firms.

In that one-year period, small businesses with fewer than 500 employees

generated just under three-fourths (72.7 percent) of the 3.6 million net new

jobs, and establishments with fewer than five employees generated about 29

percent. The 3.6 million-job net gain was the result of much more extensive

activity: 10.6 million jobs gained through expansions, more than 8 million lost

through contractions, almost 6 million gained in new establishments, and 4.5

million lost in business closings.

Over the five-year period, job generation totaled 7.3 percent of 1990

employment (Chart 2.3 and Table 2.2). The job generation rate in small firms

was 10.5 percent, almost three times the 3.7 percent rate in large firms.

Over the 1990–1995 period, small firms with fewer than 500 employees

again generated about three-fourths (76.4 percent) of the 6.9 million new jobs

and firms with four or fewer employees generated about 27 percent. Behind the

job generation total were 16 million new jobs as a result of expansions, 14 million lost to contractions, 25 million in new establishments, and more than 20

million lost to business closings.

Adding together the gross job creation and destruction rates gives a gross

reallocation or churning rate. This is the portion of jobs that turned over in a

period, or the portion of employees in jobs that were created or destroyed during the period. In the economy as a whole, the churning rate totaled 30 percent

50 The Annual Report on Small Business and Competition
for the one-year (1994–1995) period and almost 81 percent over the five-year

(1990–1995) interval (Tables 2.1 and 2.2). The five-year reallocation rate was

much higher for the smaller firm size classes, ranging from 130 percent in the

1–4-employee size class to 81 percent in the 100–499-employee size class,

and 70 percent in the over-500-employee size class. Even in the one-year period, firms with 1–4 employees experienced a reallocation rate of 60 percent,

twice the economy-wide rate.

Where the Jobs are Generated

E mployment creation can come from three sources: the birth of a new firm

or primary establishment, the birth of a new secondary establishment to

an existing firm, or expansion in the work force of an existing establishment.

Likewise, employment destruction can come from deaths of establishments

and firms, or contractions of continuing establishments. Large firms add most

The State of Small Business 51

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

Tracking Series, from data provided by the U.S. Department of Commerce, Bureau of the Census.

Percent

Establishment

Employment

< 500

500 +

0 20 40 60 80 100

Contractions

Net New

Establishments

Expansions

Contractions

Net Employment 

Change from 

Births Minus

Deaths

4 However, the net change is classified by firm size. The firm size can be calculated using initial

year firm size or the mean of the initial year and ending year firm sizes. This is discussed further in

Appendix B of this chapter. In this discussion, net change is allocated to the firm size in the initial year.
52 The Annual Report on Small Business and Competition Table 2.1 Establishment and Employment Changes from Establishment Expansions, Contractions, Births, and De

by Firm Size, 1994–1995 Employment Size of Firm (1994) Data Type Total 1–4 5–9 10–19 20–99 100–499 500

Establishments in 1994 5,770,090 2,518,825 980,828 607,104 627,603 278,039 757,6Establishment Changes Resulting from: Continuing Establishments without Employment Change 1,940,739 1,222,759 254,054 107,682 105,827 60,514 189,9Continuing Establishments with Employment Expansions 1,769,311 584,948 323,178 232,967 262,375 110,656 255,1Continuing Establishments with Employment Contractions 1,472,703 338,518 332,602 229,374 225,669 90,766 255,7Births, New Firms (Original Locations) 594,369 447,091 84,782 37,023 22,741 2,482 2Births, Existing Firms (Secondary Locations) 101,288 499 593 1,127 7,851 17,106 74,1Deaths, Original Locations 497,246 370,769 68,630 33,042 21,759 2,674 3

Deaths, Secondary Locations 90,091 1,831 2,364 4,039 11,973 13,429 56,4

Establishments in 1995 5,878,410 2,593,815 995,209 608,173 624,463 281,524 775,2Net Change, 1994–1995 108,320 74,990 14,381 1,069 -3,140 3,485 17,5As a Percentage of Base Year Establishments 1.9 3.0 1.5 0.2 -0.5 1.3 Percentage of Net Change Resulting from:Births and Deaths of New Firms (Original Locations) 89.7 101.8 112.3 372.4 31.3 5.5 

Birth and Deaths of Establishments of Existing 

Firms (Secondary Locations) 10.3 1.8 12.3 272.4 131.3 105.5 10
The State of Small Business 53

Employment in EstablishmentsEmployment in Establishments in 1994 96,687,346 5,311,360 6,325,466 7,537,382 17,685,901 14,113,903 45,713,3Employment Changes Resulting from:Continuing Establishments with 

Employment Expansions 10,593,050 1,302,175 936,448 985,529 2,068,486 1,497,688 3,802,7

Continuing Establishments with 

Employment Contractions 8,234,378 428,175 675,598 746,936 1,543,133 1,228,192 3,612,3

Births, New Firms (Original Locations) 3,322,001 803,500 544,323 488,330 823,180 390,123 272,5Births, Existing Firms (Secondary Locations) 2,441,599 2,426 3,178 6,184 86,909 308,682 2,034,2Deaths, Original Locations 2,822,627 648,100 441,102 427,350 747,930 369,105 189,0

Deaths, Secondary Locations 1,708,078 2,879 6,673 17,497 111,095 240,091 1,329,8

Employment in Establishments in 1995 100,278,913 6,340,307 6,686,042 7,825,642 18,262,318 14,473,008 46,691,5Net Change, 1994–1995 3,591,567 1,028,947 360,576 288,260 576,417 359,105 978,2As a Percentage of Base Year Employment 3.7 19.4 5.7 3.8 3.3 2.5 Percentage of Net Change Resulting from:Births and Deaths of New Firms (Original Locations) 13.9 15.1 28.6 21.2 13.1 5.9 Birth and Deaths of Establishments of Existing

Firms (Secondary Locations) 20.4 0.0 1.0 3.9 4.2 19.1 7

Expansions and Contractions 65.7 84.9 72.3 82.8 91.1 75.0 1

Notes: Represents activity from March 1994 to March 1995. Longitudinal data for private establishments active (payroll) in the first quarter of the year. (Es

employment in the first quarter were excluded). New firm births are classified by their employment size at the first quarter. Continuing firms are establishments tperiod and ended alive (ownership changes are considered continuing firms).

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce, Bureau of the Census.
54 The Annual Report on Small Business and Competition Table 2.2 Establishment and Employment Changes from Establishment Expansions, Contractions, Births and Deaths, by Firm Size, 1990–1995 Employment Size of Firm (1990) Data Type Total 1–4 5–9 10–19 20–99 100–499 500

Establishments in 1990 5,506,863 2,391,967 968,846 598,583 587,789 249,239 710,Establishment Changes Resulting from: Continuing Establishments without Employment Change 757,129 523,232 99,285 35,788 25,984 17,871 55,Continuing Establishments with Employment Expansions 1,465,376 549,133 267,500 177,135 186,286 80,925 204,Continuing Establishments with Employment Contractions 1,366,600 306,996 316,672 222,112 219,464 80,930 220,Births, New Firms (Original Locations) 1,797,117 1,200,693 320,476 158,662 103,910 11,920 1,Births, Existing Firms (Secondary Locations) 492,188 3,330 8,638 23,964 95,336 95,074 265,Deaths, Original Locations 1,546,705 1,006,057 274,320 145,663 105,996 12,971 1,

Deaths, Secondary Locations 371,053 6,549 11,069 17,885 50,139 56,542 228,

Establishments in 1995 5,878,410 2,583,384 1,012,571 617,661 630,900 286,720 747,Net Change, 1990–1995 371,547 191,417 43,725 19,078 43,111 37,481 36,As a Percentage of Base Year Establishments 6.7 8.0 4.5 3.2 7.3 15.0 Percentage of Net Change Resulting from:Births and Deaths of New Firms (Original Locations) 67.4 101.7 105.6 68.1 4.8 2.8 

Birth and Deaths of Establishments of Existing 

Firms (Secondary Locations) 32.6 1.7 5.6 31.9 104.8 102.8 10
The State of Small Business 55

Employment in EstablishmentsEmployment in Establishments in 1990 93,425,129 5,108,303 6,242,213 7,534,444 17,696,242 13,541,449 43,302,Employment Changes Resulting from:Continuing Establishments with

Employment Expansions 15,995,309 1,919,563 1,386,285 1,462,029 3,151,430 2,216,497 5,859,

Continuing Establishments with

Employment Contractions 13,914,523 422,184 827,565 1,088,071 2,692,529 2,173,404 6,710,

Births, New Firms (Original Locations) 13,304,645 2,345,524 2,076,217 2,092,641 3,755,026 1,857,199 1,178,Births, Existing Firms (Secondary Locations) 11,795,155 7,185 25,982 116,048 935,436 1,879,963 8,830,Deaths, Original Locations 11,808,721 1,960,701 1,766,868 1,884,399 3,726,113 1,775,068 695,

Deaths, Secondary Locations 8,518,081 9,841 30,351 81,598 482,906 1,063,948 6,849,

Employment in Establishments in 1995 100,278,913 6,987,849 7,105,913 8,151,094 18,636,586 14,482,688 44,914,Net Change, 1990–1995 6,853,784 1,879,546 863,700 616,650 940,344 941,239 1,612,As a Percentage of Base Year Employment 7.3 36.8 13.8 8.2 5.3 7.0 Percentage of Net Change Resulting from:Births and Deaths of New Firms 

(Original Locations) 21.8 20.5 35.8 33.8 3.1 8.7 2

Birth and Deaths of Establishments of Existing 

Firms (Secondary Locations) 47.8 0.1 0.5 5.6 48.1 86.7 12

Expansions and Contractions 30.4 79.7 64.7 60.6 48.8 4.6 5

Notes: Represents activity from March 1990 to March 1995. Longitudinal data for private establishments active (payroll) in the first quarter of the year. (Es

employment in the first quarter were excluded.) New firm births are classified by their employment size at the first quarter. Continuing firms are establishments tperiod and ended alive (ownership changes are considered continuing firms).

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce, Bureau of the Census.
of their new jobs by adding establishments to existing firms, while small firms

add jobs primarily through internal expansions.

Expansions and Contractions

Expansions within existing establishments were responsible for two-thirds of

the net job growth over the one-year period and 30.4 percent over the fiveyear period (Tables 2.1 and 2.2). Net expansions drive much of the job growth

in smaller firms: 83 percent of small firm job growth over the one-year period

and 56 percent over the five-year period came from expansions. In contrast,

large firms gained just 20 percent of job growth from expansions over the oneyear period and lost 53 percent of the net job growth to net contractions over

the five-year period. Overall, employment grew faster in small businesses,

where expansions were the major contributor of employment change. 

Firm and Establishment Births and Deaths 

Firm and establishment births and deaths generally account for a smaller proportion of employment change in a one-year period than expansions and contractions. Nevertheless, such turnover plays a very important role in the

dynamics of the economy. The flexibility to start and close businesses allows

the economy to adapt to new markets and changes in demand, while encouraging innovation.

56 The Annual Report on Small Business and Competition

Source: U.S. Small Business Administration, Office of Advocacy, Business Information Tracking 

Series, from data provided by the U.S. Department of Commerce, Bureau of the Census. Percent

Total < 500 500 +

0

2

4

Employment Size of Firm
Over the one-year period, net establishment births in both original and

secondary locations accounted for almost 35 percent of the net increase in

employment (Table 2.1). All of the net increase in the number of establishments in firms with fewer than 20 employees came in the form of entire new

firms. In contrast, in firms with more than 20 employees, all of the net increase

came from new secondary establishments within existing firms. The number

of establishments increased faster for large businesses than for small businesses over this one-year period, and this establishment increase was the driving

force for growth in large business employment. 

Over the 1990–1995 period, almost 70 percent of the employment

growth came from net establishment births (Table 2.2).5 Almost one-half of the

net employment increase was in establishments added to existing firms, while

22 percent came from net births of new firms. In the firms with fewer than 10

employees, all of the new establishments were original locations, while in

firms with 20 or more employees, the new establishments were additions to

existing firms. In the 10–19-employee firm size class, about two-thirds of the

new establishments were new original locations.

The State of Small Business 57

Source: U.S. Small Business Administration, Office of Advocacy, Business Information Tracking 

Series, from data provided by the U.S. Department of Commerce, Bureau of the Census. Percent

Total < 500 500 +

Employment Size of Firm

0

5

10

5 In the five-year (1990–1995) interval, a “birth” is any establishment born after 1990 and in or

before 1995, so the average age of the birth when measured in 1995 is 21

⁄2 years. Employment from

these firms born after 1990 is attributed to a birth rather than an expansion. The five-year interval also

completely misses firms that are born after 1990 and die before the end of the period. A one-year interval gives a much clearer picture of the proportion of net growth that can be allocated to births of new

establishments versus expansions of those already in existence.
58 The Annual Report on Small Business and Competition Table 2.3 Employment Change by Industry and Firm Size, 1994–1995 Employment Size of Firm Industry Total 1–4 5–9 10–19 20–99 100–499 

Total Employment in 1994 96,687,346 5,311,360 6,325,466 7,537,382 17,685,901 14,113,9

Net Change, 1994–1995 3,591,567 1,028,947 360,576 288,260 576,417 359,1Percent Change Total (Net) Change 3.7 19.4 5.7 3.8 3.3 2

From Job Creation 16.9 39.7 23.5 19.6 16.8 15From Job Destruction 13.2 20.3 17.8 15.8 13.6 13

From Job Reallocation 30.1 60.0 41.2 35.4 30.4 28

Manufacturing Employment in 1994 18,094,984 229,480 403,263 700,275 2,658,788 2,977,2

Net Change, 1994–1995 498,515 64,047 44,603 52,753 126,323 104,6Percent Change Total (Net) Change 2.8 27.9 11.1 7.5 4.8 3

From Job Creation 12.1 49.3 27.4 21.0 15.6 13From Job Destruction 9.4 21.3 16.4 13.4 10.8 9

From Job Reallocation 21.5 70.6 43.8 34.4 26.4 23

Retail Trade Employment in 1994 20,314,005 1,044,120 1,466,656 1,843,066 4,190,824 2,130,9

Net Change, 1994–1995 734,056 160,838 46,801 35,127 89,096 32,0Percent Change

Total (Net) Change 3.6 15.4 3.2 1.9 2.1 1From Job Creation 18.1 38.0 22.7 19.5 16.6 16From Job Destruction 14.5 22.5 19.5 17.6 14.5 14

From Job Reallocation 32.6 60.5 42.1 37.1 31.1 30
The State of Small Business 59

Finance, Insurance, and Real Estate Employment in 1994 6,989,431 490,468 373,651 378,085 938,983 832,0

Net Change, 1994–1995 15,982 51,356 1,935 3,335 3,907 21,6

Percent Change

Total (Net) Change 0.2 10.5 0.5 0.9 0.4 2

From Job Creation 15.7 29.1 18.7 15.9 14.7 14From Job Destruction 15.9 18.6 18.2 16.8 15.1 17

From Job Reallocation 31.6 47.7 36.8 32.7 29.8 31

Services Employment in 1994 33,248,422 2,221,625 2,493,492 2,638,087 5,767,565 5,816,0

Net Change, 1994–1995 1,486,219 392,557 129,946 102,656 258,102 200,3Percent Change

Total (Net) Change 4.5 17.7 5.2 3.9 4.5 3From Job Creation 17.4 35.6 21.0 18.6 17.7 16From Job Destruction 12.9 18.0 15.8 14.7 13.2 13

From Job Reallocation 30.3 53.6 36.8 33.2 30.9 29

Notes: Longitudinal data for establishments active (payroll) in first quarter of the year (establishments with 0 employment in the first quarter were excluded)

classified by their employment size at the first quarter. Job reallocation equals job creation plus job destruction. Represents private establishments, excluding railroad, 

Source: U.S. Small Business Administration, Office of Advocacy from Statistics of U.S. Businesses provided by the U.S. Department of Commerce, Bureau o
60 The Annual Report on Small Business and Competition Table 2.4 Employment Change by Industry and Firm Size, 1990–1995 Employment Size of Firm Industry Total 1–4 5–9 10–19 20–99 100–49

Total Employment in 1990 93,425,129 5,108,303 6,242,213 7,534,444 17,696,242 13,541,4

Net Change, 1990–1995 6,853,784 1,879,546 863,700 616,650 940,344 941,2Percent Change Total (Net) Change 7.3 36.8 13.8 8.2 5.3 

From Job Creation 44.0 83.6 55.9 48.7 44.3 4From Job Destruction 36.7 46.8 42.0 40.5 39.0 3

From Job Reallocation 80.6 130.5 97.9 89.3 83.3 8

Manufacturing Employment in 1990 19,174,359 220,723 406,313 726,921 2,784,427 3,078,6

Net Change, 1990–1995 690,522 107,722 88,697 91,724 106,138 18,5

Percent Change Total (Net) Change 3.6 48.8 21.8 12.6 3.8 0

From Job Creation 27.5 98.6 63.5 49.5 37.4 30From Job Destruction 31.1 49.8 41.6 36.9 33.6 3

From Job Reallocation 58.6 148.4 105.1 86.3 71.0 6

Retail Trade Employment in 1990 19,856,601 1,060,825 1,514,219 1,920,975 4,270,255 2,134,3

Net Change, 1990–1995 1,353,120 230,817 61,690 19,079 62,100 108,9Percent Change

Total (Net) Change 6.8 21.8 4.1 1.0 1.5 From Job Creation 46.4 73.9 51.1 46.2 44.1 4From Job Destruction 39.6 52.2 47.0 45.2 42.7 4

From Job Reallocation 86.0 126.1 98.0 91.3 86.8 8
The State of Small Business 61

Finance, Insurance, and Real Estate Employment in 1990 6,984,055 476,800 373,504 393,457 984,304 864,0

Net Change, 1990–1995 12,853 127,750 25,663 14,420 16,214 1,0

Percent Change

Total (Net) Change 0.2 26.8 6.9 3.7 1.6 0

From Job Creation 45.9 71.3 48.6 45.4 43.1 47From Job Destruction 45.7 44.5 41.8 41.7 44.7 47

From Job Reallocation 91.6 115.7 90.4 87.0 87.8 95

Services Employment in 1990 28,880,280 2,103,223 2,365,307 2,472,445 5,282,742 5,002,9

Net Change, 1990–1995 5,809,614 879,923 436,837 389,953 936,904 972,0Percent Change

Total (Net) Change 20.1 41.8 18.5 15.8 17.7 19From Job Creation 52.7 83.0 55.1 51.9 53.3 53From Job Destruction 32.6 41.1 36.7 36.1 35.6 34

From Job Reallocation 85.3 124.1 91.8 88.0 88.9 88

Notes: Longitudinal data for establishments active (payroll) in first quarter of the year (establishments with 0 employment in the first quarter were excluded)

classified by their employment size at the first quarter. Job reallocation equals job creation plus job destruction. Represents private establishments excluding railroad, 

Source: U.S. Small Business Administration, Office of Advocacy, from Statistics of U.S. Businesses provided by the U.S. Department of Commerce, Bureau 
added over the 1990–1995 period, 120 came from births of establishments to

existing firms, 30 were added from births of new firms, and 50 were lost

because large firms more often contract than expand.

Employment Changes Across Industries

I

n both the one-year and five-year periods, establishments in small firms grew

faster than those in large firms in all industries except mining and retail trade.

In 1994–1995, small firm establishments grew more than twice as fast as large

firm establishments, at 5.1 and 2.1 percent respectively (Table 2.5 and Chart

2.4). Establishments in the smallest size class (1–4 employees) had job growth

rates ranging from 10.5 percent in finance, insurance, and real estate to 31.1

percent in construction. Increases in the 5–9-employee size class ranged from .5

percent in finance to 11.1 percent in manufacturing.

Over the longer 1990–1995 period, the small business job generation rate

was almost triple the large business rate—10.5 percent, compared with 3.7 percent (Table 2.6 and Chart 2.5). Small firms grew fastest in agricultural services;

general services; and transportation, communications, and public utilities.

The three largest U.S. industries—manufacturing, retail trade, and

services—accounted for about three-quarters of all employment in 1995. In

both the one-year and five-year periods, employment in the manufacturing

and services industries grew faster in small firms than in large firms.

Employment in small manufacturing firms grew 5.6 percent in 1994–1995

and 5.2 percent in 1990–1995, compared with a gain of 1.0 percent and a

loss of 8.9 percent, respectively, in large firms. Employment in small service

firms grew 5.7 percent and 21.0 percent over the one- and five-year periods

respectively, compared with 2.8 percent and 18.8 percent in large firms.

Employment growth in retail trade from 1994 to 1995 was similar for

establishments in small and large firms, up 3.4 percent and 3.7 percent

respectively. In the five-year period however, employment in large retail firms

grew 9.7 percent—more than twice the small firm rate of 4.4 percent.

Firm Size Changes

Achart of the movement of establishments across firm sizes reveals how the

static share of employment in small businesses remains relatively constant

in spite of small businesses’ higher growth rates (Chart 2.6). This illustration uses

longitudinal data for all establishments that survived from 1990 to 1994 and had

employment in both years. Births and deaths of establishments are excluded.

62 The Annual Report on Small Business and Competition
The State of Small Business 63

Table 2.5 Employment Changes across Industries: 1994–1995

Firm Size Class

Total 1–4 5–9 10–19 20–99 100–499 500

All

Total Employment in 1994 96,687,346 5,311,360 6,325,466 7,537,382 17,685,901 14,113,903 45,713Total Net Change, 1994–1995 3,591,567 1,028,947 360,576 288,260 576,417 359,105 978Net Change as a Percent of Total 3.7 19.4 5.7 3.8 3.3 2.5 Total Employment in 1995 100,278,913 6,340,307 6,686,042 7,825,642 18,262,318 14,473,008 46,691

Agricultural Services

Total Employment in 1994 585,601 99,706 119,912 121,585 131,502 50,389 62Total Net Change, 1994–1995 42,180 29,177 6,473 3,762 3 1,729 4Net Change as a Percent of Total 7.2 29.3 5.4 3.1 0.0 3.4 

Total Employment in 1995 627,781 128,883 126,385 125,347 131,499 48,660 67

Mining

Total Employment in 1994 607,689 20,904 22,975 34,207 91,363 77,686 360Total Net Change, 1994–1995 20,701 2,949 1,055 282 910 1,866 19

Net Change as a Percent of Total 3.4 14.1 4.6 0.8 1.0 2.4 Total Employment in 1995 628,390 23,853 24,030 34,489 90,453 75,820 379

Construction

Total Employment in 1994 4,707,263 622,737 702,219 791,961 1,451,577 619,873 518Total Net Change, 1994–1995 320,001 193,912 69,656 50,610 27,625 12,712 9

Net Change as a Percent of Total 6.8 31.1 9.9 6.4 1.9 2.1 

Total Employment in 1995 5,027,264 816,649 771,875 842,571 1,479,202 607,161 509

Manufacturing

Total Employment in 1994 18,094,984 229,480 403,263 700,275 2,658,788 2,977,200 11,125Total Net Change, 1994–1995 498,515 64,047 44,603 52,753 126,323 104,677 106Net Change as a Percent of Total 2.8 27.9 11.1 7.5 4.8 3.5 Total Employment in 1995 18,593,499 293,527 447,866 753,028 2,785,111 3,081,877 11,232
64 The Annual Report on Small Business and Competition Table 2.5 Employment Changes across Industries: 1994–1995—Continued Firm Size Class Total 1–4 5–9 10–19 20–99 100–499 500

Transportation, Communications, and Public Utilities Total Employment in 1994 5,713,138 190,689 214,976 290,973 768,789 595,838 3,651

Total Net Change, 1994–1995 201,015 49,356 20,128 17,818 26,188 22,027 65Net Change as a Percent of Total 3.5 25.9 9.4 6.1 3.4 3.7 Total Employment in 1995 5,914,153 240,045 235,104 308,791 794,977 617,865 3,717

Wholesale Trade Total Employment in 1994 6,366,180 364,761 513,956 729,135 1,677,694 1,013,329 2,067

Total Net Change, 1994–1995 276,163 72,482 32,777 25,790 51,438 36,163 57Net Change as a Percent of Total 4.3 19.9 6.4 3.5 3.1 3.6 Total Employment in 1995 6,642,343 437,243 546,733 754,925 1,729,132 1,049,492 2,124

Retail Trade Total Employment in 1994 20,314,005 1,044,120 1,466,656 1,843,066 4,190,824 2,130,910 9,638

Total Net Change, 1994–1995 734,056 160,838 46,801 35,127 89,096 32,099 370Net Change as a Percent of Total 3.6 15.4 3.2 1.9 2.1 1.5 Total Employment in 1995 21,048,061 1,204,958 1,513,457 1,878,193 4,279,920 2,163,009 10,008

Finance, Insurance, and Real Estate

Total Employment in 1994 6,989,431 490,468 373,651 378,085 938,983 832,050 3,976Total Net Change, 1994–1995 15,982 51,356 1,935 3,335 3,907 21,663 40

Net Change as a Percent of Total 0.2 10.5 0.5 0.9 0.4 2.6 

Total Employment in 1995 6,973,449 541,824 375,586 374,750 935,076 810,387 3,935

Services

Total Employment in 1994 33,248,422 2,221,625 2,493,492 2,638,087 5,767,565 5,816,055 14,311Total Net Change, 1994–1995 1,486,219 392,557 129,946 102,656 258,102 200,390 402Net Change as a Percent of Total 4.5 17.7 5.2 3.9 4.5 3.4 Total Employment in 1995 34,734,641 2,614,182 2,623,438 2,740,743 6,025,667 6,016,445 14,714

Notes: Represents activity from March 1990 to March 1995. Longitudinal data for private establishments active (payroll) in the first quarter of the year. (Es

employment in the first quarter were excluded). New firm births are classified by their employment size at the first quarter. Existing establishments with ownerconsidered new firms.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce, Bureau of Census.
Of the 76.2 million jobs in the 1990 establishments that survived to 1994,

39.2 million were in small firm establishments and 37 million in large firms.

By 1994, the number of jobs in small firms had fallen to 38.9 million and the

number in large firms had risen to 37.6 million. Yet the 1990 small firms had

a net job gain and the 1990 large firms had a net job loss. How can this be? 

What happened to the small firm jobs? Almost 96 percent of the 39.2 million jobs in firms that were small in 1990 remained in firms that were small in

1994. These establishments experienced a net employment growth rate of

about 2 percent. But more than 4 percent of the small firm jobs ended up in

firms that were large in 1994. About half of this change was attributable to

establishments in small firms being acquired by large firms; the other half to

small firms growing into a larger size class.6 The acquired group increased

employment by about 18 percent; the other group by more than 75 percent.

The combined employment growth rate in establishments that were in firms

classified as small in 1990 but large in 1994 was about 46 percent.

The State of Small Business 65

Source: U.S. Small Business Administration, Office of Advocacy, Business Information Tracking 

Series, from data provided by the U.S. Department of Commerce, Bureau of the Census.

Percent

Construction

Transportation, Communications, 

and Public Utilities

Agricultural Services

Services

Manufacturing

Wholesale Trade

Retail Trade

Finance, Insurance, 

and Real Estate

Mining

-2 -1 0 1 2 3 4 5 6 7 8

6 See U.S. Small Business Administration, Office of Advocacy, Mergers and Acquisitions in the

United States, 1990–1994 (Springfield, Va.: National Technical Information Service, 1998).
66 The Annual Report on Small Business and Competition Table 2.6 Employment Changes across Industries: 1990–1995 Firm Size Class Total 1–4 5–9 10–19 20–99 100–499 500

All Total Employment in 1990 93,425,129 5,108,303 6,242,213 7,534,444 17,696,242 13,541,449 43,302

Total Net Change, 1990–1995 6,853,784 1,879,546 863,700 616,650 940,344 941,239 1,612Net Change as a Percent of Total 7.3 36.8 13.8 8.2 5.3 7.0 Total Employment in 1995 100,278,913 6,987,849 7,105,913 8,151,094 18,636,586 14,482,688 44,914

Agricultural Services Total Employment in 1990 537,968 86,384 105,955 106,570 127,826 50,273 60

Total Net Change, 1990–1995 78,548 52,742 27,290 8,667 9,491 2,923 2

Net Change as a Percent of Total 14.6 61.1 25.8 8.1 7.4 5.8 

Total Employment in 1995 616,516 139,126 133,245 115,237 118,335 47,350 63

Mining Total Employment in 1990 723,257 21,590 25,810 41,182 111,608 87,278 435

Total Net Change, 1990–1995 73,480 4,497 36 4,505 15,932 13,996 43

Net Change as a Percent of Total 10.2 20.8 0.1 10.9 14.3 16.0 

Total Employment in 1995 649,777 26,087 25,774 36,677 95,676 73,282 392

Construction

Total Employment in 1990 5,255,777 603,882 724,212 843,445 1,662,128 791,514 630Total Net Change, 1990–1995 194,897 222,561 83,867 10,650 199,381 187,438 125

Net Change as a Percent of Total 3.7 36.9 11.6 1.3 12.0 23.7 

Total Employment in 1995 5,060,880 826,443 808,079 854,095 1,462,747 604,076 505

Manufacturing

Total Employment in 1990 19,174,359 220,723 406,313 726,921 2,784,427 3,078,633 11,957Total Net Change, 1990–1995 690,522 107,722 88,697 91,724 106,138 18,571 1,066

Net Change as a Percent of Total 3.6 48.8 21.8 12.6 3.8 0.6 

Total Employment in 1995 18,483,837 328,445 495,010 818,645 2,890,565 3,060,062 10,891
The State of Small Business 67

Transportation, Communications, and Public Utilities

Total Employment in 1990 5,593,428 169,239 209,563 286,355 761,674 552,785 3,613Total Net Change, 1990–1995 291,929 97,201 53,943 39,412 50,962 65,002 14

Net Change as a Percent of Total 5.2 57.4 25.7 13.8 6.7 11.8 

Total Employment in 1995 5,885,357 266,440 263,506 325,767 812,636 617,787 3,599

Wholesale Trade

Total Employment in 1990 6,332,723 334,495 500,022 728,882 1,693,542 977,326 2,098Total Net Change, 1990–1995 264,035 151,273 83,490 47,761 30,212 18,807 67

Net Change as a Percent of Total 4.2 45.2 16.7 6.6 1.8 1.9 

Total Employment in 1995 6,596,758 485,768 583,512 776,643 1,723,754 996,133 2,030

Retail Trade

Total Employment in 1990 19,856,601 1,060,825 1,514,219 1,920,975 4,270,255 2,134,371 8,955Total Net Change, 1990–1995 1,353,120 230,817 61,690 19,079 62,100 108,981 870Net Change as a Percent of Total 6.8 21.8 4.1 1.0 1.5 5.1 Total Employment in 1995 21,209,721 1,291,642 1,575,909 1,940,054 4,332,355 2,243,352 9,826

Finance, Insurance, and Real Estate

Total Employment in 1990 6,984,055 476,800 373,504 393,457 984,304 864,044 3,891Total Net Change, 1990–1995 12,853 127,750 25,663 14,420 16,214 1,004 137

Net Change as a Percent of Total 0.2 26.8 6.9 3.7 1.6 0.1 

Total Employment in 1995 6,996,908 604,550 399,167 407,877 968,090 863,040 3,754

Services

Total Employment in 1990 28,880,280 2,103,223 2,365,307 2,472,445 5,282,742 5,002,905 11,653Total Net Change, 1990–1995 5,809,614 879,923 436,837 389,953 936,904 972,087 2,193Net Change as a Percent of Total 20.1 41.8 18.5 15.8 17.7 19.4 Total Employment in 1995 34,689,894 2,983,146 2,802,144 2,862,398 6,219,646 5,974,992 13,847

Notes: Represents activity from March 1990 to March 1995. Longitudinal data for private establishments active (payroll) in the first quarter of the year. (Es

employment in the first quarter were excluded). New firm births are classified by their employment size at the first quarter. Existing establishments with ownership sidered new firms.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce, Bureau of Census.
What about the jobs in large firms? Of the 37 million jobs in large firms

in 1990, 97 percent remained in large firms in 1994. These firms had a net job

loss of 2 percent. About 1 million ended up in firms that were small in 1994.

These establishments lost almost 39 percent of their 1990 employment. Part of

this change was attributable to divestitures of large firms, another portion to

large firms downsizing to a smaller size class. 

The net result? The establishments that were in small firms in 1990 created jobs, whether they were acquired or not, and the large firm establishments

lost jobs over the period. Despite more jobs having been created by small

firms, small business’ net employment share shifted very slightly downward—

from 51.5 percent in 1990 to 50.8 percent in 1994—because of shifts in the

size classifications of some establishments.7

68 The Annual Report on Small Business and Competition

Source: U.S. Small Business Administration, Office of Advocacy, Business Information Tracking 

Series, from data provided by the U.S. Department of Commerce, Bureau of the Census.

Percent

< 500

500 +

Services

Transportation, Communications, 

and Public Utilities

Agricultural Services

Wholesale Trade

Manufacturing

Construction

Retail Trade

Finance, Insurance, 

and Real Estate

Mining

Firm 

Employment 

Size

-20 -15 -10 -5 0 5 10 15 20 25

7 Note that the inclusion of employment gained and lost in firm and establishment births and

deaths—excluded in this example—would add to the net small firm job growth, also without markedly changing the respective shares of small and large firm employment. 
Conclusion

With the new BITS database, it is now possible to examine the whole

economy and the role small businesses play in job creation and

destruction. Small businesses grew more than twice as fast as large businesses in both the 1994–1995 and 1990–1995 periods. Underlying the relatively

constant share of employment in small businesses is a dynamic economy

experiencing firm and establishment births, deaths, expansions, and contractions that lead to changes in the size classifications of the businesses undergoing change.

The BITS already supports a wide variety of additional research that is

contributing to a better understanding of how the American economy works,

especially the dynamics of changes in the structure and employment of a

business.8 Among the questions that will be answered using this file are 

the following:

The State of Small Business 69

* Not counted here are jobs gained and lost because of business births and deaths during the 

1990–1994 period. If these figures were included, the small firm share of jobs in 1994 would be 

somewhat larger.

Note: Figures may not sum to totals because of rounding.

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

Tracking Series, from data provided by the U.S. Department of Commerce, Bureau of the Census. Millions of Employees

Large Firms

> 500

Small Firms

< 500 

76.52

1990 1994

0

10

20

30

40

50

60

70

80 76.22

36.99

39.23

37.61

38.91

1. Large Staying Large =

35.86 Million Minus

710,000 Net LOST Jobs

1.

2.

3.

4.

3. Large Becoming Small =

1.14 Million Minus

440,000 Net LOST Jobs

4. Small Staying Small =

37.54 Million Plus

780,000 Net NEW Jobs

2. Small Growing Large =

1.68 Million Plus

780,000 Net NEW Jobs

8 The BITS may be used for noncommercial research at any location of the Census’ Center for

Economic Studies. Each project proposal must be approved by the CES staff, and researchers must

become “special sworn employees” of the Bureau of the Census in order to maintain the confidential

nature of the data. Data from many other Census programs may be linked to the BITS data to enrich

the database for special analyses.
ferent from those in businesses owned by men?

• What are the new growth centers within various industries?

• In what areas are small retail businesses successfully resisting the

increasing concentration of retail business into large firms?

• What is the impact of mergers and acquisitions on growth in small and

large businesses?9

The specific exploration of the patterns of change now possible using

the BITS will enable policymakers to better understand the roles small businesses play in the economy and to implement policies that support their

growth and success.

Appendix A: The New BITS File

The Business Information Tracking Series (BITS), formerly Longitudinal

Establishment and Enterprise Microdata or LEEM, has multiple years of

data for each U.S. private sector (nonfarm) business with employees. The current BITS file facilitates tracking employment, payroll, enterprise affiliation,

and employment size for the more than 9 million establishments that existed

at some time during 1990, 1994, or 1995. A time series of 1989–1996 is

under development. The file was constructed by the U.S. Department of

Commerce, Bureau of the Census from its SBA-funded Statistics of U.S.

Business (SUSB) files and the associated Longitudinal Pointer File, which

facilitates tracking establishments over time, even when they change their

identification numbers.

Each establishment is represented by a record that includes the start year of

the establishment and three years of annual information extracted from the

1989–1995 Longitudinal Pointer File and from the three appropriate annual

SUSB Tabulation files. The annual information for an establishment includes its

Census File Numbers (CFN), Standard Industrial Classification, state, county,

metropolitan statistical area (MSA), enterprise employment, establishment

employment, and annual payroll in thousands.

Strengths of the BITS

As the only federal source of longitudinal data on the population of U.S. nonfarm businesses with employment, the BITS has a number of advantages over

70 The Annual Report on Small Business and Competition

9 See Mergers and Acquisitions in the United States.
• identifies Metropolitan Statistical Areas (MSAs);

• calculates firm employment data; 

• is the only nationwide longitudinal database covering all industries; 

• covers all establishments in almost all industries with any annual payroll (only farms, railroads, and government are excluded);

• includes better start year data (based on Longitudinal Pointer File back

to 1989, then SSEL); and

• tracks establishments across years as well as across ownership and

legal changes, even allowing for mid-year changes.

Weaknesses in the BITS

Several characteristics of the data might introduce errors into a cross-sectional analysis of the BITS if they were not handled carefully. The file:

• excludes the payroll and employment of partners and owners, resulting

in a probable understatement of average employment and wages for

unincorporated firms;

• includes no data on the self-employed who have no employees; and

• reflects employment only for the March 12 pay period (like all Census

economic data), thereby omitting data for many part-year businesses.

In addition, for analysis of longitudinal aspects of the BITS, the investigator

must keep in mind several limitations of the BITS data:

1. Imperfections (missed linkages) may occur in tracking establishments

changing legal form and ownership, especially those moving from single units

to multi-unit firms.

2. A few false linkages exist between establishments that are not the same.

3. Employment is frequently estimated, especially for multi-unit establishments, so year-to-year employment comparisons are imperfect (depend on the

estimation method).

Appendix B: Alternative Methods of

Classifying Growth by Size of Business

There are several ways to classify establishments by firm size, and the preferred method varies with the research goals. In most SBA publications,

establishments are classified by initial firm size or, in the case of births of new

The State of Small Business 71
sis based on initial size because such changes will, on average, attribute increases to the smaller size classes and decreases to the larger size classes. However,

little evidence has been found that such vacillations (or errors) are prevalent

among employment changes.10 Furthermore, only a tiny portion of such changes

would involve crossing the boundaries of the rather large firm size classes usually used for SBA analysis.

However, to avoid the risk of bias due to regression to the mean, some

researchers prefer to use the mean firm size, or the average of the beginning

and ending year firm sizes. This is appropriate for a static-equilibrium analytical framework that assumes a long-run optimum firm size with temporary

disturbances. The primary drawback of this method is that in the case of a

birth or death of an establishment that is a single-unit firm, the firm size

attributable to that birth or death is half of the actual firm size, since it is

counted as zero before or after it exists. Use of mean firm size, rather than

initial firm size, tends to shift job generation toward the larger size classes as

a result of including the expanded establishments in the mean, and to shift

job destruction to the smaller size classes as a result of including the resulting shrunken establishments in the mean for their classification.

The net growth in employment by firm size from 1990 to 1995 and from

1994 to 1995 is different depending on the methodology used (Chart 2.7 and

Table 2.7). For the one-year period, the overall growth rate was 3.7 percent.

Using the initial firm size method, firms with fewer than 20 employees registered a growth rate of 8.8 percent. This compares with a growth rate of 4.2

percent using the mean firm size method. For firms with 20 to 499 employees, the growth rates were 2.9 percent and 4.4 percent respectively. And for

firms with more than 500 employees, the growth rates were 2.1 percent using

the initial firm size method and 3.0 percent using the mean firm size method.

In the five-year period, the differences were greater. For firms with fewer

than 20 employees, the growth rate was 17.8 percent using initial firm size and

6.9 percent using mean firm size. For large firms, these percentages were 3.7

percent and 6.6 percent, respectively. Yet both methods still find greater total net

employment growth in firms with fewer than 500 employees than in those with

more than 500. Comparing the initial size method with mean size for 1994 to

1995 yields 5.1 and 4.4 percent growth for small firms and 2.1 percent and 3.0

percent for large firms. For the five-year period, the percentages are 10.5 and 8.0

for small firms and 3.7 and 6.6 for large firms.

72 The Annual Report on Small Business and Competition

10 See Per Davidson, Leif Lindmark, and Christer Olofsson, “The Overestimation of Small Firm Job

Creation—An Empirical Examination of the Regression Bias,” Small Business Economics (v. II no.1,

1998), 87–100. In estimating the regression-to-the-mean bias, the authors conclude that using initial

versus mean firm size leads to “relatively insignificant distortions and has not led researchers to draw

qualitatively false conclusions.”
The State of Small Business 73

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

Tracking Series, from data provided by the U.S. Department of Commerce, Bureau of the Census.

Percent

Initial Firm 

Size Method

Mean Firm 

Size Method

Initial Firm 

Size Method

Mean Firm 

Size Method

1994–1995 1990–1995

< 20

20–499

500 +

0 5 10 15 20

Firm 

Employment 

Size
74 The Annual Report on Small Business and Competition Table 2.7 A Comparison of Methodologies: Measuring Job Generation1994–1995 Initial Firm Size Method Mean Firm Size Method

20 20–499 500 500+ 20 20–499 500 500+ 

Total Employment in 1994 19,174,208 31,799,804 50,974,012 43,713,334 19,289,610 31,318,149 50,607,759 46,079,587 Net Change (Percent of 1994 Employment)

From Births and Deaths 1.6 0.4 0.9 1.7 1.5 0.2 0.7 1.9 From Expansions and Contractions 7.2 2.5 4.3 0.4 2.7 4.3 3.7 1.1 Total 8.8 2.9 5.1 2.1 4.2 4.4 4.4 3.0 

Total Employment in 1995 20,851,991 32,735,326 53,587,317 46,691,596 20,106,889 32,711,634 52,818,523 47,460,390 

1990–1995

Initial Firm Size Method Mean Firm Size Method

20 20–499 500 500+ 20 20–499 500 500+ 

Total Employment in 1990 18,884,960 31,237,691 50,122,651 43,302,478 19,002,692 30,093,736 49,096,428 44,328,701 Net Change (Percent of 1990 Employment)

From Births and Deaths 4.9 4.4 4.6 5.7 4.8 3.1 3.7 6.6 From Expansions and Contractions 12.9 1.6 5.8 2.0 2.2 5.6 4.3 0.0 

Total 17.8 6.0 10.5 3.7 6.9 8.7 8.0 6.6 

Total Employment in 1995 22,244,856 33,119,274 55,364,130 44,914,783 20,106,889 32,711,634 52,818,523 47,460,390 

Notes: Represents activity from March 1990, March 1994, and March 1995. Longitudinal data for private establishments active (payroll) in the first 

(Establishments with no employment in the first quarter were excluded).

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce, Bureau of Census.
The New American Evolution:

The Role and Impact of Small Firms

Synopsis

Aquiet evolution has revolutionized the American economy in its transition

from the industrial age to the information age. The purpose here is to document the role of small- and medium-sized enterprises in the new American

evolution by asking a fundamental question, “Are small firms important?”

The response to this question requires an understanding of change in the

economy as a dynamic process. A static view misses the point completely by

asking the wrong question or asking the question wrongly. Viewed through

an evolutionary lens, small firms make two indispensable contributions to

the American economy:

• First, they are an integral part of the renewal process that pervades

and defines market economies. New and small firms play a crucial

role in experimentation and innovation that leads to technological

change and productivity growth. In short, small firms are about

change and competition because they change market structure. The

U.S. economy is a dynamic organic entity always in the process of

becoming, rather than an established one that has arrived. It is about

prospects for the future, not about the inheritance of the past.

• Second, small firms are the essential mechanism by which millions

enter the economic and social mainstream of American society. Small

businesses enable millions, including women, minorities, and immigrants, to access the American Dream. The greatest source of

American strength has always been the American Dream of economic growth, equal opportunity, upward mobility. In this evolutionary

process, community plays the crucial and indispensable role of providing the “social glue” and networking opportunities that bind small

firms together in both high tech and “Main Street” activities. The

American economy is a democratic system, as well as an economic

system, that invites change and participation.

The crucial barometer for economic and social well-being is the continued high level of creation of new and small firms in all sectors of the economy

by all segments of society. This examination of small firms’ role is divided into

six segments: the performance of the U.S. economy in the 1990s; historical
Americans to the global economy.

The Macroeconomy in the 1990s

At the time of the 1992 presidential election, one of the main issues in the

public debate was competitiveness. A common perception was that U.S.

industry was losing the global economic race. If government didn’t respond,

living standards would suffer. In that recession year, then Under Secretary of

Commerce Jeffrey E. Garten summed up the conventional economic thinking

about the state of affairs:1

Relative to Japan and Germany, our economic prospects are poor and our

political influence is waning. Their economic underpinnings—trends in

investment, productivity, market share in high technology, education and

training—are stronger. Their banks and industry are in better shape; their

social problems are far less severe than ours.2

By 1996 it had become apparent to experts and others that profound change

had occurred and the economic anxiety of four years earlier was no longer to

be found in the electorate. After a quarter century of painful ups and downs,

the U.S. economy was doing extraordinarily well. According to Lawrence H.

Summers, deputy treasury secretary, “The economy seems better balanced

than at any time in my professional lifetime.”3

Unemployment in 1998 is just under 5 percent, the economy is growing

at 3 percent a year, inflation is at bay, manufacturing productivity is rising by

4 percent a year, the dollar is strong, and the Dow Jones Industrial Average is

breaking records almost as a matter of course. It seems clear that the U.S.

economy has restructured, moving from an industrial economy to an information one, and has made the transition to the 21st century.

The impressive recent performance of the United States may be contrasted with the rather lackluster performance in both Europe and Japan, where

GNP has grown at less than 1.5 percent per annum in the last five years. In the

European Union (EU) the unemployment rate has remained stubbornly in double digits, and in Japan the stock market has been stagnant since the early

1990s at half of its previous level.

76 The Annual Report on Small Business and Competition

1 Jeffrey E. Garten, A Cold Peace: America, Japan, Germany, and the Struggle for Supremacy

(New York: Times Books, 1992). 2 See also Laura D’Andrea Tyson, Who’s Bashing Whom? Trade Conflict in High Technology

Industries (Washington, D.C.: Institute for International Economics, 1992) and Lester Thurow, Head to

Head: The Coming Battle Among Japan, Europe, and America (New York: William Morrow and

Company, 1992). 3 “U.S. Sails on Tranquil Economic Seas,” The Washington Post, December 2, 1996, 1.
percent annually in the European Union and 3.1 percent in the United

States. But beneath this superficial similarity lie some fundamental differences. While total EU employment was virtually unchanged, it increased by

33 million in the United States. (Another 25 million jobs were added

between 1983 and 1996.) At the same time, the capital stock increased by

3.5 percent per year in the European Community and by 2.4 percent in the

United States.4 From 1960 to 1984, labor productivity rose much more rapidly in Europe than in the United States—but so did unemployment. The

unemployment rate hovered around 5 percent in the United States from

1960 to 1975, while it stayed below 3 percent in the European Community.

By 1982 it rose rapidly on both sides of the Atlantic to about 10 percent. The

unemployment rate has remained around 10 percent in Europe while it has

been cut in half, to less than 5 percent, in the United States.

What explains this divergent macroeconomic behavior?5 While a number

of factors can be cited, one is certainly differences in competition, entrepreneurship and new firm startups. The U.S. economy has had extremely strong

performance by new firms. Between 1960 and 1983, the number of corporations and partnerships in the United States more than doubled (from 2.0 million to 4.5 million) while the number of companies in Europe stagnated.6 It

declined in Sweden, Denmark, the Netherlands, and Britain and increased

only slightly in West Germany, France, Switzerland, and Italy.7

Between 1990 and 1997, this trend has continued in the United States.

The number of corporations and partnerships increased from 6.1 million in

1990 to 6.9 million in 1997.8 The number of sole proprietorships also

increased from 14.1 million to 16.8 million. The difference in business formation rates, in turn, reflects a number of other economic factors, such as consistently higher return on investment in the United States than in Europe, higher productivity levels, and lower unit labor costs. Other institutional factors

such as less rigid labor and capital markets, freer competition, and lower

The State of Small Business 77

4 H.W. De Jong, “Free Versus Controlled Competition,” in B. Carlsson (ed.), Industrial Dynamics:

Technological, Organizational, and Structural Changes in Industries and Firms (Boston, Dordrecht and

London: Kluwer Academic Publishers, 1989). 5 This exploration is based in part on a conference sponsored by the Office of Advocacy of the

U.S. Small Business Administration on May 9, 1997, entitled “Are Small Firms Important: Their Role

and Impact.” The discussion does not deal with the question of entrepreneurial finance, which is, however, according to many, a barrier to entry. For a discussion of the issues, see D. Blanchflower and A.

Oswald, “What Makes a Young Entrepreneur,” Journal of Labor Economics, 1998; J. Lerner, “The

Government as Venture Capitalist,” Working Paper #96–038, (Boston, Mass.: Harvard Business School,

1996); and John Freear, Jeffrey E. Sohl, and William E. Wetzel, Creating New Capital Markets for

Emerging Ventures, prepared for the U.S. Small Business Administration, Office of Advocacy, under

contract no. SBAHQ–95–m–1062 (Springfield, VA: National Technical Information Service, 1996). 6 This trend may be changing. See “Startups to the Rescue,” Business Week (March 23, 1998), 50. 7 DeJong, “Free Versus Controlled Competition.” 

8 See Chapter 1 for more detail.
ries to the U.S. success. First, large firms that existed in mature industries have

adapted, downsized, restructured, and reinvented themselves during the

1980s and 1990s and are now thriving. Large businesses have adopted and

learned from smaller firms as they have downsized. In a word, they have

become more entrepreneurial. As large firms have become leaner, their sales

and profits have increased sharply. For example, General Electric cut its work

force by 40 percent, from more than 400,000 20 years ago to fewer than

240,000 in 1996, while sales increased fourfold, from less than $20 billion to

nearly $80 billion. This was accomplished in many cases by returning to the

firm’s “core competencies” and by contracting out functions formerly done inhouse to small firms.11

Second, while these large companies have been transforming themselves,

new and small startup companies have been blossoming. Twenty years ago,

Nucor Steel was a small steel manufacturer with a few hundred employees,

which embraced a new technology called thin slab casting, allowing it to

thrive while other steel companies were stumbling. In 1995, Nucor had

59,000 employees, sales of $3.4 billion, and a net income of $274 million. In

fact, according to Lynch and Rothchild, 25 companies, some of which did not

exist in 1975, have created 1.4 million jobs.12

Third, thousands of smaller firms have been founded, many by women,

minorities, and immigrants. These new companies have come from every sector of the economy and every part of the country. Together these small firms

also make a formidable contribution to the economy, as many firms hire one

or two employees. The cumulative effect of this new firm formation was evident during the recovery from the 1991 recession. Between March 1992 and

March 1993 small firms with fewer than five employees together created more

than 1 million net new jobs. The last two entrepreneurial success stories overlap with the role of new and small firms in the economy. (Small firms are

defined as those with fewer than 500 employees).

The Historical Background

With a few notable exceptions, for the better part of the history of the profession, economists have not spent much time studying small firms.13

78 The Annual Report on Small Business and Competition

9 Gary S. Becker, “Make the World Safe for Creative Destruction,” Business Week (February 23,

1998), 20. 10 R. F. Hebert and Albert N. Link, “In Search of the Meaning of Entrepreneurship,” Small

Business Economics 1(1) (1989), 39–50. 11 B. Harrison, Lean and Mean (New York: Basic Books, 1994). 12 P. Lynch and John Rothchild, Learn to Earn (New York: Simon and Schuster, 1996). 13 A notable early exception was the work of J. Steindl in Small and Big Business (Oxford: Basil

Blackwell, 1945).
had been acknowledged previously.14

The Historical View

The view that the cornerstone of the modern economy is the large firm dates

back to the onset of the industrial revolution. The concept of scale economies

was proposed by Adam Smith with the famous passage on the pin factory.15

The classical economist’s approach to industrial competition was dominated

by an environment where technology was constantly increasing the minimum

average plant size in a static context. Unfortunately, it reached its zenith in the

late 19th century with the dominance of the trusts in steel, oil, and automobiles. The subsequent passage of the Sherman Anti-Trust Act of 1890 was

intended to stem the growth of monopoly power.

In this view, which has prevailed for the better part of this century, small

firms were not seen to play an important role in the economy, except as suppliers to large firms, and their role was expected to diminish in the future.16

This has been the case especially in the manufacturing sector where large and

even giant firms dominated Western economies throughout most of the 20th

century. The way to improve performance was to fully exploit economies of

scale. As E. F. Schumacher pointed out: “I was brought up on the theory of

‘economies of scale’...”17 In country after country, official policies favored

large units of production and mechanisms of ownership. These goals were

pursued in free market and planned economies alike, as well as in developed

and developing countries. Thus, for the better part of two centuries, there was

a convergence of opinion on the relevance of firm size and economies of

scale, and its importance for economic growth.18

Those interested in documenting the role of small firms in the 1970s

found much talk but few facts. For years the small-firm sector remained

ignored and poorly understood, even though many people worked for small

firms. However, all that has begun to change as powerful computers and large

data sets have enabled researchers to assemble a far better understanding of

the economic role of small firms.

The State of Small Business 79

14 For reviews of the literature, see Zoltan Acs, Small Firms and Economic Growth, vols. I and II

(Cheltenam: Edward Elgar, 1996); P.H. Admiraal, ed., Small Business in the Modern Economy (Oxford:

Basil Blackwell, 1996); Organisation for Economic Cooperation and Development, SMEs:

Employment, Innovation and Growth: (Paris: The Washington Workshop, 1996), and D.J. Storey,

Understanding the Small Business Sector (London: Routledge, 1994). 15 Adam Smith, The Wealth of Nations (Oxford: Clarendon Press, 1776), 54. 16 John Kenneth Galbraith, American Capitalism: The Concept of Countervailing Power, revised

edition (Boston, Mass.: Houghton Mifflin, 1956). 17 E.F. Schumacher, Small is Beautiful (New York: Harper and Row, 1973). 18 C. Pratten, The Competitiveness of Small Firms (Cambridge: Cambridge University Press, 1991).
period. Between 1958 and 1977 the static share of employment accounted for

by firms with fewer than 500 employees decreased from 55.5 percent to 52.5

percent. Between 1958 and 1979 the share of business receipts obtained by

companies with less than $5 million in receipts declined from 51.5 percent to

28.7 percent, in part because the real value of the dollar declined. Between

1958 and 1977, the share of value-added contributed by firms with 500 or

fewer employees decreased from 57 percent to 52 percent. The decline in the

small business share of value-added was because of a shift in the small business share of value-added within industries. In other words, firms were getting

bigger, and therefore the share of small firms was being reduced.20

However, by the early 1970s, cracks had begun to appear in the structure

of the manufacturing sector in some developed countries, including some of

the most important firms and industries. At the same time, casual evidence

began to suggest that small firms in several countries were outperforming their

larger counterparts. In some industries the impact of technological change was

to reduce the minimum efficient scale of production. One example of this was

the U.S. steel industry, where new firms entered in the form of “mini-mills” (for

example, Nucor) and small firm employment expanded, while the incumbent

large companies shut down plants and reduced employment in a number of

countries. Other examples are found in industries characterized by rapid product innovation, such as electronics and software. This development, following

the twin oil shocks, triggered an unexpected reappraisal of the role and importance of small manufacturing firms, resulting in a divergence of opinion on the

importance of firm size.21

The New Evolution

In fact, several lines of research have found that something happened to the

centuries-old trend toward larger business. Depending upon the measure of

80 The Annual Report on Small Business and Competition

19 Research and data for this project were provided by the U.S. Small Business Administration,

Office of Advocacy. 20 Joel Popkin and Company, Small Business Gross Product Originating: 1958–1982, report no.

PB88–240692, prepared under contract for the U.S. Small Business Administration, Office of Advocacy

(Springfield, Va: National Technical Information Service, April 1988). Note that the small business share

of value-added is the best measure of the relative importance of small business in the economy. Sales

tend to understate the importance of small businesses, and employment tends to overstate the importance of small businesses because they are more labor-intensive than large businesses. 21 Zoltan J. Acs, The Changing Structure of the U.S. Economy (New York: Praeger, 1984). Many

of the issues raised in that book were examined by David B. Audretsch and Zoltan J. Acs at the

Wissenschaftszentrum (WZB) in Berlin in the late 1980s. These findings are to be found in the inaugural issue of Small Business Economics 1(1) (1989), and in Acs and Audretsch, proceedings from the first

Global Workshop on Small Business Economics in Berlin, 1990. Subsequent issues of Small Business

Economics 6 (2) (1994); 8(3) and 8(5) (1996) have reported more recent research findings from the second and third Global Workshops.
business size examined, the trend decelerated, ceased, or reversed itself

sometime between the late 1960s and late 1970s. Contrary to the conventional wisdom:

• David Birch found that,“ . . . whatever else they are doing, large firms

are no longer the major providers of new jobs for Americans.”22

• Davis showed that the typical nonfarm private-sector employee worked

at increasingly larger establishments during the 1950s and 1960s but at

increasingly smaller establishments in the late 1960s and 1970s.23

• Brock and Evans showed that the average gross national product per

firm increased from $150,000 in 1947 to $245,000 in 1980, but then

decreased to $210,000 in 1986.24

• Loveman and Sengenberger reported that average firm and establishment size began to decrease in most of the countries they examined in

the 1970s after having increased from at least the end of World War II.25

• Acs and Audretsch showed that the small firm share of manufacturing

employment increased in most OECD (Organisation for Economic

Cooperation and Development) countries in the 1980s.26

The State of Small Business 81

Total Change 6 23 4

Change Due to Shifts in 

Industry Composition2 4 2 3

Change Due to Shifts in 

Small Business Share

Within Industries3 9 21 7

1 Excludes the construction industry.

2 Calculated under the assumption that each industry’s share of total employment, sales, or value-added,

respectively, remained constant over the time period under consideration. 3 Calculated under the assumption that small businesses’ share of employment, sales, or value-added,

respectively, remained constant for each industry over the time period under consideration.

Note: Small businesses are those with fewer than 500 employees for the employment and value-added

measures and those with sales of under $5 million in 1958 dollars for the sales measure.

Source: Brook and Evans, Economics of Small Firms (1986), Table 2.11, p. 21.

22 David Birch, “Who Creates Jobs?” The Public Interest 65 (1981), 8. 23 S. Davis, “The Distribution of Employees by Establishment Size: Patterns of Change and CoMovement in the United States, 1962–1985,” working paper, University of Chicago, 1990. 24 William A. Brock and David S. Evans, “Small Business Economics,” Small Business Economics

1(1) (1989), 7–20. 25 G. Loveman and W. Sengenberger, “The Re-emergence of Small-Scale Production: An

International Comparison,” Small Business Economics 3(1) (1991), 1–39. 26 Zoltan J. Acs and David B. Audretsch, Small Firms and Entrepreneurship: An East-West

Perspective (Cambridge: Cambridge University Press, 1993).
from manufacturing to services.

Between 1982 and 1992, the formerly declining small firm share of

value-added in the U.S. economy stabilized at 51 percent, peaking at 52 percent between 1985 and 1987 (Table 3.2).29 This result is quite remarkable in

light of the mega-mergers and consolidation in retail trade during the 1980s

and the growth of giant global business service firms during the 1990s. The

significant expansion of the service sector—and the role of growing small

firms in it—helped end the decline in the small firm share of value-added. If

the industrial makeup of the U.S. economy had remained constant at its 1982

distribution, the small business share of value-added would have declined

from 51 percent in 1982 to 48 percent in 1992. Small service firms—many of

them new startups in new industries—contributed to maintaining the aggregate small business output share during the 1980s and early 1990s.

While the small business output share has declined in some sectors during the past 10 years, declines have been counterbalanced by gains in other

sectors. In construction, for example, small business value-added rose from 78

percent to 88 percent of the industry total during the 1982–1992 period. The

small firm share of value-added in manufacturing and mining rose from 23

percent to 25 percent.

According to Piore and Sabel, the economic crisis of the 1970s resulted

from the inability of firms and policymakers to maintain the conditions necessary to preserve mass production—that is, the stability of markets.30 Their

claim is that the deterioration in economic performance in the 1980s resulted

from the limits of the model of industrial development found in mass production: the use of special-purpose machines and of semi-skilled workers to produce standardized products. In fact, if the Great Depression represented a

macroeconomic crisis, the economic problems of 1970–1990 were essentially microeconomic in that the focus was on the choice of technologies and the

organization of firms, industries, and markets. The emerging conventional wisdom seems to suggest that small firms and entrepreneurship are both necessary for macroeconomic prosperity.31

82 The Annual Report on Small Business and Competition

27 Bruce D. Phillips, “The Increasing Role of Small Firms in the High-Technology Sector:

Evidence from the 1980s,” Business Economics (January 1993), 40–47. 28Zoltan J. Acs and David S. Evans, “The Determinants of Variation in Self-Employment Rates

Across Countries and Over Time,” University of Maryland working paper, 1995. 29 Joel Popkin and Company, Small Business Share of Private, Nonfarm Gross Domestic Product,

report no. PB91–80723 prepared under contract for the U. S. Small Business Administration, Office of

Advocacy (Springfield, Va.: National Technical Information Service, February 1997). 30 M.J. Piore and C. F. Sabel, “Possibilities for Prosperity: International Keynesianism and Flexible

Specialization,” The Second Industrial Divide (New York: Basic Books, 1984), 251–280. 31 OECD, SMEs: Employment, Innovation and Growth, The Washington Workshop, Paris, 1996.
Small Firms in Economic Theory

I

n thinking about the economic role of small firms, the obvious starting point

is the theory of the firm.32 The field of economics that focuses the most on

links between the organization of firms in industries and economic performance has been industrial organization. It is the task of industrial organization

scholars to sort out the perceived trade-off between economic efficiency on

the one hand, and political and economic decentralization on the other. Two

disparate views about the impact of small firms on economic efficiency have

emerged in the economic literature: first, static theory suggests that large firms

are efficient because it focuses on the status quo: second, dynamic theory suggests that small firms are efficient because it focuses on change.

The Static View

One of the most striking findings emerging in the static view of industrial

organization is that small firms generally operate at a level of output that is too

small to sufficiently exhaust scale economies, even when the standard definition of a small firm employing fewer than 500 employees is applied. The

importance of scale economies in the typical manufacturing industry relegated most small firms to being classified as sub-optimal. Almost 79 percent of

firms in 1995 had fewer than 10 employees (Chart 3.1). Static theory argues

for reducing the share of firms that are sub-optimal to increase efficiency.

Static analysis takes a snapshot of the economy at two different time

periods and then compares different equilibrium points. Static theory

assumes prompt adjustment to changes in the economic environment. It is

not concerned with the time required for changes to take place, or the organizational and managerial structure needed for the change. Static theory is

The State of Small Business 83

Mining and Manufacturing 23 23 24 25 25 25 24 24 24 25 25

Construction 78 81 83 84 86 87 88 88 88 88 88

Transportation, Communications

and Public Utilities 22 21 22 23 23 23 23 23 24 24 24

Trade 70 69 68 67 66 65 64 64 63 61 62

Finance, Insurance, and Real Estate 62 60 60 58 56 55 54 52 51 50 51

Services 81 81 80 79 78 77 76 76 75 74 74

Source: Joel Popkin and Company, “Small Business Share of Private, Nonfarm Gross Product,” prepared

under contract for the U.S. Small Business Administration, Office of Advocacy, SBAHQ–95–C–0021, June 1997,

Table 1, p.2.

32 For a review of the literature on small firms in economic theory see J. You, “Small Firms in

Economic Theory,” Cambridge Journal of Economics 19 (1995), 441–462.
concerned with determining the direction in which economic variables move

in response to other variables The two snapshots are compared and an

assumption is made about the role of small or large firms, monopoly profits,

market structure or efficiency.

Static theory favors large firms in the old raw-material-based economy

because of economies of scale. For example, in the electric utility industry, if

you doubled the size of a coal-fired utility plant, the output of electricity doubled, while the cost of building the plant went up only 70 percent. The building of larger and larger plants contributed to cheaper electricity rates.

What are the economic welfare implications? In static theory, the existence of small sub-optimal firms represented a loss in economic efficiency.

Seen through the static lens provided by traditional industrial organization and

labor economics, the economic welfare implication of the recent shift in economic activity away from large firms and toward small enterprises is unequivocal: overall economic welfare is decreased because productivity and wages

will be lower in small firms than large. As Weiss argued in terms of efficiency

and Brown, Hamilton, and Medoff in terms of employee compensation, the

84 The Annual Report on Small Business and Competition Percent of Firms in the Employment Size C

0 1–4 5–9 10–19 20–99 100–499 500+

Note: Employment is measured in March, thus leading to firms with zero employment and 

some annual payroll.

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

U.S. Department of Commerce, Bureau of the Census.

Firm Size by Employee Number

0

10

20

30

40
y pg

why a firm should exist.34 His answer? To reduce transaction costs. But why

should more than one firm exist in an industry? One answer is provided by the

traditional economics literature focusing on industrial organization. An excess

level of profitability induces entry into the industry. This is why the entry of

new firms is interesting and important—because the new firms provide an

equilibrating function in the market, in that the levels of price and profit are

restored to the competitive levels.

But why do firms start up in industries where the incumbent firms are

experiencing negative profits and a loss in market share to foreign companies?

Traditional static theory would support either entry or exit, but not both at the

same time. An alternative explanation was needed.35 It was suggested that new

firms entering the industry were not simply to increase output by being smaller replicas of large incumbent enterprises, but by serving as agents of change.

However, there is nothing unique about firms.36 The firm is in no sense a

natural unit of analysis. Only individuals can claim that distinction. All are

potential entrepreneurs. It seems then that an economic theory of efficiency

needs to build up from men and women rather than from firms. When the focus

is shifted toward individuals and away from the firm as the relevant unit of observation, the question becomes, “How can entrepreneurs with a given endowment of new knowledge best appropriate the returns from that knowledge?”

Each economic agent must choose how best to appropriate the value of

his or her endowment of economic knowledge by comparing the wages he or

she would earn in continued employment with an incumbent enterprise to the

expected net value of the profits accruing from starting a new firm.

An additional layer of uncertainty pervades a new enterprise. It is not

known how competent the new firm really is, in terms of management, organization, and work force. At least incumbent enterprises know something about

their underlying competencies from past experiences. A new enterprise is burdened with uncertainty as to whether it can produce and market the intended

product as well as sell it. The degree of uncertainty will typically exceed that

confronting incumbent enterprises.

Dynamic theory favors small firms because it shines the light on change.

In the “new information economy,” continued innovation and change is the

The State of Small Business 85

33 Leonard W. Weiss, “The Structure-Performance Paradigm and Antitrust,” University of

Pennsylvania Law Review, 127 (April 1979), 1104–1140 and C. Brown, et al., Employers: Large and

Small (Cambridge: Harvard University Press, 1990).

34 Ronald Coase, “The Nature of the Firm,” Economica 4 (1937), 386–405. 35 Zoltan J. Acs, The Changing Structure of the U.S. Economy (New York: Praeger, 1984). 36 David B. Audretsch, “Small Firms and Efficiency,” conference paper prepared for the U.S.

Small Business Administration, Office of Advocacy, 1997.
The prevalence of small enterprises in the firm size distribution reflects

the continuing entry of new firms into industries and not necessarily the permanence of such small and sub-optimal enterprises over the long run.

Although the skewed distribution of firms (a few large firms and many small

firms) persists with remarkable stability over long periods of time, a constant

set of small and sub-optimal scale firms is not responsible for this skewed distribution. Instead, a changing set of new small firms provides an essential

source of new ideas and experimentation that otherwise would remain

untapped in the economy. A constant supply of new firms seems to replace

existing ones.

What are the welfare implications of dynamic theory? With dynamic theory, the existence of small sub-optimal firms does not represent a loss in economic efficiency. Seen through the dynamic lens of evolutionary theory, the

economic welfare implications of the recent shift in economic activity away

from large firms and toward small enterprises is welfare-enhancing because

new startups introduce change into the economy. As Schumpeter argued in

terms of economic development, and Kirchhoff in terms of dynamics, the

implication for public policy is to implement policies that encourage the entry

of new firms, support their survival, and promote their growth.38

Community

How can an unrelated collection of small businesses prosper in the face of

competition from large firms?39 There are two mechanisms by which small

firms can succeed. First, they can become part of the value chain of an industry. For example, small firms can write software for a larger project. Second,

small firms can become part of a larger social community like the “Third Italy”

or “Silicon Valley.”

Community comes in many flavors—from the high tech communities of

Silicon Valley to the Cuban immigrant communities of Miami. The essence of

community is a shared set of values and customs concerning behavior and

family. Community and evolution play the crucial and indispensable role of

86 The Annual Report on Small Business and Competition

37 Statistics of U.S. Business (SUSB), U.S. Small Business Administration, Office of Advocacy from

data provided by the U.S. Department of Commerce, Bureau of the Census, Table 9S. See also Chapter

2 of this report for a discussion of job creation and destruction over the 1990–1995 period. 38 Joseph A. Schumpeter, The Theory of Economic Development (Cambridge: Harvard University

Press, 1934) and Bruce Kirchhoff, Entrepreneurship and Dynamic Capitalism (London: Praeger, 1994).

Perhaps the most important determinant of the survival and growth of new firms is the availability of

human and financial capital. See R. C. Cressey, “Are Business Startups Debt-Rationed?” The Economic

Journal 106 (1996), 1253–1270. 39 M. Lazerson, “Organizational Growth of Small Firms: an Outcome of Markets and

Hierarchies?,” American Sociological Review 53 (3) (1988), 330–342.
choice and economic growth. The essential qualities of social capital, as

opposed to physical or human capital, are that it reflects a community or

group and that it impinges on individuals regardless of their independent

choice. According to new research, what is important is the interplay between

social dynamics in the community and economic performance over time.

Strong community ties lead to strong commercial ties.40

Innovation, New Firm Startups, and Job Creation

What are the consequences of a dynamic economy? Underneath the

smooth surface of macroeconomic aggregates is a very active microeconomic world. Massive reshuffling of factors of production is constantly taking place. Market economies seem to handle this overwhelming “churn” with

remarkable success.41 Small and new firms are an integral part of the renewal

process that pervades and defines market economies. New and small firms

play a crucial role in experimentation and innovation that leads to technological change and employment growth. In short, small firms are about change

and competition because they change market structure.

Innovation

Almeida and Kogut rely on the semiconductor industry to explore the role of

small firms and community in radical innovation.42 They support the view that

small firms play a key role in innovation and the evolution of markets, arguing that small firms’ importance lies not only in the productivity of their

research relative to large firms, but in the unique role they play in the innovative process. Small firms play a critical role in technological and economic

development by exploring and innovating in new technological fields.

Almeida and Kogut use patent data to identify the patterns of innovation

in large and small firms. Startups produce innovations in less crowded technological fields, while larger firms appear to succeed in more established

fields. Discoveries for new small firms usually come just a few years after their

The State of Small Business 87

40 ”The Ties That Lead to Prosperity,” Business Week (December 15, 1997), 153. 41 R.J. Caballero and L. Hammond, “On the Timing and Efficiency of Creative Destruction,”

Quarterly Journal of Economics 446 (3) (August 1996), 805–852 and Wilbur R. Maki and Paul D.

Reynolds, Business Volatility and Economic Growth, report no. PB90–269226, prepared by Regional

Economic Development Associates, Inc. under contract with the U. S. Small Business Administration,

Office of Advocacy (Springfield, Va.: National Technical Information Service, 1990). 42 Paul Almeida and B. Kogut, “The Exploration of Technological Diversity and Geographic

Localization in Innovation: Start-up Firms in the Semiconductor Industry,” Small Business Economics 9

(1) (1997).
firms overcome their limited resources by turning to community networks.

They often rely on regional knowledge networks for important inputs into the

innovation process. Through this process of accessing and sharing knowledge

with geographically proximate firms, small firms help the circulation and

building of regional networks.43

In the Almeida-Kogut study, both large and small firms cited local patents

significantly more than would be expected, indicating localization effects.

These effects were most significant for the startup sample; that is, startup firms

were much more closely tied to other firms within the same regional network

than were larger firms.

New Firm Startups

The entry of new firms is impressive in most economies. Over a five-year period, entry in manufacturing industries accounts for almost half of the net new

employment increase in both the United States and Canada. However, while

the size of the entry population is impressive, the importance of entry is tied

to its dynamic impact on innovation. Entrants play a key role in the entrepreneurial process that constantly offers consumers new goods and services.

Entrants are often seen as providing the dynamic new force that leads to

change in an industry. This process is costly. Many entrants fail soon after they

enter—but some become the next Microsoft.

Baldwin surveyed a large number of startups to better understand the

innovation process.44 He examined firms’ innovative and technological competencies and their human capital development. The survey focused on new

entrants that emerged from their early years and survived to their teen years.

The frame consisted of all entrants to the commercial sector (both goods and

services) in the period 1983–1986 that survived to 1993.

The results helped generalize the importance of innovation to firms in all

industries. Firms in the semiconductor and electronics industries are clearly

innovative, but other firms have also developed the capacities needed for

innovation in their particular industries. Innovations thus enhance firm survival. These capabilities often involve developing new technologies, nurturing

worker skills, or devising products that are highly novel. The range and diversity of the innovative skills of new firms across all industries is remarkable.

The importance of the relationship between innovation and firm growth

is also clear. The successful entrants that grow most are those that develop

88 The Annual Report on Small Business and Competition

43 A. Saxenian, “The Origins and Dynamics of Production Networks in Silicon Valley,” Research

Policy 20 (1994), 423–37. 44 John R. Baldwin, “Innovation and Entry,” conference paper prepared for the U.S. Small

Business Administration, Office of Advocacy, 1997.
Job Creation

What is the contribution of new establishments, startups and small firms to job

creation? The public discourse about the role of employer size has focused primarily on the contribution of small businesses to job creation. However, there

is less agreement about this aspect of the role of employer size than, for example, the role of small firms in innovation, compensation, or productivity. The

widely cited claim that small businesses are the primary creators of jobs in the

United States derives primarily from studies by David Birch and the 

U.S. Small Business Administration using the only data publicly available in

the 1980s from Dun and Bradstreet.

What is the relationship between employer size and age?45 Strong arguments can be made why employer age might be relevant. First and foremost,

new and young businesses are inherently a part of the ongoing process of

renewal that pervades market economies, as predicted by the dynamic model.

The introduction of new ideas, products, and techniques involves a process of

trial and error in which many new businesses fail, while others are dramatic

successes. Just a few years ago, computers did not talk to each other either

within or between offices.46

The new Business Information Tracking Series (BITS) file, jointly constructed by the Office of Advocacy of the U.S. Small Business Administration

and the Bureau of the Census of the U.S. Department of Commerce, has the

advantages of being longitudinal and of covering all private sector establishments with employment, even new firms in the 1–4 employee firm size class.

This file takes over where the Longitudinal Research Datafile ends in the early

1990s, and currently covers the time period of 1990–1995.47

Indeed, for the whole economy, the smallest firm size is important. When

firms were classified by their employment size in the beginning year of the

period being observed, the largest percentage increase in employment was in

the 1–4 employee firm size class where employment increased by 1,879,546

(36.8 percent) from 1990 to 1995 (Chart 3.2). This was even true in manufacturing, where employment in the 1–4 employee firm size class increased by

107,722. Of the net new jobs created in the whole economy, new establishThe State of Small Business 89

45 J. Haltiwanger and C. J. Krizan, “Small Business and Job Creation in the United States: The Role

of New and Young Firms,” conference paper prepared for the U.S. Small Business Administration,

Office of Advocacy, 1997. 46 While the Longitudinal Research Datafile (LRD) may be inadequate for the purposes of characterizing the role of employer size in job creation for the U.S. economy, it can be used effectively to

characterize the role of employer size for U.S. manufacturing, which is useful in its own right. In so

doing, it serves as a testing ground for methodological and conceptual issues. 47 See Chapter 2 for more detail. 
ments accounted for 70 percent, compared with 30 percent for existing establishments. New firm startups (as distinguished from new establishments) that

did not exist before 1990 created almost 22 percent of all net new jobs

between 1990 and 1995. Using the new Census data it seems that both size

and age are important determinants of employment growth.

The contribution of small firms to the economy may be summarized in

terms of efficiency and dynamics. The essence of the efficiency argument is

that there are certain things small firms do better than large firms. Through the

division of labor between small and large firms, the efficiency of the economy

is increased. This is especially important in production and innovation.48

The argument with respect to dynamics is that small firms are needed to

provide the entrepreneurship and variety required for macroeconomic growth

and stability. In fact, the connection between entrepreneurship and small business is interesting from an economic growth perspective. While the static

effects of the division of labor between large and small firms may be tied to

the vast majority of small firms, the dynamic aspects are tied to a subset of

firms that are entrepreneurial.

90 The Annual Report on Small Business and Competition

48 C. Pratten, The Competitiveness of Small Firms (Cambridge: Cambridge University Press, 1991)

and Zoltan J. Acs and David B. Audretsch, “Innovation in Large and Small Firms,”The American

Economic Review 78 (1988), 678-690.

Source: U.S. Small Business Administration, Office of Advocacy, from Statistics of U.S. Business 

provided by the U.S. Department of Commerce, Bureau of the Census. Millions

Total

Services

Employment Size of Firm

0

1

2

3

4

5

6

Total 1–4 5–9 10–19 20–99 100–499 500+
Entrepreneurship, Women, Minorities, 

and Immigrants

While change is important for the economy—since it directly affects productivity and growth—the broader social and political issues are equally important. Small firms are the essential mechanism by which millions enter

the economic and social mainstream of American society. Small business is

the vehicle by which millions access the American Dream by creating opportunities. The American economy is a democratic system, as well as an economic system, that invites change and participation. What is the entrepreneurial role of women, minorities and immigrants in the economy?50

Women Business Owners

Less than half a century ago, the entire work force in the United States was

composed of less than 26 percent women, who most often were employed as

secretaries, nurses or teachers.51 Regulatory events, notably the passage of the

Civil Rights Act in 1964, the Equal Credit Opportunity Act in 1975, and the

Affirmative Action Act in 1978, helped to remove structural barriers women

faced in business ownership. Parallel to regulatory changes, the role of women

in society also changed. As more women successfully created, managed and

grew companies, and more women’s advocacy groups were founded, greater

recognition of their achievements was recorded by the media and government.

Why are women-owned businesses important? The role of women-owned

businesses has changed dramatically over the past decade.52 From 1987 to

1997, women-owned businesses are estimated to have increased by 89 percent, to almost 8.5 million.53 One reason the U. S. economy has created so

many new businesses in the past decades is that many women have chosen

self-employment over wage employment. Despite the dramatic increase, there

is relatively little research on women-owned businesses or the extent to which

they have different needs.

The role of women-owned businesses can be better understood by taking

a broader perspective on their role in society over time, and examining the

social context influencing women business owners. Of particular importance is

The State of Small Business 91

49 Bo Carlsson, “Entrepreneurship, Industry Evolution and the Macroeconomy,” conference paper

prepared for the U.S. Small Business Administration, Office of Advocacy, 1997. 50 See Chapter 4 for detailed data covering women- and minority-owned businesses. 51 B. Bergman, The Economic Emergence of Women (New York: Basic Books, 1986). 52 Candida Brush and Robert D. Hisrich, “Women-Owned Businesses: Why Do They Matter?”

conference paper prepared for the U.S. Small Business Administration, Office of Advocacy, 1997. 53 See Chapter 4 for more detail.
nesses, about a quarter of which are operated full-time. The socioeconomic

context of many women-owned businesses is different from that of many businesses owned by men, but technology is creating greater diversity in the reasons for business startups, as well as their costs.

Judged from a static, efficiency perspective, many small women-owned

businesses are sub-optimal. However, from an evolutionary and contextual

social perspective, many of these small businesses turn out to be socially efficient. This is because being a woman entrepreneur fulfills a large number of

social and economic needs. For example, raising children and self-employment seem to go together, and home-based firms have the capacity for both.

Ethnic Entrepreneurship

From another perspective, what is the role of ethnic entrepreneurship and its

relationship to the concept of community? Like women-owned businesses,

minority-owned businesses increased significantly, by more than 165 percent

from 1982 to 1992.54

A clear distinction is made here among immigrant-owned businesses,

minority-owned businesses, and ethnic entrepreneurship. Ethnic entrepreneurship has a very special meaning in this context, being defined as “a set of

connections and regular patterns of interaction among people sharing a common national background or migration experiences.”

The debate here is about the role of entrepreneurship in shaping a community—a debate with a long history. Butler and Green present three case

studies describing three ethnic- or minority-owned business communities.55

The case studies are drawn from different historical periods to clearly illustrate

the dynamics of community entrepreneurship. Because community entrepreneurship has not always been driven by ethnicity or immigration, the exploration takes a page from the history of black America also. For these groups,

business enterprise is a very important tool, contributing to the incorporation

of ethnic immigrants into American society.56

Two important lessons may be drawn from these case studies consistent

with the concept of small firms. First, just as there are two views of efficiency

in industrial organization, there are also two views of efficiency in ethnic entrepreneurship. The static view would suggest that most of these businesses are

sub-optimal, while a dynamic view suggests that these businesses are building

92 The Annual Report on Small Business and Competition

54 See Chapter 4 for more detail. 55 John S. Butler and Patricia Gene Green, “Don’t Call Me Small: The Contribution of Ethnic

Enterprises to the Economic and Social Well Being of America,” conference paper prepared for the U.S.

Small Business Administration, Office of Advocacy, 1997. 56 For another perspective see T. Bates, Race Self-Employment and Upward Mobility: An Elusive

American Dream (Baltimore: The Johns Hopkins University Press, 1998).
Second, just as community is important for small high technology firms,

it important for ethnic entrepreneurship. In other words, small businesses—

whether they are high tech or low tech—need a community to survive and

grow. Community provides the instrumental networks, entrepreneurial

apprenticeships, and sources of funds. The crucial barometer for economic

and social well-being is the continued creation of new startup firms and establishments by all segments of society.

Evolution, Community, and the Global Economy

The world economy at the end of the 20th century is characterized by

increasing cross-border awareness and interdependence among nations.

Both international trade and investment have increased manifold. Total world

trade increased from $629 billion (in 1995 dollars) in 1960 by eight times to

$5 trillion by 1995, while world output grew only by 3.6 times.57 Total world

foreign investment went up faster than either world trade or world output.

Small firms make an important contribution to the U.S. role in the international community. What are the linkages among evolution, community and the

global economy? What role do small and medium-sized firms’ innovations play

in the globalization process?58 The question is linked to the question of why

small firms are such radical innovators. Innovations arise only when property

rights are properly aligned. Property rights may be less perfectly aligned in large

firms than in small firms. Innovators in small firms can hold clear property rights.

Smaller firms can conduct international expansion on their own, or by

collaborating with a multinational firm. The intermediated form of international expansion has certain advantages. The small firm benefits from having

access to the multinational firm’s global market reach. From the large firm’s

perspective, the arrangement enhances the value of its existing contributions

to internationalization.59

The world is changing rapidly, and firm boundaries are blurred by competitive network connections. Large firms can now be thought of as coordinating transaction units rather than merely integrating production units. In this

The State of Small Business 93

57 The Economic Report of the President (Washington, D.C.: U.S. Government Printing Office,

1997), 243. 58 Zoltan J.Acs, Randall Morck, and Bernard Yeung, “Evolution, Community and the Global

Economy,” conference paper prepared for the U.S. Small Business Administration, Office of

Advocacy, 1997. 59 See Georgia S. Vozikis, A Strategic Disadvantage Profile of the Stages of Development and the

Stages of the Exporting Process: The Experience of the Small Business Exporters in Georgia, report no.

PB82–185224, prepared under contract for the U.S. Small Business Administration, Office of Advocacy

(Springfield, Va.: National Technical Information Service, 1979).
Are small firms important? Yes. The impressive performance of the U.S.economy over the past six years can be contrasted with the rather lackluster performance in both Europe and Japan. This divergent macroeconomic

performance can be explained in part by differences in competition, entrepreneurship and new firm startups. Small firms make two indispensable contributions to the American economy.

First, they are an integral part of the renewal process that pervades and

defines market economies. New and small firms play a crucial role in experimentation and innovation, which leads to technological change and productivity growth. Small firms are about change and competition because they

change market structure. The U. S. economy is a dynamic organization always

in the process of becoming, rather than an established one that has arrived. 

Second, small firms are the essential mechanism by which millions enter

the economic and social mainstream of American society. Small business is

the vehicle by which millions access the American Dream by creating opportunities for women, minorities, and immigrants. In this evolutionary process,

community plays the crucial and indispensable role of providing the social

glue and networking that binds small firms together in both high tech and

“Main Street” activities. The American economy is a democratic system, as

well as an economic system, that invites change and participation.

A successful entrepreneurial environment features continual “creative

destruction,” to use Joseph Schumpeter’s apt term. New companies prosper and

help the economy, in part by destroying the markets for semi-monopolistic

industries. Nations that protect the markets and incomes of existing larger

companies prevent the creative destruction so essential to progress. Therefore,

the crucial barometer for economic and social well-being is the continued high

level of creation of new and small firms in all sectors of the economy by all

segments of society. Government policy facilitates that process when it eliminates barriers to entry, lowers transaction costs, and minimizes monopoly

profits by large firms.

94 The Annual Report on Small Business and Competition
Characteristics of Small Business

Owners and Employees

Synopsis

Small firms represent business ownership opportunities for women, minorities, and the young and elderly, as well as the population in their prime

working years. Ownership opens doors for women and minorities to move

into the economy less encumbered by traditional barriers to economic

achievement. Small firms are more likely than large businesses to hire individuals that are on the margin of the labor force. By giving entry-level positions to the young and individuals on public assistance, for example, they

help create the skills needed to move the society and economy forward. To

understand these small business contributions, it is useful to look at the characteristics of small business owners, their businesses, and the small business

labor force.

In 1997, according to Current Population Survey data, 11.5 million

Americans had some self-employment earnings. A total of 7.2 million men;

4.3 million women; 500,000 Asians, Pacific Islanders, American Indians, and

Aleut Eskimos; almost 700,000 blacks; 10.3 million whites; and almost

700,000 Hispanics were self-employed.

Women- and minority-owned businesses are rising in importance in our

nation’s economy. They are represented in every type of industry and in every

form of business. Based on data from the Census Bureau’s Survey of WomenOwned Businesses and Survey of Minority-Owned Business Enterprises, the

U.S. Small Business Administration’s Office of Advocacy estimates that in

1997 there were almost 8 million women-owned businesses (8.5 million with

C corporations) and 3.2 million minority-owned businesses. Their numbers

have been increasing steadily, and more rapidly, than those in the economy

as a whole.

Small businesses also employ thousands of individuals of all races, genders, and ages. In 1997, the small business work force consisted of 54.5 percent males, 45.5 percent females. It represented diverse ethnic and racial

groups: 4.5 percent Asians, Pacific Islanders, American Indians, and Aleut

Eskimos; 9.7 percent blacks; 85.8 percent whites; and 13.1 percent

Hispanics. Small businesses hire a larger proportion of younger and older

workers, part-time employees, employees with lower educational attainment, and individuals that receive public assistance than large businesses.
(CPS), which is a joint project of the U.S. Department of Commerce, Bureau

of the Census, and the U.S. Department of Labor, Bureau of Labor Statistics.

The CPS covers current employees of private firms, defining the self-employed

as those who have any self-employment earnings during the year.2

The most comprehensive federal statistics on women- and minorityowned businesses are collected and disseminated every five years as part of

the Survey of Minority-Owned Business Enterprises (SMOBE) and the Survey

of Women-Owned Businesses (WOB), special programs of the Census

Bureau’s Economic Censuses. The most recent data available, for 1992, cover

all such women- and minority-owned businesses, and include information

about sole proprietorships, partnerships, and S corporations. The only major

exclusions are C corporations and businesses with less than $500 in annual

receipts.3 The Characteristics of Business Owners (CBO) survey samples a subset of the SMOBE and WOB samples and asks detailed questions about various aspects of the owner and business, including questions about financing,

survival, exporting, and franchising.

The Self-Employed

The 11.5 million individuals who had self-employment earnings in 1997 are

a diverse group (Table 4.1). More than one-third—and the number is

increasing—were women. White individuals accounted for 89.7 percent of

96 The Annual Report on Small Business and Competition

1 For analyses of all U.S. firms, the SBA’s Office of Advocacy usually defines a small firm as a firm with

fewer than 500 employees. Data for this chapter come from the U.S. Department of Commerce, Bureau of the

Census, and the U.S. Department of Labor, Bureau of Labor Statistics (BLS). Census data include the

Characteristics of Business Owners,1992 (CBO), Women-Owned Businesses, 1992, Asians and Pacific

Islanders, American Indians, and Alaska Natives,1992, Black-Owned Businesses,1992, and Hispanic-Owned

Businesses,1992. The 1992 CBO was released in late 1997 and is available on the Internet at http://

www.census.gov/prod/www/titles.html#econ. The CBO provides extensive detail about both business owners

and their businesses. 2 Self-employment and employee information in this report are based on the 1993–1997 March CPS, taken

by the Census Bureau for BLS, which asks a variety of questions about employment and worker characteristics.

While some self-employment figures cover only those unincorporated individuals who are self-employed as their

primary occupation, there are also statistics on individuals who had any self-employment earnings during that

year. The CPS survey asks a question about employer size, but inconsistencies may exist in the responses. For

example, the respondents may not know the total number of employees of the firm, especially if it has more than

one location. Franchise employees may or may not consider the entire franchise the employer. 3 A C corporation is a business organization that offers limited liability for corporate debts, free transfer of

ownership of business interests, centralized management, and continuity of life. The largest businesses are usually C corporations. The exclusion of C corporations from the CBO makes comparisons between small and large

businesses difficult. Because these large employers are excluded, the largest employment size class used here is

100 or more employees. An S corporation is a business organization similar to a C corporation but with a limited number of shareholders and less liability protection for corporate debts; S corporations pass all revenues

through to shareholders. S corporations are included in the data base. The Office of Advocacy was able to project the 8.5 million summary number of women-owned businesses that includes C corporations because data on

women-owned C corporations are available for 1992. Using the ratio of corporations to all other businesses, estimates were made for the number of women-owned C corporations in 1982 and 1987. These corporations are

included in the estimates for the total number of women-owned businesses and receipts.
The State of Small Business 97

Total 11,477,120 100.0

Self-Employed as a Share of the Labor Force — 8.4

Sex

Female 4,251,717 37.0

Male 7,225,403 63.0

Race

Asian/American Indian 512,711 4.5

Black 667,058 5.8

White 10,297,351 89.7

Origin or Descent

Hispanic 669,015 5.8

Other 10,808,105 94.2

Age

25 482,359 4.2

25–34 1,958,543 17.1

35–44 3,460,141 30.1

45–54 3,101,292 27.0

55–64 1,741,141 15.2

65 733,644 6.4

Educational Level

High School or Less 4,517,894 39.4

Some College 3,191,266 27.8

Bachelors 2,303,301 20.1

Masters or Above 1,464,659 12.8

Earnings in the Previous Year (1997 Dollars)

$5,000 4,006,781 34.9

$5,000–24,999 4,056,993 35.3

$25,000–49,999 1,909,963 16.6

$50,000 1,503,384 13.1

Industry

Agriculture Services, Forestry, and Fishing 360,768 3.1

Mining 43,811 0.4

Construction 1,626,085 14.2

Manufacturing 780,625 6.8

Transportation, Communications, and Public Utilities 602,355 5.2

Wholesale Trade 376,730 3.3

Retail Trade 1,554,891 13.5

Finance, Insurance, and Real Estate 701,374 6.1

Services 5,209,515 45.4

Unknown 220,966 1.9

Note: Represents individuals with any self-employment earnings in the year.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the Bureau of the

Census, Current Population Survey.
the self-employed; black individuals accounted for 5.8 percent; and Asian,

Pacific Islander, American Indian, and Aleut Eskimo individuals accounted

for 4.5 percent. By origin, Hispanic individuals accounted for 5.8 percent.

The 1991 to 1997 period saw increases in the percentage of the selfemployed who were women, Hispanics and all races except white. The CPS

data provide more detail about the self-employed:

• Of the 11.5 million Americans with self-employment earnings in 1997,

men constituted 63 percent (7.2 million); women, 37 percent (4.3 million). Some 8.4 percent of the civilian labor force (10.0 percent of men

and 6.9 percent of women) were self-employed. 

• Some 4.2 percent were under age 25 and 6.4 percent were 65 or older. 

• A large proportion of the self-employed, 34.9 percent, received less

than $5,000 for their business efforts; only 13.1 percent received more

than $50,000 (Chart 4.1).

• By industry, most of the self-employed were in services (45.4 percent),

retail trade (13.5 percent), and construction (14.2 percent).

Self-employment increased from 1996 to 1997, especially among 35- to

64-year-olds, nonminorities, men, and individuals with a high school education or less and relatively higher self-employment earnings.

98 The Annual Report on Small Business and Competition Millions

< $5,000 $5,000–24,999 $25,000–49,999 $50,000 +

Note: Includes all individuals with any self-employment earnings during 1997.

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

U.S. Department of Commerce, Bureau of the Census.

Earnings

0

1

2

3

4
, , py 

Asians to own larger firms (Table 4.2). Women owned 35 percent of all firms

without employees, but only 26.7 percent of firms with employees. Similarly,

blacks and Hispanics’ relative shares of firms without employees tended to be

relatively more than their shares of firms with employees. Other findings

include the following:

• In 1992, 90.6 percent of business owners in the CBO were born in the

United States. The native-born percentage was higher for larger firms:

94.5 percent of the owners of firms with 100 or more employees were

born in the United States.

• Owners in the CBO data base were older than those in the CPS, perhaps because the CBO’s exclusion of tax returns with less than $500 in

annual business receipts eliminates more of the younger selfemployed. 

• Prime working age adults were most likely to own larger firms: only the

age categories of 45–54 and 55–64 had larger percentages of owners

in the category of firms with 100 or more employees than firms without employees.

Characteristics of Businesses

The CBO also provides a unique opportunity to examine the characteristics

of businesses. Because C corporations are excluded, almost all firms covered in the CBO are small. Survey questions included but were not limited to

how the businesses were obtained, when they were started, and if they have

survived until the survey.4

How Firms were Acquired

Business owners in the CBO acquired their firms in a variety of ways: threefourths were original founders, about 11 percent received the firm as a gift,

and another 11 percent purchased it (Chart 4.2). Only about 3 percent

inherited their firms. Original founders and purchasers are less prevalent in

the larger firm employment size classes. In fact, 41.3 percent of the firms

with 100 or more employees received the firm as a gift, 29.8 percent were

The State of Small Business 99

4 In 1996, businesses existing in 1992 were surveyed. Because surviving companies are more likely to

be found and to respond, survival rates, and thus firm age may be skewed. However, the intraindustry comparisons are still quite useful.
100 The Annual Report on Small Business and Competition

Chart 4.2 How the Business was Acquired by the Owner, 1992

Original Founder

73%

Note: Survey excluded non-S corporations (often large companies), and business tax 

returns with less than $500 in business receipts during the year.

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

U.S. Department of Commerce, Bureau of the Census.

Received Transfer

of Ownership/Gift

11.1%

Purchased

10.7%

Inherited

2.9%

Other

2.3%

Gender Women 33.4 35.0 26.7

Race/Origin Asian/American Indian 3.6 3.4 4.5

Black 3.3 3.7 1.6

White 88.9 88.4 90.8

Hispanic 4.2 4.4 3.2

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Commerce, Bureau of the Census, Characteristics of Business Owners, 1992.
original founders, 22.5 percent inherited the firm, 6.3 percent purchased it,

and the remaining 0.2 percent acquired it in another way.

Firm Age

In 1992, 23.3 percent of the CBO firms were started within the previous two

years and 22.4 percent were started more than 12 years earlier (Chart 4.3).

The year in which firms were started differed widely between firms with and

without employees. Not surprisingly, firms without employees are often

younger than firms with employees: of the firms without employees, 27.0

percent were started within the previous two years, compared with only 9.7

percent of firms with 1 to 4 employees. What is less obvious is that firms with

5 to 9 employees are similar in their age ranges to firms with 100 or more

employees. The transportation, communications, and public utilities sector is

the major industry group most represented by younger firms, while finance,

insurance, and real estate is the industry most represented by older firms.

The State of Small Business 101

Note: Survey excluded non-S corporations (often large companies), and business tax 

returns with less than $500 in business receipts during the year.

Source: U.S. Small Business Administration, Office of Advocacy, from data 

provided by the U.S. Department of Commerce, Bureau of the Census.

1992

14.1%

1991

9.2%

1986–1988

18%

1990

8.5%

1989

8.3%
• More than three-quarters, 75.5 percent, of firms existing in 1992

survived four or more years until at least 1996.5

• Survival rates varied widely for firms with and without employees. Of

firms without employees, 72.4 percent remained in business until at

least 1996; the figure was 89.6 percent for firms with 1 to 4 employees. 

• While firms without employees close more often than firms with

employees, firms with employees have similar ranges of survival rates.

• By major industry, the finance, insurance, and real estate group had the

highest survival rate (82.6 percent) and the transportation, communications, and public utilities group had the lowest survival rate (70.9

percent). The major industry figures are probably strongly influenced by

the industry ratios of firms without employees to firms with employees.

• Of the owners whose firms did not survive the period, 38.2 percent

said the business was successful at the time the decision was made to

cease operations: the figure was 57.4 percent for firms with employees and 36.4 percent for firms without employees (Table 4.3). Figures

were similar for women-owned firms, and somewhat lower for minority-owned businesses.

Industry Distribution

Business owners of various demographic groups tended to be concentrated in

certain industries. Women-owned firms were reasonably represented in retail

trade (44.1 percent) and the service industries (40.6 percent), but underrepresented in construction (10.0 percent). The Asian, Pacific Islander, American

Indian, and Aleut Eskimo group was well represented in retail trade; black and

Hispanic-owned firms were most often in transportation, communications, and

public utilities; and white-owned firms were best represented in finance, insurance, and real estate.

102 The Annual Report on Small Business and Competition

5 The 1992 Characteristics of Business Owners was a survey conducted in 1996 on businesses and their

activity in 1992, but a few questions were asked pertaining to the 1992–1996 period. Of course, companies

that survived until 1996 were more likely to be located and to respond than those that had closed by that time;

thus, some survival rate and firm age figures may be skewed.
Home-Based Businesses

The CBO also provides firm characteristics by employer size for home-based

businesses: 

• Home-based businesses were 53.4 percent of all businesses, with only

a small percentage of home-based businesses moving out of the

house—that is, percentages of firms that were home-based when first

established do not differ much from percentages of firms that are currently home-based.

• Home-based business rates decline sharply as the firm employment

size increases.

• Major industry figures for 1992 show that construction firms were the

most likely to be home-based (81.9 percent); and finance, insurance,

and real estate firms were least often home-based (36.0 percent).

Franchising

Franchising as a method of starting a small business is much less prevalent

than starting a nonfranchised business:

• Franchised businesses were 3.1 percent of all businesses.

• The share of businesses that are franchised increases sharply as firm

employment size increases. 

• Retail trade firms were most often franchised (8.0 percent).

The State of Small Business 103

All Firms 36.4 57.4

Gender Women 37.6 53.1

Race/Origin Asian/American Indian 24.6 49.4

Black 22.1 35.7

White 37.9 58.7

Hispanic 28.2 42.0

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Commerce, Bureau of the Census, Characteristics of Business Owners, 1992. 
• The percentage of businesses that export increases sharply with firm

employment size.

• The percentage of sales that are exports is less than 10 percent for most

businesses that export; however, small exporters tend to export a larger percentage of their product than larger exporters.

• Manufacturing firms were most often exporters: 9.3 percent of manufacturing firms exported.

Women’s Business Ownership

Women-owned businesses are rising in importance in the U.S. economy.6

They are represented in every industry and form of business, and they

account for one-third of all businesses. Their numbers have been increasing

steadily and more rapidly than business ownership overall. As the new century approaches, evidence suggests that they will be an increasingly important

segment of the economy.

Excluding C corporations, women-owned firms totaled nearly 6 million

in 1992 (Table 4.4). Just 818,000 women-owned businesses (again excluding

C corporations) had paid employees—about 14 percent of all women-owned

firms; in comparison, 18 percent of all businesses had paid employees.

Including C corporations, there were approximately 6.4 million womenowned businesses generating $1.6 trillion in business revenues (Chart 4.4).

They accounted for about one-third of all businesses and generated 11.2 percent of revenues.

The number of women-owned businesses, excluding C corporations, grew

rapidly—by 43 percent—from 1987 to 1992, while businesses overall increased

by 26 percent. Women-owned business receipts increased 92 percent over the

same period, compared with an increase of 38.5 percent for all businesses.

104 The Annual Report on Small Business and Competition

6 See chapter 3 for a discussion of the importance of women-owned businesses’ entrance in the economy. For more detail on women-owned businesses, see U.S. Small Business Administration, Office of Advocacy,

Women in Business (Springfield, Va.: National Technical Information Service, 1998). Women-owned businesses are analyzed using figures from the Bureau of the Census collected and disseminated every five years in the

Survey of Women-Owned Business (WOB). The most recent WOB data available, for 1992, were released in

1997. For the first time, the 1992 data include data on regular “C” corporations. Businesses with less than $500

in annual receipts were excluded beginning in 1987, and the Census Bureau subsequently adjusted the 1982

data for comparability. Because of inflation, fewer and fewer small firms have less than $500 in receipts; therefore, the growth rate is biased upwards slightly for the smaller firms. Other data bases available for analysis of

women-owned business include data on self-employment from the Bureau of Labor Statistics and on sole proprietorships from the Internal Revenue Service. Self-employment and sole proprietorship data generally represent the smaller women-owned firms and firms without employees.
The State of Small Business 105

Table 4.4 Women-Owned Businesses: Number of Firms, Receipts, and Employment, 1982, 1987, 1992, and 19

Pe

All Women-Owned Businesses 1982 1987 1992 19972 1982–19

Number of BusinessesTotal 2,842,359 4,476,616 6,406,715 8,472,881 198.C Corporations1 229,738 361,829 517,832 684,833

Sole Proprietorships, Partnerships, and S Corporations 2,612,621 4,114,787 5,888,883 7,788,048Receipts of Businesses (Nominal Receipts in Thousands of Dollars)Total 240,814,771 681,439,984 1,574,090,352 3,050,272,284 637.C Corporations1 142,523,258 403,301,867 931,606,000 1,805,266,107

Sole Proprietorships, Partnerships, and S Corporations 98,291,513 278,138,117 642,484,352 1,245,006,177Women-Owned Businesses with EmployeesNumber of Businesses (Includes C Corporations) 474,275 940,749 1,244,454 1,376,366 190.Receipts of Businesses (Nominal Receipts in Thousands of Dollars) 175,003,870 599,900,314 1,474,067,116 2,763,241,994 829.Number of Employees (Includes C Corporations) 2,863,659 6,559,213 13,217,066 23,769,175 730.

1 C corporations were estimated for 1982 and 1987 using 1992 ratios.2 1997 projections assume similar growth patterns for 1992–1997 as experienced between 1982 and 1992.3 Growth rates for receipts are calculated using constant 1992 dollars; they are real growth rates, adjusted for inflation.

Source: U.S. Small Business Administration, Office of Advocacy, based upon data published by the U.S. Department of Commerce, Bureau of the Census, 199

Owned Businesses.
Using Census data for 1982, 1987, and 1992, the SBA’s Office of

Advocacy estimated the number of women-owned businesses, including C

corporations, in 1997 at 8.5 million, an 89 percent increase over 1987.7

Women’s business receipts are estimated at $3.1 trillion after adjusting for

inflation, a 209 percent increase. The number of women-owned businesses

with employees is estimated at 1.4 million, with receipts of $2.8 trillion.

Other highlights include the following:

• Women-owned businesses constitute 34 percent of businesses as a

whole, including 25 percent of businesses with paid employees and 36

percent of businesses with no paid employees.

• More than 72 percent of women-owned businesses are in services or

retail trade (Chart 4.5). More than 10 percent are in finance, insurance,

and real estate.

106 The Annual Report on Small Business and Competition Millions

Years

Note: 1997 was estimated by the Office of Advocacy using similar growth rates as 1982 to 

1992. C corporations were estimated for 1982 and 1987 using 1992 ratios.

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

U.S. Department of Commerce, Bureau of the Census.

All Firms

Firms with Employees

1982 1987 1992 1997 Estimates

0

2

4

6

8

7 Estimates for 1997 are based on the assumption that the growth patterns from 1982 to 1992 continued.

Because of recession years in the 1982 to 1992 period, it is possible that these estimates underestimate the

growth rates of women-owned businesses and the total number of businesses in 1997. Data on women-owned

regular C corporations are available only for 1992. Using the ratio of corporations to all other businesses, estimates were made for the number of corporations in 1982 and 1987. These estimates were used with the 1992

data to project the number of corporations in 1997. While corporations represent only 8 percent of all womenowned businesses, they represent almost 60 percent of all business receipts. Corporations were included in the

estimates of the total number of women-owned businesses and receipts.
• Over the 1987 to 1992 period, women-owned businesses in construction, wholesale trade, and transportation, communications, and public

utilities had the highest rates of growth (Table 4.5).

• Businesses in mining, manufacturing, wholesale trade, and finance had

the highest rates of growth in receipts.

• By state, Nevada, Georgia, New Mexico, Florida, and Idaho had the

highest growth rates in the number of women-owned firms (Table 4.6).

Nevada, Georgia, and Florida also had high growth rates in firms overall, but New Mexico and Idaho had somewhat lower rankings for

growth in the overall number of firms, an indication that women-owned

firms led business growth in these states.

Women-Owned Sole Proprietorships

It is estimated that by the year 2000, there will be 7.1 million women-owned

sole proprietorships (Table 4.7).8 The number is expected to grow by 33.5

percent over 1990–2000, compared with an increase of 23.4 percent in sole

The State of Small Business 107

Millions

Note: Excludes C corporations.

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

U.S. Department of Commerce, Bureau of the Census.

Total Services Retail 

Trade

Finance, 

Insurance, and 

Real Estate

Other

0

1

2

3

4

5

8 Using Internal Revenue Service tax returns, tabulations of the number of sole proprietorships by gender

are prepared for the Office of Advocacy by the Statistics of Income (SOI) division of the IRS. Then, using data

for 1989–1995, future years were projected assuming similar growth rates.
Table 4.5 Number and Receipts of Women-Owned Businesses by Industry, 1982, 1987, and 1992

1982 1987 1992 Perce

Number Percent Number Percent Number Percent 1982–1992 19

Number of BusinessesTotal 2,612,621 100.0 4,114,787 100.0 5,888,883 100.0 125.4 Agricultural Services, Forestry, and Fishing 19,497 0.8 47,979 1.2 82,526 1.4 323.3 Mining 19,832 0.8 26,420 0.6 37,205 0.6 87.6 Construction 58,991 2.3 94,308 2.3 183,695 3.1 211.4 Manufacturing 44,909 1.7 93,960 2.3 152,346 2.6 239.2 Transportation, Communications, and Public Utilities 38,944 1.5 79,768 1.9 141,623 2.4 263.7 Wholesale Trade 32,059 1.2 82,513 2.0 154,542 2.6 382.1 Retail Trade 631,309 24.2 798,692 19.4 1,093,342 18.6 73.2 Finance, Insurance, and Real Estate 246,403 9.4 437,360 10.6 602,802 10.2 144.6 Services 1,284,837 49.2 2,269,028 55.2 3,158,444 53.7 145.8 Industry Unknown 235,840 9.0 184,759 4.5 282,358 4.8 19.7 

Total Receipts (1992 Dollars in Millions)Total 140,016,400 100.0 334,702,909 100.0 642,484,352 100.0 222.1 Agricultural Services, Forestry, and Fishing 976,821 0.7 2,325,894 0.7 4,987,572 0.8 258.4 Mining 3,163,739 2.3 2,327,102 0.7 6,905,374 1.1 53.2 

Construction 6,502,726 4.6 24,430,955 7.3 45,978,168 7.2 396.4 Manufacturing 7,553,956 5.4 37,201,070 11.1 90,634,753 14.1 742.3 Transportation, Communications, and Public Utilities 4,599,605 3.3 13,160,383 3.9 25,822,193 4.0 294.1 Wholesale Trade 13,090,490 9.3 51,509,697 15.4 124,847,093 19.4 569.5 Retail Trade 51,084,658 36.5 102,788,839 30.7 155,852,751 24.3 114.2 Finance, Insurance, and Real Estate 9,073,977 6.5 21,460,171 6.4 51,748,279 8.1 300.3 Services 37,432,694 26.7 73,554,067 22.0 130,745,314 20.3 145.2 Industry Unknown 6,537,734 4.7 5,944,730 1.8 4,962,855 0.8 46.7 

Note: The survey excluded non-S corporations (often large companies), and business tax returns with less than $500 in business receipts.Source: U.S. Small Business Administration, Office of Advocacy, based on data from the U.S. Department of Commerce, Bureau of the Census, Survey 

Businesses, 1987 and 1992.

108 The Annual Report on Small Business and Competition
Alabama 48,018 71,466 48.8 15 178,119 227,119 27.5 22

Alaska 19,380 13,976 -27.9 51 48,784 58,898 20.7 40

Arizona 60,567 93,300 54.0 6 191,908 248,337 29.4 15

Arkansas 35,469 50,440 42.2 25 134,766 159,820 18.6 45

California 559,821 801,487 43.2 23 1,809,252 2,259,327 24.9 26

Colorado 89,411 121,659 36.1 38 262,597 323,147 23.1 31

Connecticut 60,924 79,931 31.2 47 196,537 237,705 20.9 37

Delaware 9,727 14,904 53.2 7 30,976 42,228 36.3 3

District of Columbia 10,987 14,599 32.9 44 29,244 35,344 20.9 38

Florida 221,361 352,048 59.0 4 735,810 1,000,542 36.0 4

Georgia 88,050 143,045 62.5 2 305,382 425,118 39.2 2

Hawaii 21,696 29,743 37.1 36 60,928 79,050 29.7 13

Idaho 18,973 29,946 57.8 5 68,006 88,712 30.4 10

Illinois 177,057 250,613 41.5 26 573,973 726,974 26.7 24

Indiana 89,949 125,411 39.4 30 294,570 364,253 23.7 30

Iowa 53,592 71,040 32.6 45 169,593 191,262 12.8 50

Kansas 53,505 66,429 24.2 49 293,131 348,978 19.1 43

Kentucky 53,454 74,280 39.0 32 193,806 236,525 22.0 35

Louisiana 55,852 76,849 37.6 35 204,723 236,589 15.6 48

Maine 23,922 35,260 47.4 17 88,208 109,360 24.0 29

Maryland 81,891 121,777 48.7 16 244,071 328,403 34.6 5

Massachusetts 111,376 147,572 32.5 46 356,780 442,848 24.1 28

Michigan 133,958 193,820 44.7 21 426,656 551,091 29.2 16

Minnesota 88,137 124,143 40.9 28 280,249 358,921 28.1 20

Mississippi 28,976 40,879 41.1 27 112,245 135,497 20.7 41

Missouri 87,658 117,885 34.5 43 174,121 206,840 18.8 44

Montana 17,747 25,310 42.6 24 63,623 75,331 18.4 46

Nebraska 32,285 43,637 35.2 42 102,811 124,212 20.8 39

Nevada 18,831 32,430 72.2 1 59,784 87,786 46.8 1

New Hampshire 22,713 31,492 38.7 34 79,771 97,772 22.6 32

New Jersey 117,373 164,798 40.4 29 406,792 517,204 27.1 23

New Mexico 25,397 40,636 60.0 3 82,253 107,377 30.5 9

New York 284,912 395,944 39.0 31 930,669 1,159,700 24.6 27

North Carolina 93,532 142,516 52.4 10 329,373 439,301 33.4 6

North Dakota 12,689 15,355 21.0 50 42,717 48,368 13.2 49

Ohio 154,084 224,693 45.8 20 521,123 666,183 27.8 21

Oklahoma 63,690 82,894 30.2 48 223,676 246,936 10.4 51

Oregon 58,941 87,970 49.3 14 185,151 238,967 29.1 17

Pennsylvania 167,362 227,500 35.9 39 595,653 728,063 22.2 34

Rhode Island 14,517 21,353 47.1 18 52,780 67,641 28.2 19

South Carolina 42,604 64,812 52.1 11 149,190 197,330 32.3 7

South Dakota 13,374 18,215 36.2 37 47,829 57,084 19.4 42

Tennessee 67,448 101,134 49.9 13 251,255 325,371 29.5 14

Texas 298,138 414,179 38.9 33 1,025,617 1,256,121 22.5 33

Utah 29,810 45,626 53.1 8 100,186 129,202 29.0 18

Vermont 13,802 21,033 52.4 9 45,243 58,924 30.2 12

Virginia 94,416 138,494 46.7 19 297,541 391,451 31.6 8

Washington 90,285 136,337 51.0 12 286,224 372,975 30.3 11

West Virginia 22,549 30,644 35.9 40 78,026 94,912 21.6 36

Wisconsin 69,185 99,357 43.6 22 239,185 300,348 25.6 25

Wyoming 10,796 14,617 35.4 41 34,573 40,696 17.7 47

Note: The survey excluded non-S corporations and business tax returns with less than $500 in business

receipts per year.

Source: U.S. Small Business Administration, Office of Advocacy, based upon data published by the 

U.S. Department of Commerce, Bureau of the Census, 1992 Survey of Women-Owned Businesses.

The State of Small Business 109
Table 4.7 Women-Owned Nonfarm Sole Proprietorships, 1980, 1989, 1991–2000

Number of Businesses Receipts (Thousands of 1992 Dollars) Ave

Women-Owned All Women’s Share Women-Owned All Women’s Share Women-Own

1980 2,535,240 9,730,019 26.06 60,226,109 680,804,161 8.85 23,756 1989 4,977,143 15,920,963 31.26 99,257,386 772,364,479 12.85 19,943 1991 5,548,514 16,957,636 32.72 108,459,185 738,336,288 14.69 19,547 1992 5,698,415 17,292,286 32.95 106,060,210 737,082,032 14.39 18,612 1993 5,851,514 17,714,120 33.03 108,756,108 738,026,756 14.74 18,586 1994 6,046,617 18,108,776 33.39 110,840,710 752,980,971 14.72 18,331 1995 6,135,898 18,391,237 33.36 113,472,337 750,337,954 15.12 18,493 1996* 6,397,581 18,881,927 33.88 112,018,658 735,448,475 15.23 17,510 1997* 6,582,489 19,281,645 34.14 113,248,267 731,107,363 15.49 17,204 1998* 6,767,398 19,681,362 34.38 114,477,877 726,766,251 15.75 16,916 1999* 6,952,306 20,081,080 34.62 115,707,487 722,425,139 16.02 16,643 2000* 7,137,214 20,480,797 34.85 116,937,096 718,084,027 16.28 16,384 

Percent Change Percent Change Perc

1980–1995 1990–1995 1990–2000* 1980–1995 1990–1995 1990–2000* 1990–2000 

Women 142.0 14.7 33.5 88.4 0.5 3.6 Women All 89.0 10.8 23.4 10.2 3.9 8.0 All 

Share 28.0 3.5 8.2 71.0 4.5 12.6

*Note: 1995–2000 are projections by the U.S. Small Business Administration, Office of Advocacy.Source: U.S. Small Business Administration, Office of Advocacy, with data from the U.S. Department of the Treasury, Internal Revenue Service, 1996.

110 The Annual Report on Small Business and Competition
pgp

have been falling steadily for both groups, but more for men.9 And while the

receipts gap between men and women persists, it has been diminishing over

time. Average receipts of women-owned sole proprietorships, which were 47

percent of the average for men in 1990, were expected to exceed 51 percent

by the year 2000.

Women’s Self-Employment

In 1997, 3.9 million women declared their primary occupation to be selfemployment, a 48 percent increase over 1983, compared with an increase

of just 1.5 percent for men over the same period (Table 4.8).10 Of these

women, 3.6 million were self-employed in nonagricultural sectors, 

an increase of 46 percent from 1983 to 1997. Men’s self-employment in

nonagricultural sectors totaled 5.5 million in 1997, a 7 percent increase

over 1983.

Projecting from 1983–1997 data, it is estimated that in 2000, about 4.2

million women will be primarily self-employed, with 3.8 million in nonagricultural sectors. About 6.8 million men will be primarily self-employed in

2000, bringing the total to almost 11 million.

By state, women’s share of self-employment ranged from a low of 28

percent in Rhode Island to more than 46 percent in Arizona. Colorado,

Hawaii, Wyoming, and the District of Columbia rounded out the top five, all

with a women’s share of more than 40 percent (Table 4.9).

The number of people who had any self-employment during the year is

considerably larger than the number who are primarily self-employed. In

1997, 11.5 million people, 37 percent of them women, had some selfemployment earnings (Table 4.10). From 1991 to 1997, however, the number

of women claiming any self-employment earnings declined 3.5 percent—just

over one-third of the 9.4 percent decline in self-employed men. In 1997, 6.7

percent of the female work force and 9.9 percent of the male work force

received some self-employment earnings. Both groups have experienced a

decline of more than 10 percent since 1991.

The State of Small Business 111

9 The decline in average receipts is probably tied to the increase in smaller startups.

10 These figures are based on data from the Bureau of Labor Statistics. Self-employed incorporated

women-owned firms are considered employees of their own corporations and not covered in self-employment

figures here.
Characteristics of Women-Owned Firms

Data from the 1992 Characteristics of Business Owners and other sources provide detail about the businesses owned by women: 

• More than 60 percent of women-owned businesses were operated in a

residence when they were first established (Table 4.11). Smaller firms

were much more likely to have been home-based in the beginning than

larger firms, as expected. Firms that stayed very small were more likely

112 The Annual Report on Small Business and Competition

1984 6,568 2,770 9,338 5,219 2,566 7,785

1985 6,452 2,817 9,269 5,207 2,603 7,810

1986 6,498 2,829 9,327 5,271 2,610 7,881

1987 6,617 3,007 9,624 5,423 2,778 8,201

1988 6,738 3,179 9,917 5,564 2,955 8,519

1989 6,729 3,279 10,008 5,562 3,043 8,605

1990 6,749 3,349 10,098 5,597 3,122 8,719

1991 6,886 3,388 10,274 5,700 3,150 8,850

1992 6,777 3,184 9,961 5,613 2,963 8,576

1993 7,011 3,269 10,280 5,894 3,065 8,959

1994 6,756 3,891 10,647 5,560 3,443 9,003

1995 6,599 3,883 10,482 5,461 3,440 8,901

1996 6,590 3,900 10,490 5,465 3,506 8,971

1997 6,590 3,923 10,513 5,506 3,550 9,056

1998 6,784 4,036 10,820 5,711 3,642 9,353

1999 6,798 4,129 10,928 5,740 3,720 9,460

2000 6,813 4,223 11,036 5,769 3,798 9,568

2001 6,827 4,316 11,143 5,798 3,877 9,675

2002 6,841 4,410 11,251 5,827 3,955 9,782

2003 6,855 4,503 11,359 5,857 4,033 9,890

2004 6,870 4,597 11,467 5,886 4,111 9,997

2005 6,884 4,690 11,574 5,915 4,190 10,104

Percentage Changes

1983–1997 1.5 48.1 15.0 7.2 45.6 19.6

1983–2005 6.0 77.1 26.6 15.2 71.8 33.4

1990–2000 0.9 26.1 9.3 3.1 21.7 9.7

Note: Includes only those with self-employment as their primary employment.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the Bureau of

Labor Statistics. 1998-2005 projections by the U.S. Small Business Administration, Office of Advocacy.
Alabama 51 167 30.5 50

Alaska 13 35 37.1 29

Arizona 76 164 46.3 1

Arkansas 43 115 37.4 28

California 576 1,587 36.3 32

Colorado 84 184 45.7 2

Connecticut 34 108 31.5 49

Delaware 8 19 42.1 8

District of Columbia 6 14 42.9 5

Florida 156 458 34.1 44

Georgia 83 241 34.4 40

Hawaii 26 59 44.1 3

Idaho 27 68 39.7 15

Illinois 148 383 38.6 22

Indiana 66 183 36.1 33

Iowa 57 173 32.9 45

Kansas 54 134 40.3 14

Kentucky 56 136 41.2 12

Louisiana 53 149 35.6 37

Maine 26 71 36.6 31

Maryland 74 190 38.9 18

Massachusetts 90 221 40.7 13

Michigan 119 287 41.5 10

Minnesota 104 265 39.2 17

Mississippi 31 91 34.1 43

Missouri 102 246 41.5 11

Montana 26 67 38.8 21

Nebraska 41 109 37.6 25

Nevada 21 56 37.5 26

New Hampshire 23 61 37.7 24

New Jersey 71 192 37.0 30

New Mexico 36 86 41.9 9

New York 187 521 35.9 34

North Carolina 89 277 32.1 47

North Dakota 17 52 32.7 46

Ohio 143 361 39.6 16

Oklahoma 55 161 34.2 41

Oregon 74 175 42.3 7

Pennsylvania 150 440 34.1 42

Rhode Island 7 25 28.0 51

South Carolina 39 109 35.8 36

South Dakota 19 53 35.8 35

Tennessee 85 268 31.7 48

Texas 328 845 38.8 20

Utah 28 80 35.0 39

Vermont 15 40 37.5 27

Virginia 75 196 38.3 23

Washington 115 269 42.8 6

West Virginia 21 54 38.9 19

Wisconsin 82 232 35.3 38

Wyoming 13 30 43.3 4

Note: Includes women aged 16 and older. These data represent women who reported their primary

occupation as “self-employed.”

Source: U.S. Small Business Administration, Office of Advocacy, with data from the U.S. Department of

Labor, Bureau of Labor Statistics, Current Population Survey.

The State of Small Business 113
114 The Annual Report on Small Business and Competition Table 4.10 Gender of the Self-Employed, 1991–1997 1991 1992 1993 1994 1995 1996 199

Number Percent Number Percent Number Percent Number Percent Number Percent Number Percent Number 

Total Self-Employed 12,379,419 100.0 12,701,563 100.0 12,313,766 100.0 12,908,189 100.0 11,603,584 100.0 11,303,095 100.0 11,477,120 

Percent of Labor Force 9.8 9.9 9.5 9.8 8.8 8.4 Female Self-Employed 4,406,835 35.6 4,445,346 35.0 4,572,388 37.1 4,949,179 38.3 4,406,421 38.0 4,226,242 37.4 4,251,717 

Percent of Female Labor Force 7.7 7.6 7.8 8.2 7.2 6.8 Male Self-Employed 7,972,584 64.9 8,256,217 65.0 7,741,378 62.9 7,959,010 61.7 7,197,163 62.0 7,076,853 62.6 7,225,403 

Percent of Male Labor Force 11.5 11.8 11.0 11.2 10.1 9.8 

Notes: Represents individuals with any self-employment earnings in the year. Labor force numbers are annual averages. Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce, Bureau of the Census, March Curren
to continue to be home-based, whereas firms with more than 5 employees most often moved out of the home.

• The CBO estimates that 3.5 percent of all women-owned businesses

are franchises (Table 4.11). The percentage varies dramatically by firm

size, from about 3 percent in firms with fewer than 5 employees to

more than 16 percent in firms with 20–100 employees. According to

the 1987 and 1990 surveys by Women in Franchising, Inc., just under

one-third of franchises are owned solely or in part by women (11 percent solely, 18 percent jointly by men and women). Women’s representation in franchising is thus comparable to their representation in

the business population overall.

• While women-owned businesses represent about one-third of all

businesses in the United States, they received only 1.7 percent of federal

procurement prime contract dollars in both FY 1996 and FY 1997 

(Table 4.12).11 However, women-owned businesses have been making

The State of Small Business 115

Total 61.0 58.2 3.5

Employer Size

Zero 66.1 64.1 3.2

1–4 31.1 25.2 2.7

5–9 20.5 8.9 6.1

10–19 18.4 7.1 9.4

20–49 14.2 3.7 16.2

50–99 20.2 4.5 16.3

100 11.1 0.1 10.3

Industry Average 60.9 58.2 3.5

Agricultural Services, Forestry, Fisheries, 

and Mining 62.2 58.2 3.4

Construction 78.9 73.1 0.9

Manufacturing 63.1 60.4 2.1

Transportation, Communications, and Utilities 55.3 51.2 3.6

Wholesale Trade 65.7 60.3 3.4

Retail Trade 57.7 54.6 6.9

Finance, Insurance, and Real Estate 39.7 37.3 8.2

Services 65.0 62.9 1.5

Not Classified 60.3 57.3 4.1

Notes: About 3 percent of the employer size category of 0 are firms that reported payroll but no employees.

Survey excluded non-S corporations (often large businesses) and business tax returns with less than $500 in

business receipts during the year. Includes allocations for nonresponding owners.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Commerce, Bureau of the Census, Characteristics of Business Owners, 1992.

11 See Appendix B, Procurement from Small Firms.
Table 4.12 Federal Procurement from Women-Owned Businesses, Fiscal Years 1993–1997

FY 1993 FY 1994 FY 1995 FY 1996 

Billions of Billions of Billions of Billions of 

Dollars Percent Dollars Percent Dollars Percent Dollars Percent 

Prime Contract Dollars 200.4 1.0 196.4 100.0 202.3 100.0 197.5 100.0 

Small Business 39.2 0.2 39.6 20.2 42.9 21.3 41.1 20.8 Women-Owned Small Business 2.7 0.0 3.1 1.6 3.6 1.8 3.4 1.7 

Total Subcontracting Dollars 55.8 1.0 57.5 100.0 56.9 100.0 61.2 100.0 

Small Business 20.8 0.4 22.0 38.3 23.8 41.9 25.3 41.4 

Women-Owned Small Business 1.4 0.0 1.5 2.5 1.7 3.0 2.1 3.5 

NA=Not available.Source: U.S. Small Business Administration, Office of Advocacy, with data from the General Services Administration’s Government-wide Information System

116 The Annual Report on Small Business and Competition
• Nearly three-quarters of all women-owned firms accessed some type of

credit in 1993, according to the National Survey of Small Business

Finances (Tables 4.13 and 4.14).12 Half of all women-owned firms used

traditional loans, and 60 percent used nontraditional sources for their

credit needs. Types of loans women used frequently were vehicle loans

(used by 22 percent of women-owned firms), lines of credit (19 percent), and equipment loans (12 percent).

• Commercial banks were the traditional source used most often by

women business owners; 32 percent of women-owned firms used them,

compared with 37 percent of businesses overall. Some 10 percent used

each of the next most popular sources: finance companies and friends

and family. Women-owned firms with more than 100 employees were

more likely than their male-owned counterparts to use personal credit

cards (38 percent compared with 21 percent). More than 27 percent of

women-owned firms used some type of business credit card, and this

percentage has probably risen slightly in recent years.13

• As a firm grows, so does its reliance on credit: 57 percent of womenowned firms with no employees used credit in 1993, compared with

99 percent of firms with 100–499 employees. Only 18 percent of

women-owned firms with no employees obtain credit from commercial

banks, compared with 80 percent of women-owned firms with

100–499 employees. Traditional loans are used by 31 percent of

women-owned businesses with no employees and 95 percent of firms

in the largest size class. Use of credit lines increases from 7 percent for

the smallest firms to 67 percent for the largest.

• One-half of women-owned firms used traditional loans; 30 percent had

only one type of loan and 21 percent had two or more. As more firms

obtain credit lines (revolving credit that can be used multiple times in

a given period), the frequency and significance of credit use becomes

more difficult to measure.

The State of Small Business 117

12 To track the financing of women-owned businesses, the SBA’s Office of Advocacy and the Board of

Governors of the Federal Reserve System conducted a second National Survey of Small Business Finances in

1993–1994. (The first was conducted in 1987 and a third will be conducted in 1999). This survey asked business owners with employees about their financing patterns in 1993, in addition to various characteristics about

their businesses. 13 Small Business Lending in the United States, 1997, a study by the SBA Office of Advocacy, Office of

Economic Research, indicates huge increases in the number and percentage of loans under $100,000 in

1997, much of it driven by credit card banks like American Express Centurion Bank, which has been distributing millions of credit cards to creditworthy business owners. The studies are on the SBA web site at

www.sba.gov/advo/stats/lending. 14 See Chapter 3 for a discussion of the importance of the entrance of minority-owned businesses in 

the economy.
118 The Annual Report on Small Business and Competition Table 4.13 Small Women-Owned Firms’ Use of Credit by Type, 1993 (Percent of Small Women-Owned Firms) Loan Type Any Any Any Traditional Line of Nontraditional Owner 

Category Credit Loan Credit Mortgage Vehicle Equipment Lease Other Loan Loan CAny Firm 73.6 50.3 18.5 7.0 21.8 11.7 7.0 12.3 59.7 15.2 Number of Employees 0 57.2 30.8 7.0 4.9 11.2 6.0 3.3 7.8 48.3 1.1 1–4 75.6 48.2 18.3 8.1 17.8 10.7 5.7 13.7 62.5 17.5 5–9 85.8 70.2 30.0 4.9 37.6 17.5 7.8 11.5 70.2 28.8 10–19 87.9 79.3 25.1 12.5 43.3 16.2 20.8 20.5 59.1 15.9 20–99 93.5 81.3 43.4 4.4 43.7 36.1 18.8 16.1 67.4 32.6 100–499 98.6 94.5 67.3 28.4 30.1 34.7 28.6 12.4 78.6 40.2 Total Sales (Dollars)Less than 25,000 64.4 37.6 11.4 4.4 13.1 9.1 3.2 6.6 51.7 10.5 25,000–49,999 76.9 51.7 7.3 12.3 23.7 10.1 4.6 11.2 63.0 7.9 50,000–99,999 71.4 42.7 13.6 7.2 17.2 9.8 6.5 16.0 60.9 12.9 100,000–249,999 72.7 53.6 20.0 12.3 21.3 13.7 8.2 13.2 61.4 18.6 250,000–499,999 83.0 64.5 26.0 2.1 34.8 13.0 10.2 18.6 63.5 17.7 500,000–999,999 87.6 69.9 34.4 6.7 37.4 16.5 10.9 16.1 73.0 23.2 1,000,000–2,499,999 88.6 58.4 34.5 3.3 25.3 4.4 11.4 11.2 70.6 23.9 2,500,000–4,999,999 94.5 83.0 46.1 4.3 53.4 29.3 26.3 27.4 66.4 28.8 5,000,000–9,999,999 99.3 82.5 66.7 8.1 51.5 31.2 17.0 25.5 86.5 55.8 10,000,000 or more 98.1 98.1 60.2 4.9 16.6 48.3 20.3 42.9 47.5 28.9 Standard Industrial ClassificationMining and Construction 84.3 70.1 38.2 7.2 47.6 10.4 2.9 18.6 64.3 20.4 Manufacturing 72.6 52.9 21.6 2.8 23.1 24.7 14.5 10.3 58.3 24.6 Transportation 80.0 59.7 29.1 8.5 17.8 19.2 16.7 9.8 57.9 20.9 Wholesale Trade 77.3 45.5 30.3 4.1 24.9 7.7 13.1 11.4 66.2 24.5 Retail Trade 70.8 50.7 21.2 7.7 19.8 5.9 5.7 15.4 58.8 17.9 Finance, Insurance, and Real Estate 83.7 62.3 15.5 13.8 16.4 25.4 7.6 13.3 61.4 15.7 Services 71.8 45.6 11.3 6.7 19.5 12.3 5.6 9.9 58.8 9.6 

Note: Owner loans are included for partnerships and corporations only.Source: U.S. Small Business Administration, Office of Advocacy, with data from the 1993 National Survey of Small Business Finances sponsored by the 

Administration and the Federal Reserve Board.
Table 4.14 Small Women-Owned Firms’ Use of Credit by Supplier, 1993 (Percent of Small Women-Owned Firm

Lender

Depository Institutions Nondepository Institutions Nonfinancial Institutions

Any Any Any Non- Any Non- Any NonAny Traditional Depository Commercial depository Finance financial Family and Other traditional Owner 

Category Credit Loan Institution Bank Institution Company Insitution Friends Businesses Credit Loans Any Firm 73.6 50.3 34.8 31.5 17.6 10.3 14.3 9.8 4.8 59.7 15.2 Number of Employees0 57.2 30.8 20.2 18.3 7.6 3.9 7.1 4.7 2.9 48.3 1.1 1–4 75.6 48.2 32.3 29.2 18.1 8.9 15.0 11.5 4.2 62.5 17.5 5–9 85.8 70.2 54.9 47.2 22.1 17.5 17.5 12.8 4.5 70.2 28.8 10–19 87.9 79.3 47.9 46.1 31.9 21.0 28.1 15.0 13.1 59.1 15.9 20–99 93.5 81.3 65.1 63.5 41.8 25.3 21.7 4.5 13.2 67.4 32.6 100–499 98.6 94.5 82.8 80.0 31.7 17.0 13.6 10.8 3.5 78.6 40.2 Total Sales (Dollars)Less than 25,000 64.4 37.6 25.5 23.6 11.7 6.6 7.1 3.7 3.2 51.7 10.5 25,000–49,999 76.9 51.7 28.5 20.9 20.5 11.0 17.1 15.0 3.6 63.0 7.9 50,000–99,999 71.4 42.7 27.9 24.4 12.4 7.9 17.6 12.4 3.3 60.9 12.9 100,000–249,999 72.7 53.6 39.1 36.7 17.7 8.5 17.0 14.7 5.6 61.4 18.6 250,000–499,999 83.0 64.5 43.7 37.1 27.7 16.1 19.5 12.4 5.5 63.5 17.7 500,000–999,999 87.6 69.9 53.2 50.9 19.8 16.3 20.9 11.9 9.0 73.0 23.2 1,000,000–2,499,999 88.6 58.4 43.6 39.2 21.6 13.4 10.1 8.1 1.6 70.6 23.9 2,500,000–4,999,999 94.5 83.0 59.1 57.3 45.9 29.9 38.6 14.0 18.6 66.4 28.8 5,000,000–9,999,999 99.3 82.5 75.4 74.1 44.4 34.6 7.7 2.2 4.7 86.5 55.8 10,000,000 or more 98.1 98.1 84.5 84.5 37.3 23.2 40.1 11.6 29.0 47.5 28.9 Standard Industrial ClassificationMining and Construction 84.3 70.1 60.3 50.4 25.5 20.6 16.7 14.6 2.6 64.3 20.4 Manufacturing 72.6 52.9 32.3 30.2 32.1 18.0 19.3 6.6 10.7 58.3 24.6 Transportation 80.0 59.7 44.7 43.7 26.4 17.3 20.3 9.4 10.7 57.9 20.9 Wholesale Trade 77.3 45.5 32.0 29.5 20.6 14.8 13.6 4.3 7.4 66.2 24.5 Retail Trade 70.8 50.7 38.1 35.1 10.7 6.9 11.4 9.8 2.9 58.8 17.9 Finance, Insurance, and Real Estate 83.7 62.3 42.0 35.9 30.0 3.8 21.3 15.8 6.5 61.4 15.7 Services 71.8 45.6 28.4 25.7 16.1 9.2 14.0 9.8 4.5 58.8 9.6 

Note: Owner loans are included for partnerships and corporations only.Source: U.S. Small Business Administration, Office of Advocacy, with data from the 1993 National Survey of Small Business Finances.

The State of Small Business 119
Minority Business Ownership

Minority-owned businesses are also rising in importance in the nation’s

economy.14 The number of minority-owned firms jumped more than 168

percent from 1987 to 1997, even more than the increase in women-owned

firms over the same period (Chart 4.6 and Table 4.15). By 1992, 4.5 percent

of firms were owned by Hispanic business owners; 3.5 percent by Asians (or

Pacific Islanders, American Indians, or Aleut Eskimos); and 3.6 percent by

African Americans (Table 4.16). Population projections suggest, moreover, that

minorities will be an increasingly important segment of the economy.

By industry, most minority-owned firms, like most other firms, were in

services. Asian-owned firms were well represented in retail trade (5.3 percent),

but accounted for only 1.5 percent of construction firms. Black-owned firms

constituted 7.0 percent of the transportation, communications, and public

utilities sector, but only 1.4 percent of wholesale trade. Hispanic-owned firms

were also well represented in transportation, with 6.8 percent of the firms, but

had only 2.5 percent of the finance, insurance, and real estate sector.

Minority Self-Employment

In 1998, Asian, Pacific Islander, American Indian, and Aleut Eskimo individuals accounted for 4.5 percent of the self-employed; black individuals for 5.2

120 The Annual Report on Small Business and Competition Millions

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

U.S. Department of Commerce, Bureau of the Census.

1982 1987 1992 1997 Estimate

Years

0

0.5

1.0

1.5

2.0

2.5

3.0

Firms with Employees
The State of Small Business 121

All Minority-Owned Firms

Number of Businesses

All 736,064 1,211,017 1,979,056 3,245,127 168.0

Businesses with Employees 119,232 247,678 313,031 522,942 111.1

Nominal Receipts of Businesses 

(Thousands of Dollars)

All 34,181,238 77,744,780 202,683,780 494,703,206 342.8

Businesses with Employees 21,820,541 56,394,339 159,252,282 430,647,362 431.5

Employees 445,840 837,158 1,877,690 3,868,649 362.1

Hispanic-Owned Firms

Number of Businesses

All 233,975 422,373 771,708 1,401,531 231.8

Businesses with Employees 39,272 82,908 115,364 202,037 143.7

Nominal Receipts of Businesses 

(Thousands of Dollars)

All 11,759,133 24,731,600 72,824,270 183,799,941 416.8

Businesses with Employees 7,435,664 17,729,432 57,187,370 160,408,831 529.2

Employees 154,791 264,846 691,056 1,492,773 463.6

Black-Owned Firms

Number of Businesses

All 308,260 424,165 620,912 881,646 107.9

Businesses with Employees 37,841 70,815 64,478 89,686 26.6

Nominal Receipts of Businesses 

(Thousands of Dollars)

All 9,619,055 19,762,876 32,197,361 59,303,334 109.1

Businesses with Employees 5,704,545 14,130,420 22,589,676 46,034,389 127.2

Employees 121,373 220,467 345,193 583,752 164.8

Asian-Owned Firms

Number of Businesses

All 201,264 376,711 606,426 1,055,641 180.2

Businesses with Employees 43,323 96,457 136,351 248,163 157.3

Nominal Receipts of Businesses 

(Thousands of Dollars)

All 13,148,315 34,035,605 99,709,460 275,106,075 462.5

Businesses with Employees 8,900,741 25,104,127 81,083,845 245,293,007 580.0

Employees 174,179 360,301 860,408 1,917,244 432.1

1 1997 numbers were estimated assuming a 1992–1997 growth rate equal to the average of the previous

two five-year periods, 1982–1987 and 1987–1992. 2 Growth rates for receipts are calculated using constant 1992 dollars: they are real growth rates, adjusted

for inflation.

Note: These numbers exclude C corporations and businesses with less than $500 in annual receipts.

Source: U.S. Small Business Administration, Office of Advocacy, based on data from the U.S. Department

of Commerce, Bureau of the Census, Survey of Minority-Owned Business Enterprises, 1982, 1987, and 1992.
122 The Annual Report on Small Business and Competition Table 4.16 Firms by Owner Characteristic, 1992 (Percent of Firms, unless noted) Ethnicity Race Total Number of Firms Hispanic1 Non-Hispanic Black Asian2 

Total, All Firms 17,253,143 4.5 95.5 3.6 3.5 Employer Size03 14,554,022 4.6 95.4 3.9 3.4 

1–4 1,716,076 3.8 96.2 2.2 4.5 

5–9 503,808 3.4 96.6 1.6 4.5 

10–19 256,110 3.3 96.7 1.1 3.9 20–49 144,734 2.8 97.2 1.2 3.5 50–99 45,331 2.1 97.9 1.0 2.4 100

 33,062 2.0 98.0 1.0 2.1 

IndustryAgricultural Services, Forestry, Fishing, and Mining 583,253 5.6 94.4 1.8 2.6 Construction 1,829,620 5.3 94.7 2.4 1.5 Manufacturing 517,714 3.6 96.4 2.0 3.7 Transportation, Communications, and Public Utilities 698,903 6.8 93.2 7.0 3.5 Wholesale Trade 538,339 3.3 96.7 1.4 3.7 Retail Trade 2,478,045 4.4 95.6 3.5 5.3 Finance, Insurance, and Real Estate 1,941,029 2.5 97.5 2.1 3.3 Services 7,784,016 4.5 95.5 4.3 3.5 Not Classified 882,224 6.0 94.0 4.5 3.2 

1 “Hispanic” is an ethnic origin and can be of any race. 2 “Asian” includes Asian Americans, Pacific Islanders, American Indians, and Alaska Natives. 3About 3 percent of the employer size category of “0” are firms that reported payroll but no employees on the date of the survey. 

Note: Survey excluded C corporations and businesses reporting less than $500 in annual receipts.Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce, Bureau of the Census, Chara

Owners, 1992.
The State of Small Business 123

1996 10,489 9,577 506 406 644

1995 10,482 9,635 512 335 567

1994 10,648 9,772 485 391 598

1993 10,279 9,487 468 324 543

1992 9,960 9,215 452 293 498

1991 10,274 9,512 475 287 500

1990 10,097 9,377 461 259 523

1989 10,008 9,291 411 306 530

1988 9,917 9,209 414 294 508

1987 9,624 8,956 403 265 455

1986 9,328 8,706 380 242 428

1985 9,269 8.659 379 231 372

1984 9,338 8,736 365 237 370

1983 9,140 8,581 345 214 322

1982 8,898 8,367 346 185 327

Percent of Self-Employed in 1998 100 90.4 5.2 4.5 6.4

Percent Change, 1988–1998 3.9 1.1 28.7 56.5 30.1

1 “Asian” includes Asian Americans, Pacific Islanders, American Indians, and Alaska Natives. Due to the

small sample size of this group, numbers should be viewed with caution. 2 ”Hispanic” is an ethnic origin and can be of any race.

Note: “Self-employment” means that it was identified as the primary occupation of survey respondents.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Labor, Bureau of Labor Statistics.

percent; and white individuals for 90.4 percent (Table 4.17). By origin, 6.4

percent were Hispanic. From 1992 to 1998, the percentage of the selfemployed increased for women, Hispanics, and all races except white.

Characteristics of Minority-Owned Firms

Data from the 1992 Characteristics of Business Owners and other sources provide detail about the businesses owned by minorities: 

• Fifty percent or more of all owners started their firms in the home, except

Asian owners, for whom the figure was 37.6 percent (Table 4.18). The

share of black-owned firms with employees that were started in the home

(43.3 percent) was larger than average (30.1 percent). For Asians, the

comparable share was 16.4 percent. The percentages of firms without

employees that were started in the home and remained in the home were

similar, an indication that few such firms leave the home.

• Compared with an average franchise share of 3.1 percent, more Asianand black-owned firms and fewer Hispanic-owned firms are franchises
(4.8, 4.1, and 2.8 percent respectively) (Table 4.18). The higher Asian

share was driven by a 13.7 percent franchise rate for Asian-owned firms

(compared with 4.7 percent for all firms) in the transportation, communications, and public utilities industries (Table 4.19).

• Of the firms in existence in 1992, 75.5 percent survived until 1996

(89.7 percent of firms with employees and 72.0 percent of firms without employees) (Table 4.20). The survival rates for firms overall were

79.2 percent for Asian-owned firms, 74.3 percent for Hispanic-owned

firms, and 68.9 percent for black-owned firms.

• Of the owners of firms that closed, 38.2 percent said the business was

successful at closure; the rates were 29.3 percent for Hispanic owners,

27.1 percent for Asian owners, and 22.8 percent for black owners.

• Of the $195 billion in 1997 federal prime contract dollars, 5.6 percent

went to minority-owned businesses (Table 4.21). About 6 percent of the

contract actions over $25,000 went to minority-owned businesses, as

well as 2.6 percent of actions of $25,000 or less. These percentages

were slightly higher than the 1996 percentages for the total and for

actions over $25,000, but less for actions of $25,000 or less.

• The annual change in the dollar volume of contract actions over

$25,000 from 1980 to 1997 shows only two years of declining contract

awards to minority-owned businesses, even though the total has

decreased in eight of those years (Table 4.22). From 1996 to 1997, the

124 The Annual Report on Small Business and Competition

py

Without Employees 14,118,184 63.0 60.6 4.8 1.3

Hispanic-Owned1 771,708 51.6 49.2 2.8 2.5

With Employees 115,634 30.7 25.2 3.3 4.0

Without Employees 656,074 56.9 55.4 2.8 2.2

Black-Owned 620,912 57.0 55.6 4.1 0.8

With Employees 64,478 43.3 36.6 4.3 0.8

Without Employees 556,434 58.8 58.0 4.0 0.7

Asian-Owned2 606,426 37.6 36.1 4.8 2.3

With Employees 136,351 16.4 12.3 6.6 3.9

Without Employees 470,075 45.9 45.3 4.1 1.6

1 “Hispanic” is an ethnic origin and can be of any race. 2 “Asian” includes Asian Americans, Pacific Islanders, American Indians, and Alaska Natives. 

Note: Survey excluded C corporations and businesses with less than $500 in receipts during the year.

Includes allocations for non-responding owners.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Commerce, Bureau of the Census, Characteristics of Business Owners, 1992.
Table 4.19 Franchising by Owner Type, Firm Size, and Industry, 1992

Number of Firms (Thousands) Percent of Firms F

Total Hispanic 1 Black Asian 2 All Hispanic 1 

Total, All Firms 17,253.1 771.7 620.9 606.4 3.1 2.8 Employment Size of Firm03 14,554.0 675.9 570.2 490.1 2.9 2.7 

1–4 1,716.1 64.6 37.6 76.6 2.9 2.3 

5–9 503.8 16.9 7.9 22.9 3.5 2.8 

10–19 256.1 8.6 2.8 10.1 9.9 8.4 20–49 144.7 4.1 1.7 5.0 14.0 9.2 50–99 45.3 0.9 0.4 1.1 21.0 14.2 100 33.1 0.7 0.3 0.7 14.5 16.8 

IndustryAgricultural Services, Forestry, Fishing, and Mining 583.3 32.9 10.3 15.2 0.9 1.6 Construction 1,829.6 97.5 43.4 28.3 0.6 1.3 Manufacturing 517.7 18.5 10.5 19.0 1.4 1.9 Transportation, Communications, and Public Utilities 698.9 47.8 49.1 24.4 4.7 2.8 Wholesale Trade 538.3 17.7 7.6 20.0 3.5 3.4 Retail Trade 2,478.0 107.8 86.8 132.5 8.0 6.6 Finance, Insurance, and Real Estate 1,941.0 49.2 40.9 64.8 6.8 6.4 Services 7,784.0 347.3 333.0 273.8 1.5 1.5 Not Classified 882.2 52.9 39.4 28.5 2.4 4.8 

1 “Hispanic” is an ethnic origin and can be of any race.2 “Asian” includes Asian Americans, Pacific Islanders, American Indians, and Alaska Natives. 3About 3 percent of the employer size category of ”0” are firms that reported payroll, but no employees on the date of the survey. 

Note: The survey excluded C corporations and businesses with less than $500 in business receipts during the year. Includes allocations for non-responding 

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce, Bureau of the Census, Chara

Owners, 1992.

The State of Small Business 125
With Employees 89.7 2.9 2.6 1.9 3.0 57.4

Without Employees 72.0 5.2 6.6 7.8 8.4 36.4

Hispanic-Owned 1 74.3 5.5 4.9 7.2 8.2 29.3

With Employees 91.2 2.7 2.4 2.4 1.3 42.0

Without Employees 70.0 6.1 5.6 8.4 9.9 28.2

Black-Owned 68.9 6.0 6.8 8.0 10.3 22.8

With Employees 86.7 3.7 4.1 3.0 2.5 35.7

Without Employees 66.5 6.3 7.3 8.7 11.2 22.1

Asian-Owned 2 79.2 4.6 4.7 6.4 5.1 27.1

With Employees 92.1 2.2 1.9 2.0 1.9 49.4

Without Employees 73.9 5.6 5.9 8.2 6.4 24.6

1 “Hispanic” is an ethnic origin and can be of any race. 2 “Asian” includes Asians, Pacific Islanders, American Indians, and Alaska Natives. 

Notes: The survey excluded C corporations and businesses with less than $500 in business receipts during

the year. Includes allocations for non-responding owners. “Closed successful” means the owner believed the

business was successful at the time of closure.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Commerce, Bureau of the Census, Characteristics of Business Owners, 1992.

Table 4.21 Total Prime Federal Contract Actions by Owner Type, 

FY 1996 and FY 1997 (Millions of Dollars)

Total Actions over $25,000 Actions of $25,000 or Less

1996 1997 1996 1997 1996 1997

Total 197,579.1 195,286.9 178,607.9 178,068.0 18,971.2 17,218.9

Small Business 41,142.9 41,273.2 31,959.4 33,190.4 9,183.4 8,082.8

Percent of Total 20.8 20.9 17.9 18.6 48.4 42.6

Minority-Owned Business 10,926.5 11,132.6 10,292.6 10,640.8 622.6 491.9

Percent of Total 5.5 5.6 5.8 6.0 3.3 2.6

Source: Federal Procurement Data System, Federal Procurement Report (Washington, D.C.: 

U.S. Government Printing Office, January 1997 and January 1998).

126 The Annual Report on Small Business and Competition
Table 4.22 Annual Change in the Dollar Volume of Prime Federal Contract Actions over $25,000 by Owner Typ

FY 1980–FY 1997 (Millions of Dollars)

Total, All Business Small Business Minority-Ow

Change from Change from 

Prior Year Prior Year 

Total Total Total

Actions Dollars Percent Actions Dollars Percent Actions 

1997 178,068.0 539.9 0.3 33,190.4 1,231.0 3.9 10,640.8 1996 178,607.9 2,244.0 1.2 31,959.4 152.2 0.5 10,292.6 

1995 180,852.0 6,164.0 3.5 31,807.3 3,384.2 11.9 10,519.5 1,1994 174,688.0 3,649.0 2.0 28,423.0 475.6 1.7 9,059.5 

1993 178,337.0 550.6 0.3 27,947.4 282.3 1.0 8,804.0 1,

1992 177,786.4 11,815.8 6.2 28,229.7 617.6 2.1 7,796.1 1,

1991 189,602.2 18,301.3 10.7 28,847.4 3,445.7 13.6 6,486.3 1990 171,300.9 2,605.9 1.5 25,401.6 1,685.5 7.1 5,690.1 1989 168,695.0 5,402.6 3.1 23,716.2 1,955.1 7.6 5,333.9 

1988 174,097.6 7,441.0 4.1 25,671.3 2,256.4 8.1 5,192.5 

1987 181,538.6 2,111.6 1.1 27,927.7 852.4 3.0 4,849.1 

1986 183,650.2 4,335.2 2.3 28,780.1 2,077.4 7.8 4,285.9 

1985 187,985.5 20,052.0 11.9 26,702.7 1,196.7 4.7 3,884.6 

1984 167,933.5 12,345.4 7.9 25,506.0 3,426.0 15.5 4,004.1 1983 155,588.1 3,190.2 2.1 22,080.0 1,478.6 6.3 3,187.1 

1982 152,397.9 23,533.1 18.3 23,558.6 3,489.8 17.4 2,858.9 1981 128,864.7 27,971.4 27.7 20,068.8 4,742.7 30.9 2,635.0 1980 100,893.4 15,326.1 1,821.9

Source: Federal Procurement Data System, “Special Report S89522C” (prepared for the U.S. Small Business Administration, Office of Advocacy, June 12, 1989

Procurement Report (Washington, D.C.: U.S. Government Printing Office, July 10, 1990, March 13, 1991, February 3, 1994, January 13, 1997, and January 1998

The State of Small Business 127
g py 

67 percent of minority-owned businesses used some type of credit in

1993, compared with 76 percent of all businesses (Table 4.23). About

46.5 percent used traditional financing, less than the 55 percent average

for all firms.15 And 52.7 percent of businesses owned by minorities used

nontraditional sources for their credit needs, compared with 58 percent

of all businesses.

• Commercial banks were the traditional source used most often by

minority-owned businesses: 26.6 percent used them, compared with

36.9 percent of all small firms (Table 4.24). Finance companies were the

second most common traditional source at 11.1 percent. The types of

traditional loans used most frequently were vehicle loans (used by 21.4

percent of minority-owned businesses), lines of credit (18.3 percent),

and equipment loans (12.6 percent). More than one-quarter of minority-owned businesses used business credit cards and 36 percent of them

used personal credit cards for all or part of their credit needs.

Characteristics of Small Business Employees

Small firms with fewer than 500 employees employed 55.4 percent of the101.2 million private sector employees in 1997 (Table 4.25). Small firms

are hiring a diverse work force.16 Their willingness to hire younger and older

workers, part-time workers, and workers on public assistance also serves the

economy by providing employment to some workers who might otherwise

be unemployed.17

Women

Small and large firms hire women in about equal proportions. About 45.5 percent of the small firm work force and 47.6 percent of the large firm work force

are women (Table 4.26). Firms with fewer than 10 employees employ women

at a slightly higher rate (47.9 percent) than firms with 25 to 99 employees

(43.4 percent). Because small firms employ more of the private work force

than large firms, they employ more women: 25.5 million in small firms compared with 21.5 million in large firms. 

128 The Annual Report on Small Business and Competition

15 Traditional sources include commercial banks, credit unions, finance companies, thrifts, brokerages,

leasing, family, friends, government, and other businesses. Nontraditional sources include owner loans,

personal credit cards, and business credit cards. 16 For many purposes, the Office of Advocacy defines a firm with fewer than 500 employees as small.

Here, different employment size classes are presented to allow more detailed analysis of businesses by size. 17 These differences between small and large firms in the work forces they hire should be considered in

analyses of wage differentials by firm size.
Table 4.23 Credit Use by Small Minority-Owned Firms, by Type of Loan, 1993 (Percent Reporting Use)

Traditional Credit Nontraditio

Any Any Non- 

Any Traditional Line of traditional Owner 

Category Credit Loan Credit Mortgage Vehicle Equipment Lease Other Loan Loan* All Small Minority-Owned Firms 67.0 46.5 18.3 4.6 21.4 12.6 6.5 10.9 52.7 13.9 Number of Employees0 44.8 30.8 7.4 3.2 11.8 7.2 3.3 9.8 32.7 1.1 1–4 68.3 43.1 17.6 3.7 21.9 10.9 2.0 11.4 55.8 13.3 5–9 83.8 63.8 26.6 6.9 27.7 16.4 13.4 12.9 68.6 22.6 10–19 85.2 68.0 27.6 3.5 20.3 25.4 20.3 4.8 57.3 26.0 20–99 88.3 71.1 41.8 8.0 36.3 30.5 22.2 12.6 70.7 45.0 100–499 96.7 92.9 36.9 43.9 83.9 8.2 34.5 2.5 41.4 17.0 

IndustryMining and Construction 67.4 45.3 21.8 1.3 30.6 15.8 7.1 5.5 56.1 15.2 Manufacturing 78.9 53.5 24.1 5.5 16.4 21.8 12.4 7.7 56.6 20.7 Transportation, Communications,

and Public Utilities 75.8 40.3 11.7 2.9 22.9 9.5 6.5 12.0 64.0 17.8 

Wholesale Trade 78.9 59.4 37.0 1.7 29.5 10.2 10.4 22.5 62.6 29.4 Retail Trade 58.8 38.0 15.7 3.1 13.1 5.2 5.2 12.8 44.2 15.8 Finance, Insurance, 

and Real Estate 77.5 46.9 21.9 20.2 25.6 7.7 2.3 7.7 68.9 16.4 

Services 66.1 48.5 15.1 5.2 22.1 15.4 5.9 9.9 51.9 8.7 

* Owner loans are included for partnerships and corporations only.Source: U.S. Small Business Administration, Office of Advocacy, with data from the 1993 National Survey of Small Business Finances.

The State of Small Business 129
130 The Annual Report on Small Business and Competition Table 4.24 Credit Use by Small Minority-Owned Firms, by Source of Loan, 1993 (Percent Reporting Use) Any Any Any 

Any Depository Commercial Non-Depository Finance Non-Finan

Category Credit Institution Bank Institution Company InsitituioAll Small Minority-Owned Firms 67.0 30.6 26.6 16.9 11.1 14.9 Number of Employees 0 44.8 13.6 9.3 14.3 9.8 8.5 1–4 68.3 29.3 26.1 12.4 8.3 16.0 5–9 83.8 47.2 39.1 24.5 16.1 21.8 10–19 85.2 41.4 41.2 24.7 11.6 9.5 20–99 88.3 55.3 55.3 35.7 24.7 22.1 100–499 96.7 82.8 75.8 38.3 33.3 3.6 IndustryMining and Construction 67.4 33.1 32.8 18.4 17.5 12.3 Manufacturing 78.9 36.5 31.3 18.5 14.0 13.7 Transportation, Communications,

and Public Utilities 75.8 32.5 30.5 27.7 25.6 2.9 

Wholesale Trade 78.9 47.6 45.8 20.3 17.3 21.0 Retail Trade 58.8 24.2 21.1 10.3 6.7 11.8 Finance, Insurance, 

and Real Estate 77.5 38.8 28.4 18.8 10.0 16.2 

Services 66.1 28.8 23.6 18.2 9.6 16.8 

Note: Owner loans included for partnerships and corporations only.Source: U.S. Small Business Administration, Office of Advocacy, with data from the 1993 National Survey of Small Business Finances.
Table 4.26 Employee Characteristics by Employment Size of Firm, 1997

(Percent of Employees)

Employment Gender Race Origin

Size of Firm Female Asian1 Black White Hispanic 2

Total 46.4 4.6 11.3 84.1 11.1

Under 10 47.9 4.6 7.9 87.5 14.5

10–24 44.4 4.2 9.1 86.7 13.8

25–99 43.4 4.3 9.2 86.5 13.5

100–499 46.2 5.0 12.2 82.8 11.0

500–999 47.7 4.3 13.9 81.7 9.8

1,000 47.5 4.8 13.3 82.0 8.4

500 45.5 4.5 9.7 85.8 13.1

500 47.6 4.7 13.4 81.9 8.6

1 ”Asian” includes Asian Americans, Pacific Islanders, American Indians, and Alaska Natives. 2 ”Hispanic” is an ethnic origin and can be of any race.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Commerce, Bureau of the Census, March Current Population Surveys.

Total 101,216 100.0 81,667 100.0

Under 10 14,940 14.8 10,198 12.5

10–24 10,720 10.6 8,169 10.0

25–99 15,300 15.1 12,821 15.7

100–499 15,140 15.0 12,999 15.9

500–999 6,276 6.2 5,398 6.6

1,000 38,840 38.4 32,082 39.3

500 56,100 55.4 44,187 54.1

500 45,116 44.6 37,480 45.9

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Commerce, Bureau of the Census, March Current Population Surveys.

The State of Small Business 131
p(p), pyg

ally increases with firm size.

The race category of Asian / Pacific Islander or American Indian / Aleut

Eskimo had similar employment rates in small and large firms. Overall, 4.7

million workers of Asian / Pacific Islander or American Indian / Aleut Eskimo

were in the private work force (4.6 percent).

The percentage of Hispanic workers decreases as firm employment size

increases. Hispanic individuals constituted 7.4 million of the 56.1 million

small firm employees (13.1 percent), and 3.9 million of the 45.1 million large

firm employees (8.6 percent). Very small firms (fewer than 10 employees) had

a Hispanic worker ratio of 14.5 percent.

Age

Small firms hire a larger proportion than large firms of full-time workers under

age 25 and workers age 65 and older (Table 4.27 and Chart 4.7).18 In 1997,

small firms with fewer than 500 employees employed about 7.2 million fulltime workers under 25, while large firms employed about 5.0 million.

Employees under age 25 were 14.0 percent of very small firms (fewer than 10

employees) and 11.2 percent of very large firms (1,000 employees or more).

Very small firms also have more than double the large firm ratio of

employees over age 65 (2.2 percent and 1.0 percent, respectively). Small

firms employed about 872,000 full-time employees age 65 or older and

large firms employed about 449,700 in 1997.

Part-Time Employment

Overall, 21.1 percent (11.9 million) of small firm workers were part-time

employees in 1997, compared with 16.9 percent (7.6 million) of large firm

workers (Table 4.28). Small firms employed about 626,000 part-time workers

who usually work full-time, while large firms employed about 361,000. Very

small firms (fewer than 10 employees) hire part-time employees at a rate

almost twice that of very large firms (1,000 or more employees) (Chart 4.8).19

Very small firms also hire part-time employees who usually work full-time at

a rate about twice that of very large firms.

The gap between large and small firms in the share of part-time workers

has been narrowing. The small firm share declined every year from 1991 to

132 The Annual Report on Small Business and Competition

18 For comparisons of the age distribution of workers by firm size, full-time employees were chosen to

avoid distortions because of the distribution of part-time workers; that is, smaller firms have a higher proportion

of part-time employment than large firms. 19 Part-time employment is defined here as working less than 35 hours per week.
The State of Small Business 133

Percent

Chart 4.7 Age of Full-Time Employees by Employment Size of Firm, 1997

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

U.S. Department of Commerce, Bureau of the Census.

Under 10 10–24 25–99 100–499 500–999 1,000 +

Employment Size of Firm

Under 25 years old

65 years old or older

0

2

4

6

8

10

12

14

16

Under 10 14.0 28.4 28.0 18.3 9.1 2.2

10–24 15.5 28.9 28.4 17.3 8.3 1.7

25–99 12.5 30.5 28.4 19.3 7.9 1.4

100–499 10.3 28.7 29.5 20.9 9.7 1.0

500–999 11.1 29.5 29.6 20.7 7.9 1.2

1,000 11.2 27.8 29.2 21.8 9.0 1.0

500 12.9 29.1 28.6 19.1 8.8 1.6

500 11.2 28.0 29.3 21.7 8.9 1.0

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Commerce, Bureau of the Census, March Current Population Surveys.
1996, from 22.3 percent at the beginning of the period to 20.5 percent at the

end, but increased to 21.1 percent in 1997. The large firm share was relatively

stable over the period.

Educational Attainment

Small firms have more employees with lower educational levels: 54.0 percent

of small firm employees had a high school degree or less in 1997 compared

with 44.4 percent of large firm employees (Table 4.29). Conversely, large firms

have a higher ratio of employees with bachelor’s and master’s degrees and

higher. In 1997, 57.6 percent of the work force in firms with fewer than 10

employees (8.6 million employees) had high school degrees or less and 4.2

percent (0.6 million employees) had degrees beyond bachelor’s degrees. In

contrast, 43.9 percent of the work force in firms with 1,000 or more employees (17.0 million employees) had high school degrees or less and 7.0 percent

(2.7 million employees) had degrees beyond bachelor’s degrees. The percentages were similar for employees with some college and bachelor’s degrees:

41.2 percent in small firms (23.1 million employees) and 48.6 percent in large

firms (21.9 million employees).

Employee age and industry structure may explain some of the differences

between small and large firm employee educational attainment. The fact that

small firms have a higher ratio than large firms of employees under age 25

could explain small firms’ higher ratio of employees with educational attainments of high school and below. Note that the educational levels listed here are

those reached by private workers at a point in time. During their lives, many of

the workers (particularly younger workers) will reach higher educational levels.

134 The Annual Report on Small Business and Competition

Total 19.3 1.0

Under 10 31.8 1.6

10–24 23.8 1.1

25–99 16.2 0.8

100–499 14.1 1.0

500–999 14.0 0.7

1,000 17.4 0.8

500 21.1 1.1

500 16.9 0.8

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Commerce, Bureau of the Census, March Current Population Surveys.
The State of Small Business 135

Percent

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

U.S. Department of Commerce, Bureau of the Census.

Under 10 10–24 25–99 100–499 500–999 1,000 +

Employment Size of Firm

0

5

10

15

20

25

30

Table 4.29 Employee Education Level by Employment Size of Firm, 1997

(Percent of Employees)

Employment Less than High School Some Bachelor’s Master’s Professional/

Size of Firm High School Degree College Degree Degree Doctorate

Total 15.6 34.1 28.6 15.9 4.0 1.8

Under 10 22.7 34.8 26.4 11.8 2.5 1.7

10–24 21.3 34.7 27.9 12.4 2.1 1.5

25–99 16.8 36.3 28.0 14.1 3.3 1.7

100–499 14.8 35.2 27.5 16.4 4.5 1.6

500–999 12.2 35.3 29.0 16.5 5.0 2.1

1,000 11.8 32.1 30.3 18.9 4.9 2.0

500 18.7 35.3 27.4 13.8 3.2 1.6

500 11.9 32.5 30.1 18.5 4.9 2.0

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Commerce, Bureau of the Census, March Current Population Surveys.
be unemployed.

Public Assistance

Small firms are contributing to the economy by hiring more individuals who

utilize public and financial assistance than large firms. In 1997, small firms

employed about 468,000 individuals receiving financial assistance (money

received from friends or relatives not living in the same household, excluding

loans) and 719,000 individuals receiving public assistance (assistance

received from government sources, excluding food stamps and SSI payments).

Large firms employed about 341,000 individuals receiving financial assistance

and 466,000 individuals receiving public assistance.

Very small firms with fewer than 10 employees had higher ratio of individuals receiving financial assistance than very large firms with 1,000 or more

employees (1.14 percent versus 0.78 percent) (Table 4.30 and Chart 4.9).

From 1991 to 1997, the percentages of employees receiving assistance

decreased for both small and large firms, while overall employment

increased.20 The private sector saw a 17 percent drop in the share of financially assisted workers (0.96 percent to 0.80 percent), and a 26 percent drop

in the share of publicly assisted workers (1.43 percent to 1.17 percent).

Management and Administrative Workers

A larger percentage of small firm workers than of large firm workers produce

the goods and services for the firm. Management and administrative support

represented 26.5 percent of the work force in small firms and 30.9 percent in

large firms in 1997 (Table 4.31). Small firms also had less of their work force

in sales than large firms (10.6 percent versus 13.1 percent). From 1991 to

1997, there was a slight increase in management (from 12.9 percent to 14.7

percent) and a slight decrease in administrative support (from 16.2 percent to

13.8 percent).

Small Business Employee Benefits

Small firms continue to be less likely to offer employee benefits. Employees

of very large firms (1,000 or more employees) were almost five times more

likely to be employed in firms with pension plans than employees of very

small firms (fewer than 10 employees) (Table 4.32). Overall in 1997, 16.8 million workers were receiving pension plan benefits from small firms, and 26.1

136 The Annual Report on Small Business and Competition

20 Note, however, that the small numbers are subject to survey instability.
The State of Small Business 137

Percent

Chart 4.9 Employees on Financial and Public Assistance by 

Employment Size of Firm, 1997

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

U.S. Department of Commerce, Bureau of the Census.

Under 10 10–24 25–99 100–499 500–999 1,000 +

Employment Size of Firm

Financial

Public

0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

Under 10 1.14 1.29

10–24 0.78 1.39

25–99 0.85 1.20

100–499 0.57 1.28

500–999 0.61 0.87

1,000 0.78 1.06

500 0.83 1.28

500 0.76 1.03

Note: Financial assistance is money (excluding loans) regularly received from outside the househould during the year. Public assistance is assistance (excluding food stamps and supplemental security income) received

from the government at any time in the year.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Commerce, Bureau of the Census, March Current Population Surveys.
Table 4.32 Employer Pension Plans by Employment Size of Firm, 1997 (Percent of Employees)

All Employees Full-Time Employees

Firms with Plans Firms with Plans 

Employment Not No Not No 

Size of Firm Included Included Plan Included Included Plan Total 42.3 13.9 43.8 48.3 11.7 40.1 Under 10 11.9 5.7 82.4 15.0 5.0 80.0 10–24 20.6 7.7 71.8 25.0 7.0 68.0 25–99 35.8 11.8 52.4 40.5 10.5 49.0 100–499 47.5 15.1 37.4 53.0 12.6 34.4 500–999 56.3 16.7 27.0 62.3 13.6 24.1 1,000 58.1 18.6 23.3 66.2 15.2 18.6 

500 29.9 10.3 59.8 34.3 9.0 56.7 500 57.9 18.3 23.8 65.6 15.0 19.4 

Notes: Employer pension plans include current and former employers, and unions. Total firms with plans represent the percentage of employees that worked for 

the year that offered a pension plan to any employee.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce, Bureau of the Census, March Curren

138 The Annual Report on Small Business and Competition Table 4.31 Occupation Distribution of Full-Time Employees by Employment Size of Firm, 1997 (Percent of Emp

Employment Administrative Professional Size of Firm Management Support Sales Specialty Service ManufactuTotal 14.7 13.8 11.8 11.7 9.1 22.7 Under 10 11.0 11.7 12.4 8.8 11.3 22.3 10–24 12.9 12.0 11.5 8.4 12.2 25.8 25–99 14.8 13.0 10.2 10.5 10.6 25.4 100–499 15.8 14.3 8.9 12.1 8.2 25.1 500–999 14.2 14.2 10.5 13.1 8.5 25.0 1,000 16.2 15.1 13.6 13.6 7.3 19.9 

500 13.7 12.8 10.6 10.1 10.4 24.6 500 15.9 15.0 13.1 13.6 7.5 20.6 

Notes: Management includes executives, administrators, and managers; manufacturing includes specialists in precision products, craft, and repair, and machine o

and inspectors; other includes technicians and related support, transportation specialists and material movers, handlers, equipment cleaners, laborers, farmers, foreste

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce, Bureau of the Census, March Curren
million workers were receiving benefits from large firms. Focusing on full-time

employees increases rates of pension plan benefits, but yields similar results

in comparisons between very small and very large firms.

Firm size differences in pension benefits could be from small firms’ higher average costs for pension plans, and/or new firms (which are almost always

small) not yet reaching the stage of maturity where they can offer employee

benefits. Firms that grow to an employment size between 25 and 99 employees are more often able to overcome financial and regulatory barriers to offering pension plans. Educational level differences between the small and large

firm work forces may also be a contributing factor. Overall, higher levels of

pension and health benefits are correlated with higher levels of education and

larger firm size (Chart 4.10).

Small firms appear to be slowly catching up to large firms with respect

to pension plan coverage.21 From 1991 to 1997, the percentage of employees with pension benefits in small firms increased from 25.9 percent to 29.9

percent; in large firms the share remained at 57.9 percent. For full-time

employees, coverage increased from 30.1 percent to 34.3 percent in small

The State of Small Business 139

Percent

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

U.S. Department of Commerce, Bureau of the Census.

Under 10 10–24 25–99 100–499 500–999 1,000 +

Employment Size of Firm

High School Diploma

Bachelors Degree

0

10

20

30

40

50

60

70

21 Pursuant to the recommendations of the 1995 White House Conference on Small Business, the Small

Business Job Protection Act of 1996 provided for simple pensions, especially for small businesses. It also reformed

401(k) plans, making them easier to use. The Taxpayer Relief Act of 1997 raises income limits for IRA deductions.
firms, while in large firms it actually decreased from 66.0 percent to 65.6

percent (Chart 4.11).

Employees of smaller firms were generally less likely to belong to an

employer’s health plan than employees of larger firms (Table 4.33). Small

firms had 46.1 percent of their work force in employer health plans (25.9

million employees), compared with 67.4 percent of the large firm work force

(30.4 million employees). Reasons for this difference may be similar to reasons for differences in pension coverage: higher average costs, and new

firms (which are almost always small) not yet reaching the stage of maturity

where they can offer employee benefits. Small firms’ higher utilization of

part-time employees and employees on assistance may also mean that a

larger number of small firm employees are insured under plans of a close

relative or public plan. Again, higher benefit levels are correlated with higher education levels and larger firm sizes (Chart 4.12). Once firms grow to

between 25 and 99 employees, they seem more able to surpass the financial

and regulatory barriers to offering health insurance.

140 The Annual Report on Small Business and Competition Percent

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by 

the U.S. Department of Commerce, Bureau of the Census.

< 500 500+

Employment Size of Firm

1997

0

10

20

30

40

50

60
Total 55.6 15.3 37.4 3.0 63.5 17.5 42.7 3.2 61.7 73.9

Under 10 26.3 11.1 12.0 3.2 33.0 14.2 15.5 3.3 31.4 48.0

10–24 38.4 14.3 21.3 2.7 46.5 17.2 26.2 3.0 45.0 58.4

25–99 53.8 17.0 34.2 2.6 60.8 19.4 38.7 2.7 59.7 73.4

100–499 62.8 16.5 43.1 3.2 70.0 18.4 48.2 3.4 69.1 78.6

500–999 67.9 16.2 47.8 4.0 74.5 17.8 52.6 4.2 71.8 84.1

1,000 67.4 15.7 48.7 3.0 76.3 17.8 55.3 3.2 73.8 84.7

500 46.1 14.8 28.4 2.9 53.4 17.4 32.9 3.1 52.1 65.3

500 67.4 15.8 48.5 3.1 76.0 17.8 54.9 3.3 73.5 84.6

Notes: Employer health plans include current employers, former employers, and unions. Employees may

belong to their employer’s plan, another private plan, or a public plan.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Commerce, Bureaus of the Census, March Current Population Surveys.

The State of Small Business 141

Percent

Chart 4.12 Full-Time Employees with Employer Health Insurance by Educational 

Attainment and Employment Size of Firm, 1997

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

U.S. Department of Commerce, Bureau of the Census.

Under 10 10–24 25–99 100–499 500–999 1,000 +

Employment Size of Firm

High School Diploma

Bachelors Degree

0

10

20

30

40

50

60

70

80

90
Based on data from the Census Bureaus Survey of WomenOwned

Businesses and Survey of Minority-Owned Businesses, there were an estimated 8.5 million women-owned and 3.2 million minority-owned businesses in

1997.22 Their numbers have been increasing steadily, and more rapidly, than

those in the economy as a whole. At the approach of the new century, evidence

suggests that they will be an increasingly important segment of the economy.

Small businesses employ thousands of individuals of all races, genders,

and ages. In 1997, the small business work force consisted of 54.5 percent

males; 45.5 percent females; 4.5 percent Asians, Pacific islanders, American

Indians, and Aleut Eskimos; 9.7 percent blacks; 85.8 percent whites; and 13.1

percent Hispanics. Small businesses hire a larger proportion of younger and

older workers, part-time employees, employees with lower educational attainment, and individuals that receive public assistance than do large businesses.

142 The Annual Report on Small Business and Competition

22 Note that these numbers are not strictly comparable since the women-owned business estimate

includes C corporations and the minority-owned business estimate does not.
Financing Small Business, 1997

Synopsis

The U.S. financial markets continued to perform well in 1997, despitesome uncertainty stemming from the Asian financial crisis. Overall borrowing showed stronger growth than expected, increasing by 5.0 percent,

compared with 3.6 percent in 1996. Large increases in the demand for credit from the business and state and local government sectors were only slightly offset by decreases in demand from households and the federal government. The business sector was the biggest borrower, increasing net borrowing from $196 billion in 1996 to a record $311 billion in 1997. The large

growth in business demand reflected a strong expansion in capital spending,

especially in outlays for computers and other types of equipment.

U.S. banks had another excellent year in 1997, with high profitability

and growth in assets. A total of 7.9 million small business loans of less than

$1 million were outstanding from 9,293 reporting banks as of June 1997. The

number of the smallest business loans—those under $100,000—increased

very significantly, by 27 percent, in 1997. The percentage increase in the dollar amount was far less, an indication that more of the larger loans in this

category may have been cleared from the books and more very small loans

extended. Total assets continued to be concentrated in the largest banks,

partly because of the overall growth of banking assets over time and partly

because of increased merger and acquisition activity.

While the number of loans made through the SBA’s loan guaranty programs declined in 1997, the dollar amount increased significantly, from $7.7

billion to $9.5 billion. The large increase was made possible by reduced subsidy rates, which enabled more SBA-guaranteed lending at the same total

subsidy level authorized by the Congress.

Equity markets continued to be favorable for small businesses in 1997.

The initial public offering market stepped back from the boom of the previous year, but the average offering size increased slightly for small IPOs, from

$19 million to $20.4 million in 1997. Fundraising by venture capital funds

prospered, and disbursements by small business investment companies

increased significantly—by 25 percent.

Recent analysis of the National Survey of Small Business Finances indicates that in 1993 small businesses accounted for about 25 percent of credit market debt in the United States. According to the NSSBF data, some 5 million small firms in the Dun & Bradstreet small business population had $668
fewer minority-owned firms—two-thirds—used some type of credit in 1993.

Only 13.9 percent of minority-owned firms said they used owner loans, but

more than one-third used personal credit cards and more than one-quarter

used business credit cards.

Credit Conditions For U.S. Businesses in 1997

The prevalence of business optimism during the latter part of 1996

extended into the new year, leading to continued rising interest rates and

a booming stock market during the first half of 1997. And although U.S.

financial markets showed signs of some uncertainty as the Asian financial

crisis unfolded during the summer of 1997, the impact of the crisis on the

U.S economy was, at least initially, more positive than negative. The “flight

to safety” phenomenon that induced capital outflow from the affected

nations to American capital markets, the recessionary impacts of these

economies on commodity prices, and the favorable effects on U.S. import

prices of the depreciation of Asian currencies against U.S. dollars produced

further downward pressure on interest rates in the United States. Except for

several sectors relying heavily on exports to the Asian markets, the U.S.

economy remained strong and the financial markets performed well during

the second half of 1997.

The Federal Reserve Board watched the developments in the financial

markets with anxiety, but took little action. Interest rates moved downward

after reaching a high in the spring of 1997 and declined steadily for the rest of

the year. AAA corporate bond rates declined more than 100 basis points from

7.73 percent in April to 6.76 by year’s end (Chart 5.1).

Uses of Funds by Major Sectors

Overall borrowing by U.S. domestic sectors showed stronger than expected growth in 1997, increasing by 5.0 percent, compared with 3.6 percent growth in 1996 (Table 5.1). Large increases in the demand for credit from

the business and state and local government sectors were only slightly offset

by decreased demand from the household sector and the federal government. 

The federal government disappeared almost completely from the credit

markets in 1997 because of the disappearance of deficits in the federal budget. The federal share of net borrowing was just $23 billion of the $764 billion

total. State and local governments, on the other hand, increased net borrowing from $1.3 billion in 1996 to almost $60 billion in 1997. 

144 The Annual Report on Small Business and Competition
The biggest borrower was the business sector, which increased net borrowing significantly, from $196 billion in 1996 to a record $311 billion in

1997. Business borrowing increased despite large increases in profits, reflecting a strong expansion in capital spending, especially in outlays for computers and other types of equipment (Tables 5.1 through 5.3). Business optimism

remained high in spite of the Asian financial crisis. Financing related to merger and acquisition activities also contributed to the increased borrowing.

Small Business Borrowing in 1997

Although small business credit continued to expand in 1997, borrowing

costs remained high. A profitable banking sector and bullish stock market

provided a favorable environment for business borrowers, including small

firms. While corporate bond rates declined significantly in the second half of

1997, borrowing costs paid by small firms showed little downward movement

(Chart 5.1 and Tables 5.4 and 5.5).1

The State of Small Business 145

Percent

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

U.S. Department of Commerce, Bureau of the Census. Jan-92 Apr-92 Jul-92 Oct-92 Jan-93 Apr-93 Jul-93 Oct-93 Jan-94 Apr-94 Jul-94 Oct-94

Jan-95

Apr-95

Jul-95

Oct-95

Jan-96

Apr-96

Jul-96

Oct-96

Jan-97

Apr-97

Jul-97

Oct-97

AAA Corporate Bond Rates

Prime Rates

Treasury Bill Rates

0

1

2

3

4

5

6

7

8

9

1 Short-term and prime rates showed little movement in spite of the decline in long-term bond rates.

Most rates for small loans by banks are determined either directly in a floating rate arrangement or indirectly

in a fixed rate loan, by the prime rates. 
146 The Annual Report on Small Business and Competition Table 5.1 Credit Market Borrowing by the Nonfinancial Sector 1985–1997 (Billions of Dollars)* 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1

Total Domestic Borrowing 780.2 965.1 863.6 733.7 767.7 720.3 669.4 480.6 522.5 588.0 574.6 702.8 7Government Federal 197.2 225.7 216.0 143.9 155.1 146.4 246.9 278.2 304.0 256.1 155.9 144.4 1

State and Local 52.5 163.6 73.4 91.1 54.5 246.9 46.6 81.6 31.0 74.7 32.3 36.0 

Business 307.5 275.1 313.2 92.6 299.0 253.4 112.1 61.9 26.8 51.3 141.8 245.4 1

Farm 0.4 14.5 17.4 11.6 10.2 0.6 1.0 2.1 0.5 2.6 4.4 2.9 

Nonfarm Noncorporate 109.2 121.2 94.3 55.5 84.2 69.6 1.1 11.0 16.4 3.2 3.3 23.9 

Nonfinancial Corporate 198.7 168.4 236.3 48.7 225.0 183.2 110.0 53.0 42.7 45.5 134.1 218.6 1

Households 223.0 300.8 261.1 306.5 259.1 269.5 263.7 182.7 160.7 205.9 309.3 348.9 3Foreign Borrowing in the

United States 8.4 1.2 9.7 6.2 6.4 10.2 23.9 14.8 23.7 69.8 14.0 71.1 

*Excluding equity and borrowing by financial institutions. Major revisions were made in estimates for the household sector in 1993–1994 and the state an

in 1996.

Source: Board of Governors of the Federal Reserve System, Flow of Funds Accounts, Fourth Quarter, 1997: Flows and Outstandings (March 1998).
The State of Small Business 147

Table 5.2 Major Sources and Uses of Funds by Nonfarm, Nonfinancial Corporate Businesses, 1984–1997 (Billio

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 

Before-Tax Profit 191.0 167.6 151.3 214.9 200.0 236.5 236.5 217.1 256.7 307.4 391.9 437.7 Domestic Undistributed Profit 46.4 21.7 2.1 41.3 73.6 32.2 20.5 8.3 33.7 55.9 106.0 111.7 Depreciation with Capital

Consumption Adjustment 279.1 310.7 312.8 324.0 338.3 349.3 354.3 364.3 373.7 384.4 418.6 430.7 

Total Internal Funds, on Book Basis 329.1 336.7 315.5 370.1 418.4 384.8 377.9 372.6 407.3 440.3 524.5 542.4 Net Increase in Liability 318.9 379.7 190.0 273.9 443.7 347.4 183.5 67.1 161.3 217.9 241.6 390.8 Funds Raised in Credit Markets 198.7 168.4 236.3 148.7 225.0 183.2 110.0 55.1 42.7 45.5 134.1 218.6 

Net New Equity Issues 79.0 84.5 85.0 75.5 129.5 124.2 63.0 18.3 27.0 21.3 44.9 58.3 

Capital Expenditures 387.5 369.6 347.3 357.4 373.3 399.4 394.5 371.9 382.0 445.2 511.1 567.7 Net Financial Investment 40.9 105.6 18.0 39.4 60.7 113.9 68.3 62.7 8.9 124.1 41.7 42.7 

Note: Data revisions for 1992–1996.Source: Board of Governors of the Federal Reserve System, Flow of Funds Accounts, First Quarter 1998: Flows and Outstandings (June 1998). 
148 The Annual Report on Small Business and Competition Table 5.3 Major Sources and Uses of Funds by Nonfarm, Noncorporate Businesses, 1984–1997 (Billions of Dol

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 

Net Income 274.3 298.1 306.7 331.9 378.2 407.0 434.9 464.1 441.0 473.9 495.3 534.2 Gross Investment 55.8 59.6 64.0 67.7 72.8 77.0 80.6 67.5 82.9 84.4 64.7 56.4 Fixed Capital Expenditures 92.6 104.1 106.6 107.4 112.9 118.0 106.4 91.1 96.8 93.5 94.6 99.2 Changes in Inventories 3.1 10.0 0.6 1.5 1.1 1.6 0.3 0.1 0.1 1.3 2.5 1.9 

Net Financial Investments 39.9 45.5 43.1 41.2 41.2 42.6 26.1 23.5 14.1 10.5 32.5 44.7 

Net Increase in Credit Market Debt 109.2 111.6 48.1 25.7 87.6 61.1 13.8 15.0 16.4 3.2 3.3 23.9 Mortgages 83.8 109.1 82.7 39.9 68.5 56.1 4.1 9.9 15.1 1.5 13.8 2.2 

Net Investment by Proprietors 23.3 26.5 53.1 28.0 15.6 28.1 20.3 18.5 28.6 26.9 61.8 51.9 

*Major revisions for 1992–1996.Source: Board of Governors of the Federal Reserve System, Flow of Funds Accounts, First Quarter 1998: Flows and Outstandings (June 1998).
The State of Small Business 149

1997

November NA 9.73 8.50 5.52 9.78 . NA.

August NA 9.55 8.50 5.54 9.88 . NA.

May NA 9.67 8.50 5.50 9.94 . NA.

February 9.63 9.57 8.25 5.19 9.58 9.58

1996

November 9.44 9.61 8.25 5.31 9.78 9.65

August 9.53 9.62 8.25 5.22 9.53 9.60

May 9.54 9.64 8.25 5.24 9.68 9.62

February 9.77 9.67 8.25 5.22 9.79 9.56

1995

November 10.01 10.22 8.75 5.80 9.77 10.12

August 10.09 10.24 8.75 5.74 10.03 10.05

May 9.56 10.29 9.00 6.01 10.12 10.40

February 9.33 10.30 9.00 5.92 9.82 10.12

1994

November 7.96 9.11 8.15 5.29 9.42 9.21

August 8.74 8.54 7.51 4.47 8.92 8.46

May 8.01 8.12 6.99 4.01 8.57 8.24

February 7.96 7.49 6.00 3.25 7.35 7.64

1993

November 8.08 7.41 6.00 3.02 8.33 7.60

August 8.50 7.40 6.00 3.03 8.59 7.63

May 8.27 7.48 6.00 3.00 8.80 7.77

February 8.43 7.42 6.00 3.03 8.98 8.13

1992

November 8.64 7.53 6.00 3.09 9.28 7.95

August 8.94 7.48 6.00 3.30 9.41 7.71

May 7.89 7.78 6.50 3.82 9.17 7.79

February 8.18 7.80 6.50 4.06 9.07 7.84

1991

November 9.35 8.95 7.50 4.81 10.05 9.03

August 11.20 10.16 8.50 5.66 11.26 10.37

May 11.19 10.22 8.50 5.78 11.24 10.64

February 11.29 10.68 9.00 6.25 11.73 11.12

1990

November 11.90 11.87 10.00 7.81 12.30 12.06

August 12.06 11.84 10.00 8.13 12.15 12.08

May 11.87 11.96 10.00 8.18 11.99 12.05

Note: Small loans refer to loans under $100,000. 

Sources: Board of Governors of the Federal Reserve System, Survey of Terms of Bank Lending, Statistical

Release E.2, various issues, and Federal Reserve Bulletin, various issues. 
Lending to Small Businesses by Commercial Banks

U.S. banks had another excellent year in 1997, with high profitability and

growth in total assets. All indicators pointed to increased small business lending by banks: 2

• Survey results of bankers conducted by the Federal Reserve Board suggested strong demand for commercial and industrial loans by all sizes of businesses throughout 1997. Respondents attributed the increased demand to

greater customer financing needs for plant and equipment and also to mergers and acquisitions.3

• Net credit use by the nonfarm, noncorporate sector also increased significantly in 1997 (Tables 5.1 and 5.3). A total of 7.9 million small business

loans of less than $1 million were outstanding from 9,293 reporting banks as

of June 1997. These loans, valued at $356 billion, accounted for 38.6 percent

of total business loan dollars (Table 5.6).4

150 The Annual Report on Small Business and Competition

November 1997

1.0–99 9.78 9.73 9.77

100–499 9.26 8.83 8.84

500–999 8.23 8.00 7.67

Minimum Risk Loans 8.64 6.69 7.16

August 1997

1.0–99 9.88 9.55 9.86

100–499 9.24 8.89 8.67

500–999 8.33 8.08 7.22

Minimum Risk Loans 7.77 6.50 6.59

May 1997

1.0–99 9.94 9.67 9.97

100–499 9.07 8.89 8.46

500–999 8.89 8.19 7.48

Minimum Risk Loans 9.26 6.89 6.20

Note: “Minimum risk” loans are larger high-quality loans, as defined in the Survey of Terms of Bank

Lending, May 1997.

Source: Board of Governors of the Federal Reserve System, Survey of Terms of Bank Lending, Statistical

Release E2, various issues, and Federal Reserve Bulletin, various issues.

2 Data on bank lending to small businesses became available with the June 1993 call reports filed with

financial regulatory authorities by all commercial banks. All commercial banks are required to report in their

June call report filings the number and dollar amount of their commercial and industrial loans and loans for

nonresidential real estate by loan size. 3 Federal Reserve Board, “Senior Loan Officer Opinion Survey on Bank Lending Practices,” various issues. 4 See studies on small business lending by commercial banks by the U.S. Small Business Administration,

Office of Advocacy, including Small Business Lending in the United States, Micro-Business-Friendly Banks in

the United States, and The Bank Holding Company Study, Three small business loan sizes are defined—under

$100,000, under $250,000, and under $1 million.
Table 5.6 Number and Amount of Loans by Loan Size and Asset Size of Bank, June 30, 1997

Loan Sizes

Under $100,000 $100,000–$250,000 $250,000–$1 Million Under $1 Million Under $250,000 Ove

Bank Asset Size Amount Amount Amount Amount Amount (Millions of (Billions of (Billions of (Billions of (Billions of (Billions of (B

Dollars) Number Dollars) Number Dollars) Number Dollars) Number Dollars) Number Dollars) Commercial and 

Industrial Loans

All Banks 5,961,770 80.17 358,328 37.25 280,315 77.76 6,600,413 195.18 6,320,098 117.43 0–$100 899,912 16.99 33,328 3.61 16,510 4.66 949,750 25.25 933,240 20.60 $100–$500 1,145,259 20.77 84,697 8.96 53,575 15.01 1,283,531 44.73 1,229,956 29.73 $500–$1,000 269,300 5.17 26,841 2.80 18,614 5.71 314,755 13.69 296,141 7.98 $1,000–$10,000 1,733,977 13.69 91,637 8.39 71,820 20.20 1,897,434 42.28 1,825,614 22.08 Over $10,000 1,913,322 23.56 121,825 13.49 119,796 32.18 2,154,943 69.23 2,035,147 37.05 Nonfarm Nonresidential 

Real Estate Loans

All Banks 763,876 32.02 281,374 34.82 255,522 94.20 1,300,772 161.04 1,045,250 66.85 0–$100 236,084 10.05 31,701 4.15 23,548 7.93 291,333 22.14 267,785 14.21 $100–$500 267,334 11.57 83,996 10.90 71,631 26.85 422,961 49.32 351,330 22.47 $500–$1,000 53,461 2.52 26,276 3.33 24,190 9.12 103,927 14.96 79,737 5.84 $1,000–$10,000 107,052 4.54 61,858 8.05 60,090 23.40 229,000 36.00 168,910 12.60 Over $10,000 99,945 3.33 77,543 8.39 76,063 26.90 253,551 38.63 177,488 11.72 Total Business LoansAll Banks 6,725,646 112.20 839,702 72.08 535,837 171.95 7,901,185 356.23 7,365,348 184.28 0–$100 1,135,996 27.04 65,029 7.76 40,058 12.58 1,241,083 47.39 1,201,025 34.81 $100–$500 1,412,593 32.34 168,693 19.86 125,206 41.86 1,706,492 94.05 1,581,286 52.19 $500–$1,000 322,761 7.69 53,117 6.13 42,804 14.83 418,682 28.65 375,878 13.82 $1,000–$10,000 1,841,029 18.24 153,495 16.44 131,910 43.61 2,126,434 78.28 1,994,524 34.68 Over $10,000 2,013,267 26.89 199,368 21.88 195,859 59.08 2,408,494 107.85 2,212,635 48.77 

Note: Loans are reported by loan size; loans under $1 million are assumed to represent small business lending.Source: Adapted by the U.S. Small Business Administration, Office of Advocacy, from special tabulations of the June 1997 call reports (Consolidated Repo

Income for U.S. Banks) prepared by James Kolari, Texas A&M University, College Station, Texas.

The State of Small Business 151
• While the number of reporting banks continued to decline in 1997,

overall growth in business lending to small and large businesses continued

(Chart 5.2).5 Taking into consideration some reporting differences from 1996

for one bank, the Office of Advocacy estimates the growth in the dollar

amount of small business loans at 4.1 percent for loans under $100,000, 4.9

percent for loans under $250,000 and 5.7 percent for loans under $1 million

(Chart 5.3).6 These growth rates were far smaller than the 10.9 percent growth

rate for larger loans, however. 

• The number of small business loans increased very significantly

between June 1996 and June 1997. The largest increase was in the smallest

loans under $100,000, which increased 27 percent (Chart 5.4). While the

number of the smallest loans increased significantly, the percentage increase

in the dollar amount of these loans was less than it was for larger loans, indicating a decrease in average loan size. Explanations for this development may

include declining balances of older, larger loans on the books and/or smaller

new loans having been extended in the June 1996—June 1997 period.

152 The Annual Report on Small Business and Competition Thousands

Source: U.S. Small Business Administration, Office of Advocacy, from call report data.

< $100 Million $100 Million–

$500 Million

$500 Million–

$1 Billion

$1 Billion–

$10 Billion

>$10 Billion

1996

1997

Bank Asset Size

0

1

2

3

4

5

6

5 While the number of reporting banks declined, the total number of banking offices did not. Also, the

number of reporting banks may have declined because of consolidation in financial reporting by many multiunit bank holding companies. 6 Keycorp’s figures for both 1996 and 1997 are excluded from these growth estimates. Keycorp

informed the SBA of a discrepancy in their small business lending data that resulted in a significant overstatement of the dollar amount of small business lending. 
Bank consolidations have been the most important factor affecting the relative importance of banks of different sizes in the small business loan market.

While the number of very small banks (assets of less than $100 million)

declined throughout this period, changes in the number of banks in larger

asset size groups varied greatly year by year. 

Total assets continued to concentrate into the largest banks, partly

because of the overall growth of banking assets over time and, more significantly in this period, because of merger and acquisition activity. The share of

total assets held by the largest banks, those with assets of $10 billion or more,

increased from 39 percent to 53 percent between 1994 and 1997 (Chart 5.5

and Table 5.7). 

The relative share of small business loans under $250,000 also increased

for this group of very large banks, from 13 percent to 26.5 percent (Table 5.7

and Chart 5.6). Large billion-dollar banks seemed to have increased their

small business lending emphasis during the past four years. The ratios of small

business loans to total assets and to total business loans both increased over

the 1994–1997 period for these banks (Chart 5.7 and Table 5.8).7 Part of this

increase, however, may have come from the acquisition by larger banks of

The State of Small Business 153

Percent

Source: U.S. Small Business Administration, Office of Advocacy, from call report data.

< $100,000 < $250,000 < $1 Million > $1 Million Total

1994–1995

1995–1996

1996–1997

Dollar Amounts

0

2

4

6

8

10

12

7 The ratios were calculated without excluding the data from Keycorp. However, the trend remains even

with modified data.
smaller banks with higher small-business-loan-to-asset ratios. In very large

banks, these increases may also reflect the expansion of small business credit

cards and small credit line programs, which have been promoted in many

multi-state banks over the recent past.

Lending Under the SBA’s Guarantee Programs

While the number of loans made under the loan guaranty programs of the U.S.

Small Business Administration declined somewhat from 45,845 in FY 1996 to

45,288 in FY 1997, the dollar amount increased significantly, from $7.7 billion to $9.5 billion. Rapid increases in the smallest loans made through the

low-doc and under-$100,000 loan programs came to a halt in 1996. A large

increase in the volume of guaranteed loans was made possible by reduced

subsidy rates, which enabled more SBA-guaranteed lending at the same total

subsidy level authorized by the Congress.8

154 The Annual Report on Small Business and Competition Percent

* Changes for 1996–1997 were calculated without data for Keycorp. 

Source: U.S. Small Business Administration, Office of Advocacy, from call report data.

1994–1995 1995–1996 1996–1997*

< $100,000

$100,000–$250,000

$250,000–$1 Million

Years

0

6

12

18

24

8 By charging higher guarantee fees, improving the liquidation and collection procedures, and increasing the nonguaranteed portion of the loans, especially to the preferred lenders, SBA has been able to significantly reduce the subsidy rates during the past several years.
Lending by Finance Companies

Overall business lending by finance companies continued to increase at a very

slow annual rate of about 1.5 percent during the first nine months of 1997

(Table 5.9). Although finance companies have made attempts recently to penetrate banking markets, banks have fought back by expanding small-line-ofcredit and business credit card programs.9 Lack of data prevents an exploration

of the changing dynamics of small business lending by finance companies.

Borrowing in the Public Issue Markets

Overall, the U.S. stock market continued to be healthy in 1997. The Dow

Jones Industrial Average grew 24 percent during the first six months of

1997, only to retreat in the second half of the year, ending at around 7800, up

from around 6600 at the beginning of the year. 

The initial public offering market, however, stepped back from the boom

of the previous year. The number and volume of common stock IPOs

decreased 27 percent and 13 percent, respectively, to 630 offerings for $43.2

The State of Small Business 155

Percent

Source: U.S. Small Business Administration, Office of Advocacy, from call report data.

1994 1995 1996

> $10 Billion

$1 Billion–

$10 Billion 

$500 Million–

$1Billion 

$100 Million–

$500 Million

< $100 Million

1997

Year

Bank Asset 

Size

0

10

20

30

40

50

60

70

80

90

9 Based on two editions of the National Survey of Small Business Finances (1987 and 1993) conducted

for the Federal Reserve Board and the U.S. Small Business Administration. See Wolken and Cole, “Bank and

Nonbank Competition,” Table 9, 992. 
156 The Annual Report on Small Business and Competition

1997

Amount of Business Loans

by Loan Size:

Less than $100,000 24.1 28.8 6.9 16.3 24.0 100.0

Less than $250,000 18.9 28.3 7.5 18.8 26.5 100.0

Less than $1 Million 13.3 26.4 8.0 22.0 30.3 100.0

More than $1 Million 0.5 4.7 3.1 23.0 68.7 100.0

All Loans 5.4 13.0 5.0 22.6 53.9 100.0

Total Domestic Assets 6.8 12.6 4.9 22.6 53.2 100.0

Number of Banks 65.1 27.9 3.1 3.2 0.7 100.0

1996

Amount of Business Loans 

by Loan Size:

Less than $100,000 27.0 30.0 6.3 19.2 17.6 100.0

Less than $250,000 21.3 29.2 6.8 22.4 20.4 100.0

Less than $1 Million 14.9 26.9 7.3 25.9 24.9 100.0

More than $1 Million 0.5 4.8 2.9 26.7 65.1 100.0

All Loans 6.2 13.5 4.6 26.4 49.4 100.0

Total Domestic Assets 7.7 13.3 4.7 26.4 48.0 100.0

Number of Banks 66.9 26.3 2.7 3.4 0.7 100.0

1995

Amount of Business Loans 

by Loan Size:

Less than $100,000 29.9 30.5 5.9 19.3 14.5 100.0

Less than $250,000 23.6 29.6 6.7 22.4 17.7 100.0

Less than $1 Million 16.5 27.6 7.4 26.1 22.4 100.0

More than $1 Million 0.5 4.6 3.3 30.7 60.8 100.0

All Loans 6.7 13.6 4.9 28.9 45.8 100.0

Total Domestic Assets 8.6 14.0 5.0 29.4 43.0 100.0

Number of Banks 69.5 25.1 2.5 2.2 0.7 100.0

1994

Amount of Business Loans 

by Loan Size:

Less than $100,000 32.3 31.1 6.2 20.1 10.3 100.0

Less than $250,000 25.8 30.4 7.0 23.9 13.0 100.0

Less than $1 Million 18.1 28.3 7.7 28.4 17.5 100.0

More than $1 Million 0.6 5.2 4.0 34.9 55.3 100.0

All Loans 7.7 14.5 5.5 32.3 40.0 100.0

Total Domestic Assets 9.6 14.6 5.3 31.6 38.8 100.0

Number of Banks 70.6 23.5 2.4 3.0 0.5 100.0

Note: Loans are reported by loan size; loans under $1 million are assumed to represent small business

lending.

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

of June call reports (Consolidated Reports of Condition and Income for U.S. Banks) prepared by James Kolari,

Texas A&M University, College Station, Texas.
billion in 1997, compared with 870 issues for $49.8 billion in 1996 (Table

5.10). Offerings by small firms with less than $10 million in total assets before

the public issue showed significant declines, decreasing from 304 to 154

issues and from $5.8 billion to $3.1 billion between 1996 and 1997. The average offering size increased slightly for small IPOs, from $19.0 million in 1996

to $20.4 million in 1997. IPO offerings by venture-backed companies

declined from 276 in 1996 to 134 in 1997.

Venture Capital Funds

Despite sluggishness in the IPO market, which had been the engine of growth

in venture capital markets over the past several years, fundraising by venture

capital funds continued to prosper in 1997. Funds raised by venture capital firms

increased by another 20 percent to $9 billion, surpassing a record high of $7.5

billion achieved in 1996 (Table 5.11).10 Commitments from corporations continued to increase, from 13 percent of total contributions in 1996 to 30 percent

in 1997 (Table 5.12). The share contributed by foundations/endowments and

The State of Small Business 157

Percent

Source: U.S. Small Business Administration, Office of Advocacy, from call report data.

1994 1995 1996

> $10 Billion

$1 Billion–

$10 Billion 

$500 Million–

$1Billion 

$100 Million–

$500 Million

< $100 Million

1997

Year

Bank Asset 

Size

0

10

20

30

40

50

60

70

80

90

10 The 1996 figure was revised upward from $5.2 billion to $7.5 billion. The venture capital market hit

bottom when total commitments amounted to $1.27 billion in 1991.
financial institutions such as banks and insurance companies declined most,

from 21 percent to 9 percent and from 5 percent to 1 percent respectively.

Disbursements to small businesses by small business investment companies (SBICs) continued to increase significantly—by 25 percent—from $1.85

billion in 1996 to $2.32 billion in 1997 (Table 5.13). All of the increase came

from regular SBICs, as the SBA continued to promote the formation and

expansion of larger SBICs. 

Investment by specialized SBICs (301d companies or SSBICs), most of

them very small, declined slightly in 1997. The volume of disbursements

decreased from $117 million in 1996 to $113 million in 1997. The future of

these SSBICs remains uncertain.

Patterns of Small Business Financing in 1993

S mall businesses use a variety of financing sources, including internal

resources such as owners’ savings, business retained earnings, and depreciation; “informal” external sources, such as friends and business associates;

financial intermediaries, such as banks and finance companies; and the public markets, where standardized financial instruments are sold to a large number of buyers. Although data are available on some financing sources, efforts

158 The Annual Report on Small Business and Competition Percent

Source: U.S. Small Business Administration, Office of Advocacy, from call report data.

> $10 Billion

1994

1995

1996

1997

$1 Billion–

$10 Billion

$500 Million–

$1Billion

$100 Million–

$500 Million

< $100 Million All Banks

Bank Asset Size

0

10

20

30

40

50

60

70
The State of Small Business 159

1997

Ratio of Small Business Loans to 

Total Assets by Loan Size:

Under $100,000 9.9 6.4 3.9 2.0 1.2 2.8

Under $250,000 12.7 10.3 6.9 3.8 2.3 4.6

Under $1 Million 17.3 18.5 14.4 8.6 5.0 8.8

$1 Million and Over 1.0 5.2 8.9 14.3 18.1 14.0

Ratio of Small Business Loans to 

Total Business Loans by Loan Size:

Under $100,000 53.8 26.8 16.6 8.7 5.4 12.2

Under $250,000 69.3 43.3 29.8 16.6 9.8 20.0

Under $1 Million 94.4 78.1 61.8 37.5 21.7 38.6

$1 Million and Over 5.6 21.9 38.2 62.5 78.3 61.4

1996

Ratio of Small Business Loans to 

Total Assets by Loan Size:

Under $100,000 9.8 6.3 3.7 2.0 1.0 2.8

Under $250,000 12.6 10.1 6.7 3.9 1.9 4.6

Under $1 Million 17.2 18.0 13.8 8.7 4.6 8.8

$1 Million and Over 0.9 4.9 8.5 13.8 18.6 13.7

Ratio of Small Business Loans to 

Total Business Loans by Loan Size:

Under $100,000 54.1 27.6 16.8 9.0 4.4 12.4

Under $250,000 69.9 44.0 30.0 17.2 8.4 20.3

Under $1 Million 94.9 78.5 61.8 38.6 19.8 39.3

$1 Million and Over 5.1 21.5 38.2 61.4 80.2 60.7

1995

Ratio of Small Business Loans to 

Total Assets by Loan Size:

Under $100,000 9.8 6.2 3.3 1.9 0.9 2.8

Under $250,000 12.6 9.8 6.2 3.5 1.9 4.6

Under $1 Million 17.0 17.5 13.1 7.9 4.6 8.9

$1 Million and Over 0.8 4.6 9.2 14.4 19.5 13.8

Ratio of Small Business Loans to 

Total Business Loans by Loan Size:

Under $100,000 55.2 27.9 14.8 8.3 3.9 12.5

Under $250,000 71.2 44.2 27.7 15.7 7.9 20.3

Under $1 Million 95.7 79.3 58.8 35.4 19.2 39.2

$1 Million and Over 4.3 20.7 41.2 64.6 80.8 60.8

1994

Ratio of Small Business Loans to 

Total Assets by Loan Size:

Under $100,000 9.7 6.2 3.4 1.8 0.8 2.9

Under $250,000 12.3 9.6 6.0 3.5 1.5 4.6

Under $1 Million 16.3 16.9 12.6 7.8 3.9 8.7

$1 Million and Over 0.8 4.6 9.6 14.2 18.3 12.9
160 The Annual Report on Small Business and Competition

1994

Ratio of Small Business Loans to 

Total Assets by Loan Size:

Under $100,000 56.5 28.7 15.1 8.3 3.5 13.4

Under $250,000 71.7 44.6 27.1 15.8 6.9 21.3

Under $1 Million 95.2 78.6 56.8 35.6 17.6 40.4

$1 Million and Over 4.8 21.4 43.2 64.4 82.4 59.6

Note: Loans are reported by loan size; loans under $1 million are assumed to represent small business

lending.

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

of June call reports (Consolidated Reports of Condition and Income for U.S. Banks) prepared by James Kolari,

Texas A&M University, College Station, Texas.

Table 5.9 Business Loans Outstanding from Finance Companies,

December 31, 1980–September 30, 1997

Annual Change Total Receivables Outstanding in Chain-Type 1

Billions of Change Price Index for

Dollars (Percent) GDP (Percent)

September 30, 1997 313.1 1.5 1.8

December 31, 19962 309.5 2.6 2.2

December 31, 19952 301.6 9.7 2.4

December 31, 19942 274.9 NA 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 0.0 5.3

December 31, 1981 100.3 11.1 8.5

December 31, 1980 90.3

1 Changes from the fourth quarter of the year before.

2 Major data revisions for 1994–1996. See Federal Reserve Board, Federal Reserve Bulletin, December

1997, A33.

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, Business Conditions Digest, various

issues; and idem., Survey of Current Business, various issues.
The State of Small Business 161

Offerings by All Issuers

1997 630 43,238

1996 870 49,848

1995 581 30,047

1994 609 28,447

1993 707 41,283

1992 517 24,139

1991 368 16,846

1990 177 4,822

1989 209 6,082

1988 228 5,940

Offerings by Issuers with Assets of

$10 Million or Less

1997 154 3,136

1996 304 5,789

1995 193 3,174

1994 202 2,080

1993 203 2,798

1992 171 2,241

1991 116 1,334

1990 86 1,310

1989 89 584

1988 83 656

Offerings by Nonfinancial Issuers 

with Assets of $10 Million or Less

1997 140 2,071

1996 291 5,686

1995 187 3,129

1994 190 1,975

1993 189 2,043

1992 164 1,919

1991 108 879

1990 67 951

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 inclusive 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., October 1998.
to analyze changes over time in the sources and uses of small business financing are hampered by a lack of current time series statistics.

The 1993 National Survey of Small Business Finances indicates that in

1993 small businesses accounted for about 25 percent of credit market debt

outstanding in the United States (Chart 5.8).11

Some 55 percent of small firms used selected traditional credit, 61 percent used trade credit, and 39 percent and 28 percent, respectively, used personal and business credit cards (Table 5.14).12 The largest volume of financing

used by small firms was in lines of credit. Commercial banks were the traditional financing source most often used by small firms: 36.9 percent used

them (Table 5.15).

As of December 1993, some 5 million small firms in the Dun & Bradstreet

small business population had $668 billion outstanding in six traditional types

of financing (Table 5.16). Owners of partnerships and incorporated businesses

162 The Annual Report on Small Business and Competition

1997 9.0 13.1 2,451 NA

1996 7.5 9.9 2,040 NA

1995 4.4 6.0 NA NA

1994 3.8 5.3 1,011 34.1

1993 2.5 5.3 969 34.8

1992 2.5 4.9 1,207 31.1

1991 1.3 2.6 792 32.9

1990 1.8 3.8 1,176 36.0

1989 2.4 6.2 1,465 34.4

1988 2.9 5.9 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 1.9 828 6.7

NA = Not available.

*The capital pool at year end should equal the total pool at the end of the previous year plus new commitments, minus the amount of net withdrawal (or liquidation) from the funds. (For 1983, an additional $600

million was identified which had not been included in the prior estimate.)

Source: Capital Publishing Corporation, Venture Capital Journal (various issues).

11 Of a total of $3.2 trillion in debt instruments outstanding for all nonfinancial businesses in 1993,

small firms obtained around $800 billion. 12 A second nationwide survey of small business financing, the 1993 National Survey of Small Business

Finances, was sponsored by the U.S. Small Business Administration and the Federal Reserve Board. Special

tabulations were provided by Professor George Haynes of Montana State University. Details of the survey are

available to the public: interested researchers may access the files through the Internet at

www.bog.frb.fed.us/pubs/oss. For preliminary tabulations, see John Wolken and Rebel Cole “Financial

Services Used by Small Businesses: Evidence from the 1993 National Survey of Small Business Finances,”

Federal Reserve Bulletin (July 1995). 
The State of Small Business 163

Table 5.12 Sources of Capital Committed to Independent Venture Funds, 1983–1997 (Percent)

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 

Total (Billions of Dollars) 3.4 3.2 2.3 3.3 4.2 2.8 2.4 1.8 1.3 2.5 2.5 3.8 4.4 Share Distributed by:

Pension Funds 31.0 34.0 33.0 50.0 39.0 46.0 36.0 53.0 42.0 42.0 59.0 46.0 38.0 Foreign Sources/Others* 16.0 18.0 23.0 11.0 13.0 14.0 13.0 7.0 12.0 11.0 4.0 2.0 3.0 Corporations 12.0 14.0 12.0 11.0 11.0 11.0 20.0 7.0 4.0 3.0 8.0 9.0 2.0 Endowments 8.0 6.0 8.0 6.0 10.0 12.0 12.0 13.0 24.0 19.0 11.0 21.0 22.0 Individuals 21.0 15.0 13.0 12.0 12.0 8.0 6.0 11.0 12.0 11.0 7.0 12.0 17.0 Banks/Insurance Companies 12.0 13.0 11.0 10.0 15.0 9.0 13.0 9.0 6.0 15.0 11.0 9.0 18.0 

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 

Note: Data may not add to 100 percent because of rounding.Source: Capital Publishing Corporation, Venture Capital Journal (various issues).
1997 2,634 2,315.7 1,866 2,202.7 768 113.0

1996 2,302 1,848.5 1,343 1,731.7 959 116.8

1995 2,173 1,184.4 1,045 1,036.7 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

1 301(d) companies are minority or economically disadvantaged small business investment companies.

Source: U.S. Small Business Administration, Investment Division.

extended an additional $86 billion in credit to their own businesses. About

$2.5 billion, a relatively insignificant amount, was in credit card debt, primarily in business credit cards.13 Including owner’s debt and credit card balances

used for business purposes, total debt outstanding amounted to $756 billion.

Of the six major types of financing, lines of credit were the most significant for small firms, accounting for 42 percent, or $280 billion (Table 5.16).

Mortgage loans were second with a total volume of $166 billion.

Banks were the most important supplier of the six types of financing

examined, contributing 54 percent, or $361 billion (Table 5.17). Finance companies were second, providing 13 percent of the total.

For many segments of the small business community, borrowing from the

owners themselves is significant; however, this data base leaves out the use of

owners’ capital by sole proprietorships, covering only partnerships and corporations. For example, owners’ capital is as important as vehicle loans as a

financing source for regular corporations (Table 5.18).

164 The Annual Report on Small Business and Competition

13 Credit card debt is likely to be underestimated because it is difficult to provide estimates of debt used

for business purposes on personal credit cards. However, a preliminary Federal Reserve study concluded that

most of the credit card usage by small firms was not for revolving credit purposes. In other words, small firms

carried relatively little credit card debt forward on their books to the next pay period. 
Financing of Women-Owned Firms

Nearly three-quarters of women-owned firms had access to some type of credit in 1993 (Table 5.19). Half used traditional loans and 60 percent used nontraditional sources for their credit needs. Some 18 percent used lines of credit; 22 percent, vehicle loans; and 12 percent, equipment loans.

Although commercial banks were the traditional financing source used

most often by women, only 32 percent of women-owned businesses used

them, compared with 37 percent of all firms (Tables 5.15 and 5.20). Finance

companies and friends and family tied for a distant second, with 10 percent of

women-owned firms using each of these sources. Women-owned firms with

more than 100 employees were much more likely than other firms of the same

size to use personal credit cards (38 percent of women compared with 21 percent overall). These larger women-owned firms also are more likely to use

loans from the owners themselves.14

The State of Small Business 165

Source: National Survey of Small Business Finances.

Small Business

25%

Large Business

75%

14 Data on the use of loans from the owner are available only for partnerships and corporations. For this

survey, the use of owner’s capital by sole proprietorships was not considered debt financing.
Table 5.14 Selected Credit Services Used by Small Firms, by Firm Size and Industry, 1993 (Percentage of Firms)

Traditional Credit Nontradit

Sample Any Other Any 

Size Any Traditional Lines of Vehicle Equipment Traditional Nontraditional Owne

Category (Number) Credit Loan Credit Mortgages Loans Loans LeasIng Loans Loans Loans All Small Firms 5,356 75.7 54.8 24.3 6.5 24.1 14.0 9.1 11.2 58.1 16.5 Employment Size of Firm0 830 59.7 35.4 10.8 5.6 13.6 7.5 3.5 7.7 47.7 2.0 1–4 1,749 75.4 51.5 19.9 6.3 23.4 11.5 6.0 11.1 57.2 15.2 5–9 739 84.4 67.3 31.7 6.5 31.6 17.1 12.1 12.0 66.8 27.2 10–19 467 88.7 75.5 39.8 7.9 33.9 24.2 20.9 16.7 66.7 30.1 20–99 1,077 91.1 81.4 55.5 6.5 32.6 30.9 23.1 12.9 66.4 29.1 100–499 494 94.6 89.9 62.3 19.0 32.4 29.9 33.4 21.3 65.7 29.9 IndustryMining and Construction 620 79.2 60.4 26.6 5.3 37.1 14.0 4.0 8.6 56.3 13.2 Manufacturing 666 80.8 62.8 31.8 6.4 25.8 23.9 17.5 11.2 60.7 27.6 Transportation 215 85.2 67.4 26.5 6.1 36.4 22.1 18.8 12.3 64.6 26.5 Wholesale Trade 498 80.3 58.5 37.6 4.9 25.7 11.9 13.0 15.0 64.5 27.4 Retail Trade 1,161 73.1 55.9 25.1 6.9 22.6 10.1 7.6 15.1 54.6 19.2 Finance, Insurance, and 

Real Estate 370 74.4 52.3 20.4 15.6 14.8 9.5 6.9 11.1 53.9 15.7 

Services 1,826 73.4 49.4 19.2 5.3 20.4 15.0 9.1 9.0 59.2 11.0 

Note: Owner loans are included for partnerships and corporations only.Source: Prepared by the U.S. Small Business Administration, Office of Advocacy, from data in the 1993 National Survey of Small Business Finances, sponsor

Business Administration and the Board of Governors of the Federal Reserve System.

166 The Annual Report on Small Business and Competition
Table 5.15 Suppliers of Credit Services Used by Small Firms, by Firm Size and Industry, 1993 (Percentage of Fir

Traditional Credit Nontra

Depository Institutions Nondepository Institutions Nonfinancial Institutions

Sample Any Any Any Any Family Any 

Size Any Traditional Depository Commercial Nondepository Finance LeasIng Nonfinancial and Other Nontraditional Ow

Category (Number) Credit Loan Institution Banks Institution Companies Companies Institution Friends Businesses Credit LoaAll Small Firms 5,356 75.7 54.8 41.0 36.9 18.9 11.6 7.6 13.9 8.4 5.6 58.1 16Employment Size of Firm0 830 59.7 35.4 24.9 21.0 9.8 6.1 2.9 8.4 5.8 2.9 47.7 21–4 1,749 75.4 51.5 37.1 32.7 15.4 9.4 5.6 13.8 8.9 4.9 57.2 155–9 739 84.4 67.3 51.0 45.8 24.7 14.9 10.3 16.8 9.5 7.0 66.8 2710–19 467 88.7 75.5 57.4 55.0 35.5 21.8 15.9 20.9 12.6 8.3 66.7 3020–99 1,077 91.1 81.4 70.7 68.2 34.5 20.6 16.8 16.1 5.3 10.6 66.4 29100–499 494 94.6 89.9 80.0 77.2 44.6 27.9 23.3 23.9 9.8 17.0 65.7 29IndustryMining and Construction 620 79.2 60.4 46.7 39.5 20.1 16.2 4.7 13.4 9.0 4.5 56.3 13Manufacturing 666 80.8 62.8 48.7 43.0 25.8 15.2 10.7 16.6 8.7 7.0 60.7 27Transportation 215 85.2 67.4 52.3 48.5 32.1 24.6 9.5 16.0 8.6 7.4 64.6 26Wholesale Trade 498 80.3 58.5 47.9 45.5 19.0 13.0 7.8 17.4 10.1 7.1 64.5 27Retail Trade 1,161 73.1 55.9 41.5 37.7 17.3 12.0 5.8 13.6 9.3 4.6 54.6 19Finance, Insurance, and 

Real Estate 370 74.4 52.3 41.2 35.1 16.6 5.9 5.8 13.5 9.6 4.5 53.9 15

Services 1,826 73.4 49.4 34.8 32.0 17.5 8.7 9.2 12.8 6.9 6.1 59.2 11

Note: Owner loans are included for partnerships and corporations only.Source: Prepared by the U.S. Small Business Administration, Office of Advocacy, from data in the 1993 National Survey of Small Business Finances, sponsor

Business Administration and the Board of Governors of the Federal Reserve System.

The State of Small Business 167
Table 5.16 Aggregate Value of Small Firm Debt, by Type of Credit, Firm Size and Industry, 1993 (Billions of Dol

Traditional Credit Nont

Sample Any Other Any 

Size Any Traditional Lines of Vehicle Equipment Traditional Nontradition

Category (Number) Credit Loan Credit Mortgages Loans Loans LeasIng Loans Loans All Small Firms 4,637 756 668 280 166 30 55 30 108 88 Employment Size of Firm0 691 21 20 2 8 2 2 2 4 1 1–4 1,496 123 105 28 46 7 6 4 14 18 5–9 649 128 110 48 39 4 5 3 12 18 10–19 397 66 54 19 10 4 8 4 9 12 20–99 966 245 218 100 39 11 22 11 35 27 100–499 438 174 162 83 23 2 13 6 35 12 IndustryMining and Construction 551 62 56 32 7 4 5 2 7 6 Manufacturing 579 108 89 45 10 2 14 7 11 19 Transportation 182 51 47 8 4 6 6 4 19 4 Wholesale Trade 437 98 87 54 7 2 9 4 12 11 Retail Trade 1,004 143 125 63 16 9 7 4 26 18 Finance, Insurance, and 

Real Estate 315 177 159 43 98 1 1 2 14 17 

Services 1,569 118 105 35 24 7 13 8 19 13 

Note: Any nontraditional loan includes owner loans and personal and business credit cards with outstanding balances.Source: Prepared by the U.S. Small Business Administration, Office of Advocacy, from data in the 1993 National Survey of Small Business Finances, sponsor

Business Administration and the Board of Governors of the Federal Reserve System.

168 The Annual Report on Small Business and Competition
Table 5.17 Aggregate Value of Small Firm Debt, by Supplier, Firm Size and Industry, 1993 (Billions of Dollars)

Traditional Credit N

Depository Institutions Nondepository Institutions Nonfinancial Institutions

Sample Any Any Any Any Family Any

Size Any Traditional Depository Commercial Nondepository Finance LeasIng Nonfinancial and Nontrad

Category (Number) Credit Loan Institution Banks Institution Companies Companies Institution Friends CredAll Small Firms 4,637 756 668 388 361 165 87 19 75 33 88 Employment Size of Firm0 691 21 20 12 11 4 1 0 3 3 1 1–4 1,496 123 105 64 52 25 12 2 12 9 18 5–9 649 128 110 57 54 30 5 2 9 6 18 10–19 397 66 54 32 31 15 8 2 6 4 12 20–99 966 245 218 121 114 58 44 8 28 9 27 100–499 438 174 162 101 99 32 17 4 16 2 12 IndustryMining and Construction 551 62 56 41 38 5 3 1 6 5 6 Manufacturing 579 108 89 60 57 18 11 4 6 3 19 Transportation 182 51 47 23 23 11 7 2 12 1 4 Wholesale Trade 437 98 87 63 62 15 7 2 6 2 11 Retail Trade 1,004 143 125 55 52 45 40 2 15 8 18 Finance, Insurance, and 

Real Estate 315 177 159 75 63 52 8 1 16 10 17 

Services 1,569 118 105 71 66 20 10 8 14 5 13 

Note: Owner loans are included for partnerships and corporations only.Source: Prepared by the U.S. Small Business Administration, Office of Advocacy, from data in the 1993 National Survey of Small Business Finances, sponsor

Business Administration and the Board of Governors of the Federal Reserve System.

The State of Small Business 169
170 The Annual Report on Small Business and Competition Table 5.18 Selected Credit Services Used by Small C Corporations, by Firm Size and Industry, 1993 (Percentage of Firms, except as noted otherwise) Traditional Credit Nontradit

Sample Total Any Other Any 

Size Number of Any Traditional Lines of Vehicle Equipment Traditional Nontraditional Owne

Category (Number) Corporations Credit Loan Credit Mortgages Loans Loans Leasing Loans Loans Loans All C Corporations 1,946 1,403,736 83.4 63.2 33.3 4.3 28.8 17.6 14.1 12.6 64.6 28.6 Aggregate Value (Billions of Dollars) 1,946 1,403,736 352.3 310.0 162.7 44.4 14.8 28.7 16.6 42.7 42.3 41.6 

Employment Size of Firm 0 13 14,238 78.1 19.1 3.2 2.8 13.0 10.4 0.0 3.5 65.0 27.4 1–4 438 558,553 77.8 48.8 20.8 3.1 24.3 10.7 7.9 9.5 63.2 24.7 5–9 360 380,071 84.6 68.3 35.5 4.8 32.6 15.6 14.3 12.7 65.4 32.1 10–19 249 223,132 88.5 75.4 39.0 4.7 32.9 22.5 21.1 18.0 65.2 30.4 20–99 608 196,439 89.8 80.0 55.4 5.1 29.9 34.1 20.9 13.2 66.0 30.4 100–499 278 31,302 94.1 88.3 64.1 10.7 35.8 29.0 36.8 30.4 65.5 32.6 IndustryMining and Construction 226 192,430 87.5 69.6 36.7 3.8 45.1 15.1 7.2 9.3 65.8 26.1 Manufacturing 331 143,447 84.7 77.4 44.1 8.1 30.6 29.5 24.1 15.0 63.7 37.7 Transportation 108 60,751 89.3 68.2 22.0 4.0 41.4 21.2 21.9 10.5 74.5 41.6 Wholesale Trade 244 172,833 80.9 60.0 45.2 3.3 23.2 10.1 14.4 19.9 66.3 41.6 Retail Trade 418 313,576 82.5 65.7 31.4 5.7 30.0 12.8 11.9 15.5 59.1 30.6 Finance, Insurance, and 

Real Estate 123 102,882 83.6 50.8 26.6 10.3 13.2 18.7 5.5 10.5 64.3 24.8 

Services 496 417,818 81.8 57.3 27.8 1.0 24.2 20.5 16.3 9.0 66.3 18.9 

Note: Information on owner loans is collected for partnerships and S and C corporations only.Source: U.S. Small Business Administration, Office of Advocacy, from data in the 1993 National Survey of Small Business Finances, sponsored by the 

Administration and the Board of Governors of the Federal Reserve System.
Table 5.19 Selected Credit Services Used by Small Women-Owned Firms, by Firm Size and Industry, 1993 

(Percentage of Firms)

Traditional Credit Nontradi

Sample Total Any Other Any 

Size Number of Any Traditional Lines of Vehicle Equipment Traditional Nontraditional Own

Category (Number) Firms Credit Loan Credit Mortgages Loans Loans Leasing Loans Loans LoanAll Small Women-Owned Firms 1,013 1,089,542 73.6 50.3 18.5 7.0 21.8 11.7 7.0 12.3 59.7 15.Employment Size of Firm0 220 305,485 57.2 30.8 7.0 4.9 11.2 6.0 3.3 7.8 48.3 1.1–4 385 492,788 75.6 48.2 18.3 8.1 17.8 10.7 5.7 13.7 62.5 17.5–9 154 174,087 85.8 70.2 30.0 4.9 37.6 17.5 7.8 11.5 70.2 28.10–19 85 78,898 87.9 79.3 25.1 12.5 43.3 16.2 20.8 20.5 59.1 15.20–99 119 33,991 93.5 81.3 43.4 4.4 43.7 36.1 18.8 16.1 67.4 32.100–499 50 4,293 98.6 94.5 67.3 28.4 30.1 34.7 28.6 12.4 78.6 40.IndustryMining and Construction 57 73,063 84.3 70.1 38.2 7.2 47.6 10.4 2.9 18.6 64.3 20.Manufacturing 93 68,487 72.6 52.9 21.6 2.8 23.1 24.7 14.5 10.3 58.3 24.Transportation 46 32,521 80.0 59.7 29.1 8.5 17.8 19.2 16.7 9.8 57.9 20.Wholesale Trade 81 73,949 77.3 45.5 30.3 4.1 24.9 7.7 13.1 11.4 66.2 24.Retail Trade 254 295,875 70.8 50.7 21.2 7.7 19.8 5.9 5.7 15.4 58.8 17.Finance, Insurance, and 

Real Estate 56 53,625 83.7 62.3 15.5 13.8 16.4 25.4 7.6 13.3 61.4 15.

Services 426 492,023 71.8 45.6 11.3 6.7 19.5 12.3 5.6 9.9 58.8 9.

Note: Owner loans are included for partnerships and corporations only.Source: Prepared by the U.S. Small Business Administration, Office of Advocacy, from data in the 1993 National Survey of Small Business Finances, sponsor

Business Administration and the Board of Governors of the Federal Reserve System.

The State of Small Business 171
Table 5.20 Suppliers of Credit Services Used by Small Women-Owned Firms, by Firm Size and Industry, 1993 

(Percentage of Firms)

Traditional Credit Nontra

Depository Institutions Nondepository Institutions Nonfinancial Institutions

Sample Any Any Any Any Family Any 

Size Any Traditional Depository Commercial Nondepository Finance LeasIng Nonfinancial and Other Nontraditional Ow

Category (Number) Credit Loan Institution Banks Institution Companies Companies Institution Friends Businesses Credit LoAll Small Women-Owned Firms 1,013 73.6 50.3 34.8 31.5 17.6 10.3 6.7 14.3 9.8 4.8 59.7 15Employment Size of Firm0 220 57.2 30.8 20.2 18.3 7.6 3.9 2.3 7.1 4.7 2.9 48.3 11–4 385 75.6 48.2 32.3 29.2 18.1 8.9 8.0 15.0 11.5 4.2 62.5 175–9 154 85.8 70.2 54.9 47.2 22.1 17.5 4.6 17.5 12.8 4.5 70.2 2810–19 85 87.9 79.3 47.9 46.1 31.9 21.0 15.2 28.1 15.0 13.1 59.1 1520–99 119 93.5 81.3 65.1 63.5 41.8 25.3 18.9 21.7 4.5 13.2 67.4 32100–499 50 98.6 94.5 82.8 80.0 31.7 17.0 16.9 13.6 10.8 3.5 78.6 40IndustryMining and Construction 57 84.3 70.1 60.3 50.4 25.5 20.6 9.2 16.7 14.6 2.6 64.3 20Manufacturing 93 72.6 52.9 32.3 30.2 32.1 18.0 12.2 19.3 6.6 10.7 58.3 24Transportation 46 80.0 59.7 44.7 43.7 26.4 17.3 9.2 20.3 9.4 10.7 57.9 20Wholesale Trade 81 77.3 45.5 32.0 29.5 20.6 14.8 8.0 13.6 4.3 7.4 66.2 24Retail Trade 254 70.8 50.7 38.1 35.1 10.7 6.9 3.8 11.4 9.8 2.9 58.8 17Finance, Insurance, and 

Real Estate 56 83.7 62.3 42.0 35.9 30.0 3.8 9.9 21.3 15.8 6.5 61.4 15

Services 426 71.8 45.6 28.4 25.7 16.1 9.2 6.7 14.0 9.8 4.5 58.8 9

Note: Owner loans are included for partnerships and corporations only.Source: Prepared by the U.S. Small Business Administration, Office of Advocacy, from data in the 1993 National Survey of Small Business Finances, sponsor

Business Administration and the Board of Governors of the Federal Reserve System.

172 The Annual Report on Small Business and Competition
lion in debt outstanding in the six traditional types of credit financing in 1993

(Table 5.21). With an additional $10.9 billion in owners’ loans (in partnerships

and corporations only), total business debt outstanding amounted to $75.8 billion for women-owned businesses—just 10 percent of all small business debt

outstanding. The $26.2 billion in credit lines—the most important form of

credit borrowing for women—accounted for 40.5 percent of total traditional

women’s business borrowing.

Among the six credit suppliers examined, banks were the most important,

accounting for $34.4 billion, or 53.3 percent of traditional debt outstanding for

women-owned firms (Table 5.22). Owner loans amounted to only $10.9 billion. 

Financing of Minority-Owned Firms

Relatively fewer minority-owned firms—two-thirds, compared with more than

three-fourths of all small firms—used some type of credit in 1993 (Tables 5.14

and 5.23).15 Minority-owned firms used more nontraditional (52.7 percent) than

traditional credit sources (46.5 percent); the corresponding figures for firms overall were 58 percent and 55 percent respectively. Again, the lower rates of credit use may be an indication of barriers minority-owned firms face in obtaining

credit. Other frequently used types of credit were vehicle loans (21.4 percent),

lines of credit (18.3 percent), and equipment loans (12.6 percent).

Commercial banks were the traditional source used most often by minority-owned firms, but only 26.6 percent used them, compared with 32 percent

of women-owned firms and 37 percent of all firms (Tables 5.15, 5.20, and

5.24). Finance companies supplied just 11.1 percent; friends and family, 8.4

percent. Differences between minority-owned firms and all firms are significant: while 41 percent of all firms held debt with any depository institution,

only 30.6 percent of minority firms did so. More than half of minority-owned

businesses reported using some type of nontraditional credit. While only 13.9

percent said they used owner loans, more than one-third used personal credit cards and more than one-quarter used business credit cards.

The 590,000 minority-owned businesses had an estimated $41.2 billion

outstanding in six traditional types of financing (Table 5.25). Owners of partnerships and corporations extended an additional $5.3 billion in loans to their

businesses. Business debt totaled $46.8 billion, 6.2 percent of small business

debt outstanding. The most important forms of credit borrowing were mortgage loans, totaling $12.4 billion, or 26.5 percent of the total, and credit lines,

totaling $12.2 billion or 26 percent. While credit card debt in minority-owned

The State of Small Business 173

15 An estimated 590,000 minority-owned businesses were found in the Dun and Bradstreet small business

population in the 1993 survey.
174 The Annual Report on Small Business and Competition Table 5.21 Aggregate Value of Small Women-Owned Firm Debt, by Type of Credit, Firm Size and Industry, 199

(Billions of Dollars) Traditional Credit N

Sample Any Other An

Size Any Traditional Lines of Vehicle Equipment Traditional Nontrad

Category (Number) Credit Loan Credit Mortgages Loans Loans Leasing Loans LoaAll Small Women-Owned Firms 840 75.8 64.6 26.2 12.8 3.9 5.3 4.9 11.5 11Employment Size of Firm 0 185 2.4 2.3 0.3 0.5 0.3 0.2 0.1 0.9 01–4 300 24.0 19.2 8.6 4.7 0.9 0.6 0.7 3.8 45–9 139 8.7 7.0 1.4 0.6 0.9 1.4 1.0 1.7 110–19 67 13.5 11.9 5.7 3.2 0.5 0.3 0.6 1.7 120–99 108 20.7 18.0 7.2 2.3 1.2 1.7 2.3 3.3 2100–499 41 6.6 6.1 2.9 1.5 0.1 1.2 0.3 0.2 0IndustryMining and Construction 48 4.8 4.1 0.9 0.3 0.4 0.4 0.1 1.9 0Manufacturing 81 5.5 3.9 1.9 0.3 0.2 0.9 0.4 0.2 1Transportation 38 6.4 5.8 0.5 0.2 1.1 1.4 2.2 0.5 0Wholesale Trade 69 14.0 13.0 10.0 0.6 0.3 0.1 0.2 1.7 1Retail Trade 213 18.3 15.7 9.6 1.4 0.7 0.6 0.8 2.7 2Finance, Insurance, and 

Real Estate 47 10.1 7.2 2.1 2.9 0.1 0.5 0.4 1.2 3

Services 344 16.6 14.9 1.2 7.1 1.1 1.4 0.8 3.4 1

Note: Any nontraditional loan includes owner loans and personal and business credit cards with outstanding balances.Source: Prepared by the U.S. Small Business Administration, Office of Advocacy, from data in the 1993 National Survey of Small Business Finances, sponsor

Business Administration and the Board of Governors of the Federal Reserve System.
Table 5.22 Aggregate Value of Small Women-Owned Firm Debt, by Supplier, Firm Size and Industry, 1993 

(Billions of Dollars)

Traditional Credit 

Depository Institutions Nondepository Institutions Nonfinancial Institutions

Sample Any Any Any Any Family

Size Any Traditional Depository Commercial Nondepository Finance Leasing Nonfinancial and Other 

Category (Number) Credit Loan Institution Banks Institution Companies Companies Institution Friends BusinesseAll Small Women-Owned Firms 840 75.8 64.6 37.3 34.4 16.2 7.5 2.6 6.7 4.3 1.1 Employment Size of Firm0 185 2.4 2.3 1.9 1.8 0.2 0.1 0.1 0.2 0.1 0.0 1–4 300 24.0 19.2 12.1 10.3 1.6 0.4 0.4 2.8 2.5 0.1 5–9 139 8.7 7.0 3.5 2.7 1.6 1.1 0.5 1.3 1.0 0.2 10–19 67 13.5 11.9 5.9 5.8 5.4 0.3 0.2 0.7 0.2 0.4 20–99 108 20.7 18.0 9.0 9.0 6.9 5.4 1.2 1.6 0.3 0.3 100–499 41 6.6 6.1 4.9 4.9 0.5 0.2 0.3 0.1 0.1 0.0 IndustryMining and Construction 48 4.8 4.1 2.3 1.3 0.5 0.1 0.3 0.7 0.6 0.0 Manufacturing 81 5.5 3.9 3.1 2.9 0.5 0.1 0.3 0.3 0.0 0.1 Transportation 38 6.4 5.8 1.8 1.7 3.1 2.3 0.8 0.3 0.2 0.0 Wholesale Trade 69 14.0 13.0 6.2 6.2 5.6 0.4 0.2 0.7 0.3 0.4 Retail Trade 213 18.3 15.7 9.7 9.0 2.3 2.1 0.1 1.4 1.1 0.3 Finance, Insurance, and 

Real Estate 47 10.1 7.2 5.2 4.7 0.9 0.0 0.4 0.7 0.6 0.0 

Services 344 16.6 14.9 9.0 8.5 3.3 2.4 0.5 2.6 1.4 0.2 

Note: Owner loans are included for partnerships and corporations only.Source: Prepared by the U.S. Small Business Administration, Office of Advocacy, from data in the 1993 National Survey of Small Business Finances, sponsor

Business Administration and the Board of Governors of the Federal Reserve System.

The State of Small Business 175
176 The Annual Report on Small Business and Competition Table 5.23 Selected Credit Services Used by Small Minority-Owned Firms, by Firm Size and Industry, 1993 (Percentage of Firms) Traditional Credit Nontradi

Sample Total Any Other Any 

Size Number Any Traditional Lines of Vehicle Equipment Traditional Nontraditional O

Category (Number) of Firms Credit Loan Credit Mortgages Loans Loans Leasing Loans Loans All Small Minority-Owned Firms 1,252 595,371 67.0 46.5 18.3 4.6 21.4 12.6 6.5 10.9 52.7 Employment Size of Firm 0 241 151,913 44.8 30.8 7.4 3.2 11.8 7.2 3.3 9.8 32.7 1–4 542 277,884 68.3 43.1 17.6 3.7 21.9 10.9 2.0 11.4 55.8 5–9 224 100,611 83.8 63.8 26.6 6.9 27.7 16.4 13.4 12.9 68.6 10–19 112 33,677 85.2 68.0 27.6 3.5 20.3 25.4 20.3 4.8 57.3 20–99 103 26,460 88.3 71.1 41.8 8.0 36.3 30.5 22.2 12.6 70.7 100–499 30 4,827 96.7 92.9 36.9 43.9 83.9 8.2 34.5 2.5 41.4 IndustryMining and Construction 136 66,008 67.4 45.3 21.8 1.3 30.6 15.8 7.1 5.5 56.1 Manufacturing 94 34,465 78.9 53.5 24.1 5.5 16.4 21.8 12.4 7.7 56.6 Transportation 47 16,672 75.8 40.3 11.7 2.9 22.9 9.5 6.5 12.0 64.0 Wholesale Trade 131 45,136 78.9 59.4 37.0 1.7 29.5 10.2 10.4 22.5 62.6 Retail Trade 259 137,464 58.8 38.0 15.7 3.1 13.1 5.2 5.2 12.8 44.2 Finance, Insurance, and 

Real Estate 52 24,379 77.5 46.9 21.9 20.2 25.6 7.7 2.3 7.7 68.9 

Services 533 271,247 66.1 48.5 15.1 5.2 22.1 15.4 5.9 9.9 51.9 

Note: Owner loans are included for partnerships and corporations only.Source: Prepared by the U.S. Small Business Administration, Office of Advocacy, from data in the 1993 National Survey of Small Business Finances, sponsor

Business Administration and the Board of Governors of the Federal Reserve System.
Table 5.24 Suppliers of Credit Services Used by Small Minority-Owned Firms, by Firm Size and Industry, 1993 

(Percentage of Firms)

Traditional Credit Non

Depository Institutions Nondepository Institutions Nonfinancial Institutions

Sample Any Any Any Any Family Any 

Size Any Traditional Depository Commercial Nondepository Finance Leasing Nonfinancial and Other Nontraditional O

Category (Number) Credit Loan Institution Banks Institution Companies Companies Institution Friends Businesses Credit LAll Small Minority-Owned Firms 1,252 67.0 46.5 30.6 26.6 16.9 11.1 6.4 14.9 8.4 6.1 52.7 1Employment Size of Firm0 241 44.8 30.8 13.6 9.3 14.3 9.8 5.4 8.5 7.5 2.0 32.7 1–4 542 68.3 43.1 29.3 26.1 12.4 8.3 3.5 16.0 10.0 5.2 55.8 15–9 224 83.8 63.8 47.2 39.1 24.5 16.1 8.1 21.8 9.0 11.9 68.6 210–19 112 85.2 68.0 41.4 41.2 24.7 11.6 11.9 9.5 1.1 8.1 57.3 220–99 103 88.3 71.1 55.3 55.3 35.7 24.7 22.8 22.1 5.9 15.8 70.7 4100–499 30 96.7 92.9 82.8 75.8 38.3 33.3 34.5 3.6 0.0 2.1 41.4 1IndustryMining and Construction 136 67.4 45.3 33.1 32.8 18.4 17.5 6.0 12.3 5.9 6.9 56.1 1Manufacturing 94 78.9 53.5 36.5 31.3 18.5 14.0 4.6 13.7 3.7 10.0 56.6 2Transportation 47 75.8 40.3 32.5 30.5 27.7 25.6 4.3 2.9 0.2 2.7 64.0 1Wholesale Trade 131 78.9 59.4 47.6 45.8 20.3 17.3 5.7 21.0 13.6 8.4 62.6 2Retail Trade 259 58.8 38.0 24.2 21.1 10.3 6.7 3.8 11.8 8.4 2.1 44.2 1Finance, Insurance, and 

Real Estate 52 77.5 46.9 38.8 28.4 18.8 10.0 2.7 16.2 12.7 1.2 68.9 1

Services 533 66.1 48.5 28.8 23.6 18.2 9.6 8.6 16.8 8.9 7.7 51.9 

Note: Owner loans are included for partnerships and corporations only.Source: Prepared by the U.S. Small Business Administration, Office of Advocacy, from data in the 1993 National Survey of Small Business Finances, sponsor

Business Administration and the Board of Governors of the Federal Reserve System.

The State of Small Business 177
178 The Annual Report on Small Business and Competition Table 5.25 Aggregate Value of Small Minority-Owned Firm Debt, by Type of Credit, Firm Size and Industry, 199

(Billions of Dollars) Traditional Credit 

Sample Total Any Other A

Size Number Any Traditional Lines of Vehicle Equipment Traditional Nontra

Category (Number) of Firms Credit Loan Credit Mortgages Loans Loans Leasing Loans LoAll Small Minority-Owned Firms 1,078 588,702 46.8 41.2 12.2 12.4 2.3 3.7 2.9 7.7 5Employment Size of Firm 0 196 137,135 3.0 2.8 0.1 1.8 0.2 0.1 0.3 0.4 01–4 448 265,141 9.0 7.4 2.2 1.2 0.9 0.5 0.7 1.9 15–9 208 106,606 8.0 6.8 1.5 2.6 0.4 0.8 0.5 1.0 110–19 108 47,014 10.2 9.8 2.7 3.4 0.3 0.6 0.4 2.4 020–99 91 29,407 13.4 11.8 5.3 3.3 0.3 0.8 0.5 1.6 1100–499 27 3,399 3.2 2.5 0.5 0.1 0.1 0.9 0.5 0.4 0IndustryMining and Construction 121 71,908 3.0 2.3 0.8 0.2 0.4 0.4 0.2 0.4 0Manufacturing 79 35,107 2.0 1.4 0.5 0.1 0.0 0.5 0.1 0.1 0Transportation 39 18,182 2.4 2.2 0.1 0.1 0.3 1.0 0.5 0.1 0Wholesale Trade 119 55,880 16.8 15.1 8.2 1.3 0.4 0.4 1.0 3.8 1Retail Trade 217 127,137 4.7 3.8 0.5 0.9 0.2 0.4 0.2 1.7 0Finance, Insurance, and 

Real Estate 43 16,460 5.0 4.8 0.7 3.5 0.1 0.0 0.0 0.5 0

Services 460 264,028 12.9 11.5 1.4 6.3 0.9 1.0 0.8 1.1 1

Note: Any nontraditional loan includes owner loans and personal and business credit cards with outstanding balances.Source: Prepared by the U.S. Small Business Administration, Office of Advocacy, from data in the 1993 National Survey of Small Business Finances, sponsor

Business Administration and the Board of Governors of the Federal Reserve System.
ing for almost 60 percent of the value of traditional loans to minority-owned

firms (Table 5.26). Finance companies ranked far behind with a paltry 6.7 percent. Owner loans accounted for almost 13 percent of all traditional borrowing in minority-owned firms.

Conclusion

Given a healthy economy with rising profits in both the business and banking sectors, small businesses found an ample supply of debt and equity

capital in 1997. A very healthy banking system provided adequate small business loans, although still at relatively high interest rates. Relatively unsettled

IPO markets discouraged IPO offerings during the second half of 1997.

However, commitments to venture capital funds and their investments in companies continued. The availability of equity financing continued to expand,

especially for fast-growing firms. 

The State of Small Business 179
180 The Annual Report on Small Business and Competition Table 5.26 Aggregate Value of Small Minority-Owned Firm Debt, by Supplier, Firm Size and Industry, 1993 (Billions of Dollars) Traditional Credit 

Depository Institutions Nondepository Institutions Nonfinancial Institutions Sample Any Any Any Other Any Family A

Size Any Traditional Depository Commercial Nondepository Finance Leasing Nondepository Nonfinancial and Other Nontra

Category (Number) Credit Loan Institution Banks Institution Companies Companies Institutions Institution Friends Businesses CreAll Small Minority-Owned Firms 1,078 46.8 41.2 26.4 24.6 6.2 2.8 1.8 1.4 7.2 3.2 2.1 5Employment Size of Firm 0 196 3.0 2.8 0.9 0.6 1.6 0.2 0.1 1.3 0.4 0.3 0.1 01–4 448 9.0 7.4 4.5 3.5 1.0 0.6 0.2 0.0 1.8 1.5 0.2 15–9 208 8.0 6.8 4.3 4.1 0.9 0.5 0.3 0.0 1.6 0.5 0.7 110–19 108 10.2 9.8 7.0 6.8 0.6 0.3 0.3 0.0 2.2 0.2 0.8 020–99 91 13.4 11.8 8.7 8.6 1.5 1.0 0.5 0.0 1.2 0.8 0.3 1100–499 27 3.2 2.5 1.1 1.0 0.7 0.3 0.5 0.0 0.0 0.0 0.0 0IndustryMining and Construction 121 3.0 2.3 1.7 1.7 0.4 0.2 0.1 0.0 0.2 0.1 0.1 0Manufacturing 79 2.0 1.4 0.4 0.4 0.6 0.3 0.4 0.0 0.4 0.0 0.0 0Transportation 39 2.4 2.2 0.4 0.4 0.9 0.6 0.2 0.0 0.3 0.0 0.2 0Wholesale Trade 119 16.8 15.1 10.2 9.6 1.2 1.0 0.1 0.0 3.2 0.9 1.0 1Retail Trade 217 4.7 3.8 2.8 2.2 0.4 0.2 0.1 0.1 0.7 0.5 0.1 0Finance, Insurance, and 

Real Estate 43 5.0 4.8 2.4 2.3 1.3 0.0 0.0 1.3 1.0 0.9 0.0 0

Services 460 12.9 11.5 8.5 8.0 1.4 0.5 0.9 0.0 1.6 0.7 0.7 1

Note: Owner loans are included for partnerships and corporations only.Source: Prepared by the U.S. Small Business Administration, Office of Advocacy, from data in the 1993 National Survey of Small Business Finances, sponsor

Business Administration and the Board of Governors of the Federal Reserve System.
Supplementary Tables

Table A.1 Sources of Real GDP Growth, 1996 and 1997 183

Table A.2 Employer Firms, Establishments, Employment, Annual

Payroll, and Estimated Receipts by Firm Size, 

1988–1996 184

Table A.3 Firms, Establishments, Employment, Annual Payroll, 

and Estimated Receipts by State, 1996 186

Table A.4 Firms and Employment by Metropolitan Area and

Employment Size of Firm, 1996 195

Table A.5 Employer Firms by Major Industry and Employment 

Size of Firm, 1996 205

Table A.6 Employer Firms, Establishments, Employment, Payroll,

and Receipts by Major Industry and Firm Size, 1996 208

Table A.7 Business Income Tax Returns by Receipt Size of Tax

Return, 1990–1996 210

Table A.8 Employer Firm Births and Deaths and Related

Employment by Size of Firm, 1989–1996 211

Table A.9 Establishment and Employment Changes from Births 

and Deaths by Firm Size, 1995–1996 213

Table A.10 Employer Firms and Self-Employment by SBA Region 

and State, 1996 and 1997 214

Table A.11 New Employer Firms and New Incorporations by 

SBA Region and State, 1996 and 1997 216

Table A.12 Business Terminations, Bankruptcies, and Failures by 

SBA Region and State, 1996 and 1997 218

Table A.13 Nonfarm Sole Proprietorships and their Receipts by

Gender of Owner and Industry Group, 

1994 and 1995 220

Table A.14 Women-Owned Firms by SBA Region and State, 

1987 and 1992 221
Table A.18 Business Dissolution Rates for New Firms Born 

between 1976 and 1978 227

Table A.19 Exporters of Goods by Firm Size and State, 1992 228

Table A.20 Nonfarm Proprietors’ Income and Wage-and-Salary

Income by SBA Region and State, 1996 and 1997 229

Table A.21 Fastest Growing Industries and Industries Generating 

the Most Jobs, December 1996 and December 1997 231

Table A.22 U.S. Business Measures, 1975–1996 234

182 The Annual Report on Small Business and Competition
Supplementary Tables 183

Gross Domestic Product 6,928.4 7,188.8 260.4 3.8

Personal Consumption 4,717.1 4,867.5 150.4 3.2

Gross Private Domestic

Investment 1,068.8 1,193.5 124.7 11.7

Nonresidential 771.7 848.3 76.6 9.9

Residential 272.1 279.5 7.4 2.7

Change in Business Inventories 25.0 65.7 40.7 162.8

Net Exports 114.5 146.5 32.0 27.9

Exports 857.0 962.7 105.7 12.3

Imports 971.5 1109.2 137.7 14.2

Government Purchases 1,257.9 1,269.7 11.8 0.9

Federal 464.2 457.0 7.2 1.6

State and Local 793.7 812.7 19.0 2.4

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

the Council of Economic Advisers, Economic Indicators, March 1998.
184 The Annual Report on Small Business and Competition Table A.2 Employer Firms, Establishments, Employment, Annual Payroll, and Estimated Receipts by Firm Size, 1

Employment Size of Firm Item Year Total 0 0–4 5–9 10–19 20 20–99 100–499 50

Employer Firms 1996 5,478,047 717,991 3,327,783 996,356 585,844 4,909,983 476,312 76,136 5,462

1995 5,369,068 688,584 3,249,573 981,094 576,866 4,807,533 469,869 76,222 5,3531994 5,276,964 691,141 3,208,235 964,985 563,097 4,736,317 452,383 73,267 5,2611993 5,193,642 671,306 3,139,518 962,481 559,602 4,661,601 445,900 71,512 5,1791992 5,095,356 644,453 3,075,280 945,802 551,912 4,572,994 439,084 69,156 5,0811991 5,051,025 NA 3,036,304 941,296 551,299 4,528,899 439,811 68,338 5,0371990 5,073,795 NA 3,020,935 952,030 562,610 4,535,575 453,732 70,465 5,0591989 5,021,315 NA 3,003,224 937,202 553,449 4,493,875 443,959 69,608 5,0071988 4,954,645 NA 2,979,905 923,580 540,988 4,444,473 430,640 66,708 4,941

Establishments 1996 6,738,476 720,241 3,338,051 1,013,353 624,610 4,976,014 636,285 280,635 5,892

1995 6,612,721 690,772 3,259,795 998,264 618,268 4,876,327 638,616 283,993 5,7981994 6,509,065 693,992 3,218,076 982,695 608,804 4,809,575 631,324 283,782 5,7241993 6,401,233 673,408 3,147,991 980,865 608,922 4,737,778 631,873 285,184 5,6541992 6,319,300 646,065 3,082,325 964,863 606,276 4,653,464 634,713 283,719 5,5711991 6,200,859 NA 3,048,830 961,391 593,302 4,603,523 593,248 260,595 5,4571990 6,175,559 NA 3,032,253 970,580 599,529 4,602,362 590,496 254,747 5,4471989 6,106,922 NA 3,014,009 956,347 592,901 4,563,257 586,494 252,335 5,4021988 6,016,367 NA 2,989,964 943,442 583,301 4,516,707 581,622 244,697 5,343

Employment 1996 102,187,297 0 5,485,712 6,541,288 7,854,502 19,881,502 18,643,192 14,649,808 53,174

1995 100,314,946 0 5,395,432 6,440,349 7,734,080 19,569,861 18,422,228 14,660,421 52,6521994 96,721,594 0 5,318,961 6,332,580 7,543,777 19,195,318 17,693,995 14,118,375 51,0071993 94,773,913 0 5,258,195 6,313,651 7,498,345 19,070,191 17,420,634 13,825,238 50,3161992 92,825,797 0 5,178,909 6,202,861 7,390,874 18,772,644 17,121,010 13,307,187 49,2001991 92,307,559 0 5,151,143 6,174,730 7,386,939 18,712,812 17,146,411 13,143,390 49,0021990 93,469,275 0 5,116,914 6,251,632 7,543,360 18,911,906 17,710,042 13,544,849 50,1661989 91,626,094 0 5,054,429 6,152,151 7,420,196 18,626,776 17,353,444 13,373,640 49,3531988 87,844,303 0 5,006,203 6,060,724 7,252,715 18,319,642 16,833,702 12,761,379 47,914
Supplementary Tables 185

Annual Payroll 1996 2,848,623,049 27,583,182 150,825,321 144,692,446 185,490,873 481,008,640 465,229,685 384,229,685 1,330,258(Thousands of Dollars) 1995 2,665,921,824 25,787,172 141,537,925 137,083,047 175,388,093 454,009,065 437,065,364 361,060,815 1,252,135

1994 2,487,959,727 24,081,138 134,649,352 131,666,587 166,475,972 432,791,911 408,053,078 335,573,696 1,176,4181993 2,363,208,106 22,361,727 128,968,107 127,133,193 159,153,336 415,254,636 385,005,072 316,183,732 1,116,4431992 2,272,392,408 21,432,778 124,592,441 122,381,613 152,830,640 399,804,694 368,969,129 298,174,483 1,066,9481991 2,145,015,851 NA 118,233,813 116,794,212 146,516,583 381,544,608 352,032,797 279,436,898 1,013,0141990 2,103,971,179 NA 116,856,518 114,006,469 144,450,673 375,313,660 352,390,861 279,451,864 1,007,1561989 1,989,941,554 NA 112,462,139 108,002,714 136,794,734 357,259,587 332,733,188 264,144,335 954,1371988 1,858,652,147 NA 108,800,891 103,041,106 130,326,463 342,168,460 315,751,201 244,647,178 902,566

Estimated Receipts 1996 16,654,636,336 138,006,624 979,261,140 818,958,459 1,006,929,796 2,805,149,395 2,817,214,145 2,168,502,766 7,790,866

(Thousands of Dollars) 1995 15,751,365,178 129,711,136 919,734,985 778,863,865 965,258,998 2,663,857,848 2,678,292,849 2,062,235,050 7,404,385

1994 14,840,452,031 122,784,184 880,763,759 752,675,397 928,380,448 2,561,819,604 2,531,402,508 1,930,758,304 7,023,9801993 14,098,572,035 116,064,572 846,812,139 730,360,041 891,635,409 2,468,807,589 2,394,813,062 1,816,354,667 6,679,9751992 13,605,183,510 110,778,665 820,739,417 705,146,922 859,446,404 2,385,332,743 2,292,331,108 1,717,787,820 6,395,4511991 12,961,443,722 NA 777,737,765 680,215,533 829,024,906 2,286,978,204 2,207,714,822 1,618,186,793 6,112,8791990 9,450,655,960 NA 626,678,614 569,639,860 681,191,539 1,877,510,013 1,715,442,516 1,316,747,423 4,909,699

NA=Not availableNotes: Employment is measured in March; thus, some firms will have no employment and some annual payroll. Nineteen ninety is the first year estimated 

ed. Establishments are locations with active payroll in any quarter. Firms are an aggregation of all establishments owned by a parent company. This table illustrates tance of firm sizes over time. It does not illustrate job growth as firms can grow or decline and change firm size cells over time.

Source: U.S. Small Business Administration, Office of Advocacy, based on data provided by the U.S. Department of Commerce, Bureau of Census.
186 The Annual Report on Small Business and Competition Table A.3 Firms, Establishments, Employment, Annual Payroll, and Estimated Receipts by State, 1996 (Annual Payroll and Estimated Receipts in Thousands of Dollars) Employment Size of Firm State Total 0 20 20–99 100–499 500 

United States Firms 5,478,047 717,991 4,909,983 476,312 76,136 5,462,431 

Establishments 6,738,476 720,241 4,976,014 636,285 280,635 5,892,934 

Employment 102,187,297 0 19,881,502 18,643,192 14,649,808 53,174,502 

Annual Payroll 2,848,623,049 27,583,182 481,008,640 465,229,685 384,020,002 1,330,258,327 

Estimated Receipts 16,654,636,336 138,006,624 2,805,149,395 2,817,214,145 2,168,502,766 7,790,866,306 

Alaska Firms 15,332 2,995 13,607 1,010 260 14,877 

Establishments 17,645 2,996 13,870 1,433 767 16,070 

Employment 183,484 0 51,429 35,840 30,811 118,080 

Annual Payroll 6,093,911 90,662 1,493,637 1,049,141 941,485 3,484,263 

Estimated Receipts 36,603,223 478,217 8,397,666 6,574,806 5,444,231 20,416,703 

Alabama Firms 80,443 8,962 69,423 7,254 1,694 78,371 

Establishments 98,172 8,969 70,179 9,366 4,344 83,889 

Employment 1,568,825 0 293,160 270,013 211,450 774,623 

Annual Payroll 36,708,111 273,865 5,911,642 5,842,156 4,587,858 16,341,656 

Estimated Receipts 221,702,230 1,369,396 35,624,753 38,071,634 27,525,079 101,221,466 

Arkansas Firms 52,086 6,132 45,454 4,237 973 50,664 

Establishments 61,335 6,142 45,923 5,696 2,483 54,102 

Employment 911,902 0 184,180 157,157 118,303 459,640 

Annual Payroll 19,295,966 164,661 3,436,953 2,980,531 2,342,367 8,759,851 

Estimated Receipts 119,916,912 841,341 21,420,910 20,931,314 14,933,915 57,286,139 

Arizona Firms 86,709 12,641 74,544 7,910 1,923 84,377 

Establishments 104,185 12,684 75,403 9,894 4,547 89,844 

Employment 1,599,275 0 304,047 293,348 224,552 821,947 

Annual Payroll 40,607,704 466,443 7,122,096 6,371,905 5,217,084 18,711,085 

Estimated Receipts 224,693,221 2,289,708 38,161,546 34,474,403 27,575,691 100,211,640 

California Firms 625,818 83,241 552,618 57,378 10,814 620,810 

Establishments 750,473 83,544 560,325 73,142 29,930 663,397 

Employment 11,131,054 0 2,225,672 2,194,711 1,614,363 6,034,746 

Annual Payroll 344,968,599 4,632,314 61,608,076 59,305,857 48,126,053 169,039,986 

Estimated Receipts 1,950,447,766 21,060,559 345,455,593 343,572,365 268,791,897 957,819,855 
Supplementary Tables 187

Colorado Firms 105,483 15,749 92,480 8,499 2,010 102,989 

Establishments 122,451 15,772 93,379 10,506 4,407 108,292 

Employment 1,601,144 0 355,038 311,537 213,863 880,438 

Annual Payroll 43,726,556 512,969 8,662,489 7,577,707 5,558,083 21,798,279 

Estimated Receipts 251,849,649 2,572,748 48,293,562 42,816,076 30,400,101 121,509,739 

Connecticut Firms 79,228 9,326 68,711 6,893 1,705 77,309 

Establishments 91,925 9,353 69,488 8,458 3,573 81,519 

Employment 1,433,673 0 276,650 254,600 210,078 741,328 

Annual Payroll 49,428,999 414,746 8,515,725 8,102,061 6,437,460 23,055,246 

Estimated Receipts 296,851,580 2,268,459 47,874,261 45,021,240 37,452,549 130,348,050 

District of Firms 16,321 1,531 12,679 1,921 754 15,354 

Columbia Establishments 19,454 1,531 12,803 2,307 1,242 16,352 

Employment 387,023 0 54,255 64,740 70,058 189,053 

Annual Payroll 14,997,969 125,266 2,117,340 2,451,434 2,727,006 7,295,780 

Estimated Receipts 61,681,855 475,543 8,708,302 9,333,512 8,917,052 26,958,866 

Delaware Firms 18,447 2,570 15,170 1,624 502 17,296 

Establishments 21,578 2,581 15,345 1,965 982 18,292 

Employment 333,037 0 58,712 55,166 40,732 154,610 

Annual Payroll 10,262,278 128,662 1,436,396 1,399,394 1,034,620 3,870,410 

Estimated Receipts 63,528,911 618,134 7,657,137 7,161,457 5,609,903 20,428,497 

Florida Firms 341,595 47,436 308,143 24,632 5,133 337,908 

Establishments 407,355 47,623 311,364 31,019 13,280 355,663 

Employment 5,357,866 0 1,151,217 923,132 670,703 2,745,052 

Annual Payroll 127,960,155 1,751,620 27,560,681 21,369,310 15,817,450 64,747,441 

Estimated Receipts 714,057,099 8,588,434 153,578,349 121,776,941 86,447,711 361,803,001 

Georgia Firms 150,065 19,772 129,817 13,162 3,563 146,542 

Establishments 184,378 19,814 131,171 16,413 7,725 155,309 

Employment 3,036,609 0 523,830 477,192 386,447 1,387,469 

Annual Payroll 80,372,460 851,289 12,746,846 11,469,715 9,606,501 33,823,062 

Estimated Receipts 484,047,380 3,993,427 75,546,238 68,395,606 57,467,898 201,409,742 

Hawaii Firms 24,339 2,560 20,896 2,202 499 23,597 

Establishments 29,967 2,575 21,341 3,186 1,626 26,153 

Employment 424,116 0 89,596 80,811 66,586 236,993 

Annual Payroll 10,954,149 87,925 2,171,992 1,930,194 1,616,217 5,718,403 

Estimated Receipts 61,428,011 450,782 12,561,736 10,230,214 7,683,473 30,475,423 
188 The Annual Report on Small Business and Competition Table A.3 Firms, Establishments, Employment, Annual Payroll, and Estimated Receipts by State, 1996 (Annual Payroll and Estimated Receipts in Thousands of Dollars)—Continued Employment Size of Firm State Total 0 20 20–99 100–499 500 

Iowa Firms 65,699 7,289 56,845 5,972 1,387 64,204 

Establishments 79,347 7,304 57,579 8,581 4,020 70,180 

Employment 1,163,112 0 236,547 224,646 178,607 639,800 

Annual Payroll 26,452,175 161,272 4,343,760 4,722,986 3,855,851 12,922,597 

Estimated Receipts 189,107,549 865,513 29,245,519 38,833,314 26,390,206 94,469,039 

Idaho Firms 30,095 4,757 26,345 2,433 496 29,274 

Establishments 34,335 4,761 26,600 3,237 1,257 31,094 

Employment 393,699 0 105,349 85,656 50,742 241,747 

Annual Payroll 9,231,186 104,865 1,999,428 1,707,849 1,111,643 4,818,920 

Estimated Receipts 58,381,032 589,534 11,571,790 12,930,720 8,670,507 33,173,017 

Illinois Firms 248,983 30,906 215,474 23,700 5,719 244,893 

Establishments 297,383 30,958 217,940 29,485 12,467 259,892 

Employment 4,978,031 0 886,001 897,622 735,103 2,518,726 

Annual Payroll 151,936,652 1,294,896 23,997,059 24,843,411 20,948,065 69,788,535 

Estimated Receipts 892,627,123 6,112,537 141,127,474 150,195,573 116,624,343 407,947,390 

Indiana Firms 116,431 12,957 99,314 11,583 2,836 113,733 

Establishments 143,505 12,982 100,619 15,299 7,228 123,146 

Employment 2,433,107 0 432,490 436,135 374,530 1,243,155 

Annual Payroll 62,687,852 396,541 8,944,608 10,168,058 8,906,467 28,019,133 

Estimated Receipts 379,939,586 1,968,336 52,712,470 64,013,229 54,014,880 170,740,579 

Kansas Firms 60,353 6,759 51,788 5,511 1,323 58,622 

Establishments 72,017 6,779 52,521 7,540 3,244 63,305 

Employment 1,011,678 0 212,693 202,294 154,379 569,366 

Annual Payroll 24,613,884 182,005 4,216,267 4,395,958 3,457,255 12,069,480 

Estimated Receipts 166,650,260 920,096 27,055,481 31,167,895 20,351,931 78,575,307 

Kentucky Firms 71,619 7,913 61,118 6,845 1,633 69,596 

Establishments 86,884 7,934 61,747 8,835 4,117 74,699 

Employment 1,370,658 0 260,543 252,622 203,278 716,443 

Annual Payroll 32,118,385 229,664 5,057,125 5,279,996 4,284,583 14,621,704 

Estimated Receipts 210,550,592 1,325,505 30,864,116 34,807,482 25,589,352 91,260,950 
Supplementary Tables 189

Louisiana Firms 81,042 8,715 69,358 7,958 1,783 79,099 

Establishments 98,227 8,734 70,194 10,205 4,462 84,861 

Employment 1,498,129 0 298,278 305,935 229,781 833,994 

Annual Payroll 35,602,741 301,491 6,130,167 6,380,535 5,069,060 17,579,762 

Estimated Receipts 240,901,280 1,638,701 36,016,540 37,381,802 29,791,429 103,189,771 

Massachusetts Firms 137,916 17,444 119,269 12,755 3,234 135,258 

Establishments 163,302 17,490 120,530 15,630 7,984 144,144 

Employment 2,778,508 0 484,842 483,016 439,497 1,407,355 

Annual Payroll 89,234,007 752,200 13,693,177 14,018,510 13,397,443 41,109,130 

Estimated Receipts 472,459,442 3,766,570 77,865,866 79,282,183 66,372,588 223,520,637 

Maryland Firms 103,269 13,338 89,040 9,629 2,256 100,925 

Establishments 123,911 13,370 90,094 12,148 5,021 107,263 

Employment 1,831,367 0 370,254 353,732 264,196 988,182 

Annual Payroll 52,254,431 481,590 9,430,586 9,123,361 7,436,355 25,990,302 

Estimated Receipts 281,924,426 2,163,798 49,623,905 49,409,144 39,044,617 138,077,666 

Maine Firms 32,298 5,115 28,644 2,342 539 31,525 

Establishments 36,930 5,118 28,916 3,113 1,479 33,508 

Employment 437,539 0 108,384 87,895 68,889 265,168 

Annual Payroll 10,282,374 126,226 2,196,941 1,889,033 1,495,735 5,581,709 

Estimated Receipts 63,032,243 602,498 12,376,712 11,710,971 9,639,294 33,726,977 

Michigan Firms 192,239 25,400 167,204 18,420 3,726 189,350 

Establishments 231,747 25,449 169,263 23,954 10,097 203,314 

Employment 3,757,958 0 714,683 699,180 544,763 1,958,626 

Annual Payroll 113,342,808 892,371 17,749,471 18,426,370 14,921,097 51,096,938 

Estimated Receipts 646,586,985 4,680,217 100,258,649 105,309,272 79,904,122 285,472,043 

Minnesota Firms 108,944 15,073 93,606 10,654 2,455 106,715 

Establishments 129,016 15,106 94,681 13,767 6,120 114,568 

Employment 2,134,778 0 385,770 406,179 347,257 1,139,206 

Annual Payroll 59,604,753 476,482 8,955,386 9,980,047 9,045,507 27,980,940 

Estimated Receipts 353,464,883 2,285,971 56,221,026 63,319,452 52,475,208 172,015,686 

Missouri Firms 118,232 13,946 102,311 10,885 2,486 115,682 

Establishments 142,077 13,987 103,632 14,202 6,174 124,008 

Employment 2,210,516 0 415,265 407,596 308,926 1,131,787 

Annual Payroll 56,832,981 420,826 8,893,738 9,357,859 7,349,249 25,600,846 

Estimated Receipts 346,782,158 2,193,472 54,192,397 59,008,259 44,586,426 157,787,082 
190 The Annual Report on Small Business and Competition Table A.3 Firms, Establishments, Employment, Annual Payroll, and Estimated Receipts by State, 1996 (Annual Payroll and Estimated Receipts in Thousands of Dollars)—Continued Employment Size of Firm State Total 0 20 20–99 100–499 500 

Mississippi Firms 48,292 5,291 41,942 3,965 947 46,854 

Establishments 58,106 5,308 42,398 5,150 2,881 50,429 

Employment 883,297 0 172,641 143,871 125,268 441,780 

Annual Payroll 18,407,432 135,508 3,083,790 2,870,450 2,420,727 8,374,967 

Estimated Receipts 116,400,644 720,764 19,428,608 20,933,201 13,876,241 54,238,050 

Montana Firms 26,766 4,344 23,990 1,866 344 26,200 

Establishments 30,046 4,347 24,210 2,471 963 27,644 

Employment 265,552 0 89,930 66,708 36,497 193,135 

Annual Payroll 5,276,886 81,309 1,546,800 1,194,556 741,151 3,482,507 

Estimated Receipts 36,840,294 416,181 9,624,592 9,061,086 4,254,756 22,940,434 

North Carolina Firms 153,581 19,050 134,298 13,190 3,065 150,553 

Establishments 187,939 19,119 135,918 17,264 8,272 161,454 

Employment 3,058,725 0 549,379 492,601 405,471 1,447,451 

Annual Payroll 75,048,563 595,846 11,850,874 11,176,821 9,057,663 32,085,358 

Estimated Receipts 448,281,959 3,065,993 71,200,158 69,628,427 52,442,809 193,271,394 

North Dakota Firms 17,659 2,127 15,195 1,576 379 17,150 

Establishments 20,439 2,131 15,437 2,122 976 18,535 

Employment 235,125 0 62,141 56,973 40,868 159,982 

Annual Payroll 4,768,269 38,509 1,076,009 1,009,815 810,403 2,896,227 

Estimated Receipts 37,053,335 198,022 8,938,251 8,494,304 5,603,546 23,036,101 

Nebraska Firms 40,362 4,553 34,854 3,524 795 39,173 

Establishments 47,606 4,558 35,313 4,893 2,144 42,350 

Employment 693,501 0 145,453 130,792 93,276 369,521 

Annual Payroll 15,604,267 109,809 2,723,197 2,709,740 2,133,189 7,566,126 

Estimated Receipts 112,196,611 638,365 17,473,621 22,074,352 15,530,632 55,078,605 
Supplementary Tables 191

New Hampshire Firms 30,842 4,077 26,540 2,712 652 29,904 

Establishments 35,560 4,083 26,791 3,295 1,429 31,515 

Employment 482,052 0 106,359 97,461 71,597 275,417 

Annual Payroll 12,728,552 134,395 2,636,898 2,459,776 1,846,082 6,942,756 

Estimated Receipts 72,141,422 719,939 15,040,024 15,329,537 9,913,306 40,282,867 

New Jersey Firms 196,518 26,766 174,496 15,424 3,654 193,574 

Establishments 225,101 26,849 175,963 18,074 7,217 201,254 

Employment 3,208,801 0 654,929 573,758 458,460 1,687,147 

Annual Payroll 109,497,884 1,046,909 19,748,681 17,591,869 14,171,936 51,512,486 

Estimated Receipts 665,534,925 5,492,943 119,299,316 111,008,102 83,166,375 313,473,793 

New Mexico Firms 35,403 4,333 30,285 3,111 732 34,128 

Establishments 41,573 4,349 30,590 4,054 1,856 36,500 

Employment 519,801 0 124,224 111,685 78,611 314,520 

Annual Payroll 11,647,427 137,925 2,393,677 2,181,060 1,685,587 6,260,324 

Estimated Receipts 70,542,728 687,033 13,638,199 12,997,288 10,159,074 36,794,561 

Nevada Firms 33,963 5,287 28,394 3,195 947 32,536 

Establishments 39,466 5,292 28,683 3,816 1,778 34,277 

Employment 718,708 0 114,982 114,363 93,735 323,080 

Annual Payroll 18,426,847 298,239 3,120,552 2,908,016 2,467,381 8,495,949 

Estimated Receipts 93,251,094 1,341,015 15,957,492 16,046,819 12,924,929 44,929,240 

New York Firms 411,120 55,584 369,220 31,286 6,657 407,163 

Establishments 471,523 55,651 372,388 37,473 16,085 425,946 

Employment 6,789,494 0 1,359,734 1,183,578 1,026,869 3,570,181 

Annual Payroll 239,746,077 2,426,592 39,317,520 35,974,039 32,431,026 107,722,585 

Estimated Receipts 1,322,911,660 12,046,002 242,027,119 219,759,379 178,214,513 640,001,011 

Ohio Firms 213,707 24,526 183,769 21,612 4,799 210,180 

Establishments 266,924 24,576 186,434 28,333 12,741 227,508 

Employment 4,640,026 0 800,958 833,565 689,161 2,323,684 

Annual Payroll 124,141,252 774,930 18,178,303 20,176,901 17,236,083 55,591,287 

Estimated Receipts 717,210,348 3,900,256 103,094,603 121,831,771 93,877,190 318,803,564 

Oklahoma Firms 69,705 8,085 60,728 5,938 1,343 68,009 

Establishments 82,827 8,102 61,427 7,719 3,298 72,444 

Employment 1,084,717 0 243,367 219,116 163,924 626,407 

Annual Payroll 24,817,408 230,781 4,709,178 4,342,636 3,569,609 12,621,423 

Estimated Receipts 155,732,695 1,131,337 29,722,994 28,467,551 21,203,376 79,393,921 
192 The Annual Report on Small Business and Competition Table A.3 Firms, Establishments, Employment, Annual Payroll, and Estimated Receipts by State, 1996 (Annual Payroll and Estimated Receipts in Thousands of Dollars)—Continued Employment Size of Firm State Total 0 20 20–99 100–499 500 

Oregon Firms 82,417 11,270 72,062 6,984 1,543 80,589 

Establishments 95,867 11,281 72,790 9,017 4,318 86,125 

Employment 1,237,089 0 290,073 255,945 187,212 733,230 

Annual Payroll 32,525,787 297,589 6,232,839 6,139,154 4,848,086 17,220,079 

Estimated Receipts 191,026,926 1,549,453 36,717,926 38,308,015 29,693,940 104,719,881 

Pennsylvania Firms 234,883 25,074 204,231 22,082 4,975 231,288 

Establishments 287,009 25,202 207,035 28,312 13,099 248,446 

Employment 4,729,124 0 862,788 835,906 716,698 2,415,392 

Annual Payroll 129,568,788 934,064 19,875,593 20,856,212 18,203,739 58,935,544 

Estimated Receipts 737,238,060 4,651,179 113,917,010 127,396,013 96,306,443 337,619,466 

Rhode Island Firms 25,182 3,281 21,808 2,086 508 24,402 

Establishments 27,995 3,282 21,967 2,412 924 25,303 

Employment 381,463 0 82,166 77,132 57,754 217,052 

Annual Payroll 9,807,526 118,109 1,964,769 1,893,114 1,413,390 5,271,273 

Estimated Receipts 53,415,339 582,200 11,218,923 11,403,439 6,749,390 29,371,752 

South Carolina Firms 74,045 8,952 64,280 6,267 1,526 72,073 

Establishments 90,322 8,986 65,043 8,049 3,948 77,040 

Employment 1,433,051 0 266,810 227,016 179,301 673,127 

Annual Payroll 33,414,252 273,999 5,388,063 4,651,762 3,939,126 13,978,951 

Estimated Receipts 194,435,380 1,463,436 31,205,292 28,460,966 22,376,474 82,042,732 

South Dakota Firms 20,272 2,659 17,646 1,639 417 19,702 

Establishments 23,105 2,668 17,897 2,248 1,071 21,216 

Employment 272,216 0 70,320 58,826 44,136 173,282 

Annual Payroll 5,478,377 48,904 1,224,781 1,096,526 875,432 3,196,739 

Estimated Receipts 39,129,014 261,593 9,040,023 8,989,857 5,143,188 23,173,068 

Tennessee Firms 103,309 11,691 88,610 9,710 2,320 100,640 

Establishments 127,606 11,738 89,608 12,247 5,532 107,387 

Employment 2,193,159 0 369,183 364,316 288,698 1,022,197 

Annual Payroll 55,039,410 478,081 8,124,570 8,672,060 6,831,263 23,627,893 

Estimated Receipts 326,777,474 2,493,132 48,723,786 52,384,256 40,724,603 141,832,645 
Supplementary Tables 193

Texas Firms 359,380 44,134 315,713 32,433 6,732 354,878 

Establishments 447,531 44,313 320,132 42,741 18,731 381,604 

Employment 6,952,556 0 1,292,848 1,226,051 903,807 3,422,706 

Annual Payroll 189,271,216 2,213,649 31,290,093 29,007,134 23,081,610 83,378,837 

Estimated Receipts 1,162,514,274 13,247,289 190,605,110 175,195,820 139,795,053 505,595,983 

Utah Firms 41,104 6,381 34,772 4,058 877 39,707 

Establishments 48,092 6,392 35,108 5,019 2,057 42,184 

Employment 781,890 0 146,558 150,165 101,128 397,851 

Annual Payroll 18,686,470 224,084 3,129,558 3,272,190 2,217,569 8,619,317 

Estimated Receipts 111,117,341 1,034,044 17,440,297 20,169,607 14,883,067 52,492,971 

Virginia Firms 133,698 16,420 116,200 11,818 2,863 130,881 

Establishments 165,545 16,443 117,628 15,519 7,149 140,296 

Employment 2,523,741 0 479,432 428,324 345,352 1,253,108 

Annual Payroll 67,894,416 540,225 11,028,123 10,802,345 9,172,213 31,002,681 

Estimated Receipts 378,891,919 2,552,486 58,976,780 59,882,935 46,811,564 165,671,279 

Vermont Firms 18,771 2,524 16,560 1,368 303 18,231 

Establishments 20,910 2,528 16,706 1,814 847 19,367 

Employment 225,169 0 63,860 49,230 37,848 150,938 

Annual Payroll 5,162,935 51,447 1,242,100 1,066,614 911,196 3,219,910 

Estimated Receipts 32,493,830 265,039 7,477,396 7,395,313 5,273,965 20,146,674 

Washington Firms 132,942 19,432 117,252 11,041 2,340 130,633 

Establishments 155,524 19,546 118,738 14,571 5,846 139,155 

Employment 2,003,304 0 459,059 404,347 284,145 1,147,551 

Annual Payroll 59,426,488 560,892 10,633,664 10,174,033 7,861,981 28,669,678 

Estimated Receipts 337,182,060 2,891,179 61,972,123 63,023,271 44,859,727 169,855,121 

Wisconsin Firms 114,041 13,829 97,732 11,684 2,486 111,902 

Establishments 135,621 13,850 98,965 15,214 6,467 120,646 

Employment 2,220,724 0 421,188 444,159 364,000 1,229,347 

Annual Payroll 56,776,804 376,154 9,007,615 10,101,837 8,826,999 27,936,451 

Estimated Receipts 348,330,016 1,783,560 51,377,617 63,518,659 51,891,362 166,787,638 

West Virginia Firms 34,292 3,819 29,760 2,800 681 33,241 

Establishments 41,079 3,821 30,120 3,661 1,884 35,665 

Employment 529,250 0 122,378 100,458 76,068 298,904 

Annual Payroll 12,321,334 89,902 2,159,547 2,044,114 1,496,859 5,700,520 

Estimated Receipts 77,760,667 458,750 12,988,473 14,253,582 7,934,273 35,176,328 
194 The Annual Report on Small Business and Competition Table A.3 Firms, Establishments, Employment, Annual Payroll, and Estimated Receipts by State, 1996 (Annual Payroll and Estimated Receipts in Thousands of Dollars)—Continued Employment Size of Firm State Total 0 20 20–99 100–499 500 

Wyoming Firms 15,499 2,255 13,663 1,074 257 14,994 

Establishments 17,561 2,270 13,818 1,416 546 15,780 

Employment 157,674 0 51,857 36,091 22,030 109,978 

Annual Payroll 3,567,296 44,480 930,260 713,533 479,208 2,123,001 

Estimated Receipts 27,010,925 295,938 5,631,664 5,471,731 3,188,567 14,291,962 

Notes: Employment is measured in March; thus, some firms will have zero employment and some annual payroll. For state data, a firm is defined as an agg

establishments owned by a parent company within a state. Establishments are locations with active payroll in any quarter. For more detailed data, see http://www

Source: U.S. Small Business Administration, Office of Advocacy, based on data provided by the U.S. Department of Commerce, Bureau of the Census.
Supplementary Tables 195

Table A.4 Firms and Employment by Metropolitan Area and Employment Size of Firm, 1996

Firms by Employment Size Employment by Employment 

Metropolitan Statistical Area Total 20 500 500 Total 20 

Abilene, TX 3,150 2,471 2,866 284 47,034 10,071 27Akron, OH 14,764 12,013 13,998 766 284,894 52,980 151Albany, GA 2,579 1,917 2,268 311 45,158 8,783 24Albany-Schenectady-Troy, NY 17,063 14,199 16,196 867 319,418 58,324 157Albuquerque, NM 15,027 12,161 14,028 999 267,802 50,595 143Alexandria, LA 2,746 2,104 2,482 264 43,941 9,186 26Allentown-Bethlehem-Easton, PA 12,746 10,504 12,020 726 241,219 44,946 117Altoona, PA 2,808 2,184 2,547 261 47,662 9,799 26Amarillo, TX 4,935 3,923 4,522 413 77,515 16,307 42Anchorage, AK 6,786 5,670 6,389 397 99,276 23,301 57Ann Arbor, MI 12,110 10,001 11,536 574 208,336 41,872 113Anniston, AL 2,278 1,796 2,062 216 38,934 7,286 18Appleton-Oshkosh-Neenah, WI 7,675 5,960 7,134 541 175,045 27,014 81Asheville, NC 5,564 4,460 5,097 467 89,095 17,917 47Athens, GA 3,125 2,472 2,815 310 50,948 10,723 25Atlanta, GA 82,963 69,987 79,989 2,974 1,766,165 272,249 760Atlantic-Cape May, NJ 9,157 8,036 8,799 358 137,981 27,206 60Augusta-Aiken, GA-SC 8,023 6,492 7,370 653 167,329 27,217 65Austin-San Marcos, TX 24,090 19,905 22,822 1,268 427,140 78,988 214Bakersfield, CA 9,271 7,568 8,660 611 134,544 32,034 79Baltimore, MD 51,256 43,328 49,490 1,766 943,850 181,444 488Bangor, ME 2,531 1,970 2,324 207 40,657 8,704 25Barnstable-Yarmouth, MA 4,878 4,264 4,671 207 44,546 14,777 30Baton Rouge, LA 12,200 9,686 11,416 784 236,369 42,615 127Beaumont-Port Arthur, TX 7,116 5,740 6,580 536 123,849 24,484 62Bellingham, WA 4,748 3,958 4,475 273 55,750 15,188 37Benton Harbor, MI 3,691 2,973 3,454 237 61,433 12,646 36Bergen-Passaic, NJ 40,731 35,496 39,631 1,100 587,546 129,392 340Billings, MT 4,233 3,387 3,900 333 51,641 13,764 34Biloxi-Gulfport-Pascagoula, MS 6,135 5,104 5,738 397 112,650 21,191 51Binghamton, NY 4,437 3,496 4,078 359 94,115 15,367 41Birmingham, AL 18,814 15,269 17,686 1,128 412,761 66,611 189
196 The Annual Report on Small Business and Competition Table A.4 Firms and Employment by Metropolitan Area and Employment Size of Firm, 1996—Continued Firms by Employment Size Employment by Employment 

Metropolitan Statistical Area Total 20 500 500 Total 20 

Bismarck, ND 2,680 2,110 2,499 181 36,893 8,575 23Bloomington, IN 2,623 2,063 2,402 221 42,925 9,073 23Bloomington-Normal, IL 3,083 2,309 2,727 356 70,114 9,828 25Boise City, ID 10,008 8,202 9,399 609 163,311 33,532 85Boston, MA-NH 81,243 69,022 79,081 2,162 1,772,640 281,010 846Boulder-Longmont, CO 9,009 7,601 8,554 455 126,971 29,318 73Brazoria, TX 3,299 2,653 3,024 275 56,682 11,028 26Bremerton, WA 4,455 3,798 4,200 255 44,587 14,129 30Bridgeport, CT 10,035 8,339 9,490 545 173,630 34,004 94Brockton, MA 4,474 3,617 4,213 261 77,366 15,438 44Brownsville-Harlingen-San Benito, TX 4,862 3,959 4,545 317 74,964 15,699 40Bryan-College Station, TX 2,787 2,146 2,514 273 38,920 9,004 24Buffalo-Niagara Falls, NY 23,306 19,422 22,320 986 467,311 82,881 241Burlington, VT 5,236 4,281 4,895 341 77,914 17,712 47Canton-Massillon, OH 8,554 6,895 8,069 485 159,780 30,097 90Casper, WY 2,407 1,929 2,183 224 23,059 7,439 15Cedar Rapids, IA 4,491 3,387 4,063 428 101,250 15,078 45Champaign-Urbana, IL 3,571 2,725 3,231 340 64,574 11,577 33Charleston-North Charleston, SC 10,894 8,913 10,176 718 177,854 37,658 92Charleston, WV 5,917 4,679 5,373 544 101,269 20,038 50Charlotte-Gastonia-Rock Hill, NC-SC 31,563 25,779 29,745 1,818 686,408 106,948 295Charlottesville, VA 4,008 3,290 3,697 311 58,490 13,281 30Chattanooga, TN-GA 9,457 7,531 8,749 708 186,709 32,768 91Cheyenne, WY 2,067 1,642 1,863 204 24,317 6,705 15Chicago, IL 169,629 144,970 166,122 3,507 3,560,003 590,596 1,759Chico-Paradise, CA 4,142 3,434 3,889 253 48,633 13,811 32Cincinnati, OH–KY–IN 32,513 26,268 30,914 1,599 754,729 114,520 362Clarksville-Hopkinsville, TN–KY 3,181 2,522 2,881 300 49,143 10,507 26Cleveland-Lorain-Elyria, OH 49,181 41,134 47,372 1,809 1,002,500 174,885 510Colorado Springs, CO 10,866 9,013 10,185 681 175,367 34,803 87Columbia, MO 3,293 2,587 2,990 303 56,137 10,763 28Columbia, SC 11,142 8,896 10,259 883 211,364 37,553 96
Supplementary Tables 197

Columbus, GA–AL 4,825 3,842 4,384 441 96,268 16,858 40Columbus, OH 29,018 23,440 27,490 1,528 680,621 100,969 305Corpus Christi, TX 7,715 6,164 7,136 579 118,700 25,679 65Cumberland, MD–WV 2,116 1,726 1,944 172 28,199 7,520 16Dallas, TX 69,290 57,605 66,579 2,711 1,578,019 234,598 682Danbury, CT 5,829 4,885 5,491 338 80,871 17,979 44Danville, VA 2,193 1,766 1,990 203 37,936 7,333 16Davenport-Moline-Rock Island, IA–IL 7,861 6,152 7,274 587 149,224 27,226 78Dayton-Springfield, OH 17,343 13,876 16,335 1,008 413,995 63,850 190Daytona Beach, FL 10,002 8,662 9,522 480 130,076 32,533 71Decatur, AL 2,923 2,319 2,674 249 47,927 9,605 22Decatur, IL 2,524 1,922 2,275 249 52,345 8,383 23Denver, CO 51,193 43,383 49,096 2,097 875,277 165,479 442Des Moines, IA 10,609 8,256 9,796 813 236,866 35,761 109Detroit, MI 86,073 73,155 83,922 2,151 1,847,098 314,301 894Dothan, AL 3,155 2,478 2,858 297 55,311 10,369 27Dover, DE 2,590 2,000 2,331 259 41,719 8,436 20Dubuque, IA 2,326 1,775 2,118 208 47,701 7,899 26Duluth-Superior, MN–WI 5,753 4,753 5,412 341 85,731 21,426 50Dutchess County, NY 5,849 5,021 5,510 339 78,510 18,209 41Eau Claire, WI 3,373 2,628 3,101 272 56,307 11,643 33El Paso, TX 10,189 8,289 9,488 701 187,132 34,206 94Elkhart-Goshen, IN 4,457 3,357 4,149 308 107,612 15,947 55Elmira, NY 1,720 1,249 1,508 212 35,546 5,650 18Enid, OK 1,588 1,229 1,416 172 20,437 5,305 13Erie, PA 5,763 4,528 5,333 430 113,506 20,511 61Eugene-Springfield, OR 8,541 7,088 8,127 414 109,710 29,570 76Evansville-Henderson, IN–KY 6,791 5,301 6,257 534 138,593 23,840 69Fargo-Moorhead, ND–MN 4,604 3,513 4,261 343 81,652 16,069 50Fayetteville, NC 4,565 3,601 4,159 406 79,702 15,700 39Fayetteville-Springdale-Rogers, AR 6,118 5,054 5,747 371 113,989 20,289 50Fitchburg-Leominster, MA 2,833 2,263 2,639 194 44,165 NA 27Flagstaff, UT–AZ 3,110 2,541 2,888 222 35,873 10,618 22Flint, MI 7,853 6,429 7,399 454 153,416 28,144 71Florence, AL 3,095 2,528 2,864 231 52,190 10,616 26Florence, SC 2,900 2,200 2,590 310 52,465 9,478 25Fort Collins-Loveland, CO 6,670 5,575 6,268 402 81,461 21,782 49Fort Lauderdale, FL 42,797 37,820 41,530 1,267 555,329 130,294 308Fort Myers-Cape Coral, FL 9,862 8,238 9,239 623 126,516 31,002 73
198 The Annual Report on Small Business and Competition Table A.4 Firms and Employment by Metropolitan Area and Employment Size of Firm, 1996—Continued Firms by Employment Size Employment by Employment S

Metropolitan Statistical Area Total 20 500 500 Total 20 

Fort Pierce-Port St. Lucie, FL 6,876 5,875 6,471 405 77,099 21,810 47Fort Smith, AR–OK 4,407 3,493 4,075 332 86,910 14,891 39Fort Walton Beach, FL 4,007 3,243 3,672 335 55,455 13,241 32Fort Wayne, IN 10,749 8,449 10,022 727 238,725 38,325 119Fort Worth-Arlington, TX 29,761 24,509 28,394 1,367 585,092 100,873 285Fresno, CA 14,624 12,109 13,832 792 214,250 51,337 127Gadsden, AL 1,982 1,560 1,792 190 32,575 6,768 16Gainesville, FL 4,569 3,680 4,185 384 75,281 16,333 36Galveston-Texas City, TX 4,092 3,277 3,739 353 63,969 12,788 31Gary, IN 11,588 9,464 10,987 601 222,143 42,187 115Glens Falls, NY 2,881 2,383 2,674 207 43,263 8,444 21Goldsboro, NC 2,049 1,586 1,852 197 36,200 6,888 18Grand Forks, ND–MN 2,381 1,828 2,204 177 34,749 8,336 24Grand Junction, CO 3,103 2,537 2,883 220 37,192 10,448 24Grand Rapids-Muskegon-Holland, MI 22,327 18,187 21,342 985 481,743 81,950 252Great Falls, MT 2,284 1,817 2,100 184 26,044 7,252 16Greeley, CO 3,330 2,742 3,095 235 49,421 10,975 25Green Bay, WI 5,235 4,010 4,849 386 113,863 18,051 57Greens.-Winston-Salem-High Point, NC 26,122 21,499 24,868 1,254 572,822 89,665 268Greenville, NC 2,617 1,988 2,353 264 46,128 8,171 22Greenville-Spartanburg-Anderson, SC 19,540 16,169 18,470 1,070 441,863 67,661 179Hagerstown, MD 2,777 2,139 2,516 261 48,722 9,395 25Hamilton-Middletown, OH 5,450 4,312 5,085 365 97,553 19,028 54Harrisburg-Lebanon-Carlisle, PA 12,153 9,675 11,297 856 277,030 43,158 122Hartford, CT 25,875 21,662 24,727 1,148 520,714 90,569 253Hattiesburg, MS 2,460 1,930 2,215 245 37,608 8,415 20Hickory-Morganton, NC 6,712 5,396 6,304 408 159,391 23,265 73Honolulu, HI 17,428 14,653 16,726 702 319,923 63,294 172Houma, LA 3,778 3,076 3,556 222 59,014 13,544 38Houston, TX 76,268 64,437 73,745 2,523 1,589,024 262,791 724Huntington-Ashland, WV–KY–OH 5,893 4,803 5,488 405 94,756 20,708 52Huntsville, AL 6,918 5,468 6,349 569 136,393 22,316 62
Supplementary Tables 199

Indianapolis, IN 33,076 26,956 31,397 1,679 713,434 116,697 344Iowa City, IA 2,242 1,719 2,054 188 42,746 7,757 21Jackson, MI 3,080 2,407 2,814 266 51,672 11,138 30Jackson, MS 9,145 7,157 8,382 763 182,999 30,257 87Jackson, TN 2,616 1,933 2,306 310 48,329 8,671 24Jacksonville, FL 22,077 18,383 20,812 1,265 427,685 74,372 187Jacksonville, NC 2,178 1,774 2,012 166 25,569 7,508 16Jamestown, NY 2,858 2,322 2,650 208 45,720 9,589 23Janesville-Beloit, WI 2,961 2,328 2,709 252 58,064 10,528 27Jersey City, NJ 11,740 9,900 11,261 479 204,318 35,527 107Johnson City-Kingsport-Bristol, TN–VA 8,659 7,171 8,106 553 171,135 30,413 77Johnstown, PA 4,851 3,997 4,561 290 70,025 16,811 45Jonesboro, AR 2,034 1,582 1,855 179 31,174 6,509 16Joplin, MO 3,602 2,896 3,322 280 64,676 11,877 30Kalamazoo-Battle Creek, MI 8,921 7,060 8,339 582 185,282 32,281 90Kankakee, IL 2,124 1,648 1,898 226 50,479 7,089 16Kansas City, MO–KS 38,299 31,545 36,579 1,720 776,757 131,581 387Kenosha, WI 2,770 2,147 2,518 252 45,157 9,045 25Killeen-Temple, TX 3,946 3,172 3,626 320 71,062 13,655 32Knoxville, TN 15,459 12,590 14,498 961 279,992 52,639 139Kokomo, IN 2,110 1,597 1,866 244 49,155 7,126 17La Crosse, WI–MN 3,014 2,342 2,758 256 56,774 10,428 29Lafayette, LA 8,331 6,749 7,860 471 125,769 29,110 80Lafayette, IN 3,342 2,572 3,005 337 69,675 11,532 30Lake Charles, LA 3,637 2,805 3,312 325 67,693 12,470 35Lakeland-Winter Haven, FL 8,236 6,734 7,674 562 151,890 26,689 70Lancaster, PA 9,611 7,587 9,043 568 190,234 34,072 112Lansing-East Lansing, MI 8,859 7,024 8,262 597 158,764 31,599 85Laredo, TX 3,340 2,706 3,073 267 40,404 11,054 25Las Cruces, NM 2,834 2,258 2,610 224 32,315 9,383 22Las Vegas, NV–AZ 22,897 18,778 21,737 1,160 518,619 77,418 224Lawrence, KS 2,302 1,828 2,116 186 32,071 7,554 20Lawrence, MA–NH 7,768 6,418 7,335 433 133,508 26,196 70Lawton, OK 1,956 1,558 1,770 186 26,778 6,714 14Lewiston-Auburn, ME 2,293 1,814 2,130 163 38,181 7,564 21Lexington, KY 10,196 8,054 9,468 728 204,055 34,856 101Lima, OH 3,456 2,681 3,123 333 66,411 12,438 31Lincoln, NE 5,679 4,489 5,279 400 110,355 20,279 56Little Rock-North Little Rock, AR 13,307 10,816 12,453 854 261,635 45,681 127
200 The Annual Report on Small Business and Competition Table A.4 Firms and Employment by Metropolitan Area and Employment Size of Firm, 1996—Continued Firms by Employment Size Employment by Employment 

Metropolitan Statistical Area Total 20 500 500 Total 20 

Longview-Marshall, TX 4,892 3,862 4,504 388 72,777 16,265 42Los Angeles-Long Beach, CA 187,356 161,597 184,398 2,958 3,469,378 628,994 1,835Louisville, KY–IN 21,979 17,687 20,770 1,209 475,638 76,932 237Lowell, MA–NH 5,430 4,442 5,125 305 96,861 18,599 53Lubbock, TX 5,753 4,499 5,277 476 87,681 19,108 52Lynchburg, VA 4,605 3,726 4,257 348 85,224 15,313 41Macon, GA 6,173 4,878 5,624 549 114,053 20,626 53Madison, WI 10,042 7,858 9,412 630 201,340 35,044 112Manchester, NH 5,066 3,936 4,605 461 88,545 16,451 46Mansfield, OH 3,655 2,848 3,334 321 71,482 12,252 36McAllen-Edinburg-Mission, TX 6,662 5,517 6,310 352 93,187 22,573 59Medford-Ashland, OR 4,534 3,761 4,251 283 56,151 14,831 34Melbourne-Titusville-Palm Bay, FL 9,651 8,209 9,100 551 139,568 31,826 67Memphis, TN–AR–MS 19,741 15,549 18,371 1,370 478,408 69,267 212Merced, CA 2,603 2,093 2,388 215 34,703 8,432 19Miami, FL 60,580 54,072 59,236 1,344 820,740 192,505 464Middlesex-Somerset-Hunterdon, NJ 28,003 23,756 26,779 1,224 550,244 89,214 244Milwaukee-Waukesha, WI 33,155 26,948 31,793 1,362 741,527 119,162 384Minneapolis-St. Paul, MN–WI 64,699 53,875 62,725 1,974 1,448,560 218,259 722Mobile, AL 11,072 8,898 10,317 755 188,063 37,404 105Modesto, CA 6,987 5,716 6,548 439 103,100 24,068 58Monmouth-Ocean, NJ 25,092 22,486 24,457 635 282,922 80,644 175Monroe, LA 3,653 2,865 3,349 304 58,011 12,669 34Montgomery, AL 6,701 5,255 6,149 552 120,241 23,101 63Muncie, IN 2,399 1,766 2,131 268 48,431 8,016 25Myrtle Beach, SC 5,894 4,833 5,526 368 75,100 18,947 49Naples, FL 6,900 5,932 6,550 350 73,305 21,124 47Nashua, NH 4,589 3,595 4,225 364 83,400 14,523 41Nashville, TN 26,466 21,690 24,983 1,483 580,090 89,647 256Nassau-Suffolk, NY 78,636 71,107 77,415 1,221 985,352 248,775 576New Bedford, MA 3,630 2,998 3,407 223 54,259 12,118 30New Haven-Meriden, CT 12,951 10,789 12,310 641 226,653 43,562 115
Supplementary Tables 201

New London-Norwich, CT–RI 6,371 5,332 6,013 358 113,254 21,817 53New Orleans, LA 26,372 21,661 25,074 1,298 513,007 91,660 264New York, NY 208,911 186,872 206,358 2,553 3,418,034 658,914 1,778Newark, NJ 51,445 44,839 50,037 1,408 848,653 168,600 438Newburgh, NY–PA 7,664 6,567 7,262 402 90,787 24,706 57Norfolk-Va. Beach-Newport News, VA 26,542 22,094 25,324 1,218 509,128 96,655 255Oakland, CA 47,066 39,570 45,347 1,719 825,589 161,310 430Ocala, FL 4,672 3,819 4,288 384 61,947 14,511 32Odessa-Midland, TX 6,359 5,177 5,912 447 82,272 21,809 50Oklahoma City, OK 24,231 20,317 23,105 1,126 399,419 81,069 217Olympia, WA 4,478 3,763 4,195 283 48,576 14,639 30Omaha, NE–IA 15,356 12,296 14,391 965 342,527 51,643 156Orange County, CA 62,488 52,110 60,478 2,010 1,169,947 213,593 620Orlando, FL 34,369 28,925 32,750 1,619 666,338 109,255 290Owensboro, KY 2,114 1,618 1,900 214 36,968 7,469 20Panama City, FL 3,664 2,942 3,365 299 50,988 13,136 31Parkersburg-Marietta, WV–OH 3,516 2,788 3,215 301 57,145 11,764 31Pensacola, FL 7,298 5,955 6,732 566 120,556 24,201 56Peoria-Pekin, IL 7,193 5,745 6,694 499 147,739 25,187 74Philadelphia, PA–NJ 102,347 87,936 99,815 2,532 2,023,612 363,082 997Phoenix-Mesa, AZ 55,678 46,715 53,584 2,094 1,138,425 188,157 544Pine Bluff, AR 1,543 1,190 1,386 157 27,131 5,121 12Pittsburgh, PA 48,583 41,177 46,947 1,636 976,666 174,706 489Pittsfield, MA 2,362 1,869 2,169 193 NA NA Pocatello, ID 1,664 1,265 1,489 175 21,443 5,670 12Portland, ME 7,676 6,218 7,143 533 116,466 24,578 64Portland-Vancouver, OR–WA 45,750 38,743 44,097 1,653 780,360 155,335 423Portsmouth-Rochester, NH–ME 6,143 5,080 5,776 367 88,587 20,237 48Providence-Fall River-Warwick, RI–MA 27,209 23,406 26,362 847 435,685 90,048 244Provo-Orem, UT 5,440 4,386 5,123 317 116,096 18,991 54Pueblo, CO 2,794 2,255 2,548 246 40,910 9,583 21Punta Gorda, FL 2,575 2,166 2,377 198 28,905 8,128 15Racine, WI 3,818 3,025 3,538 280 72,345 13,384 38Raleigh-Durham-Chapel Hill, NC 25,030 20,864 23,738 1,292 495,222 84,607 221Rapid City, SD 2,928 2,375 2,723 205 36,687 9,680 24Reading, PA 6,931 5,533 6,467 464 138,279 24,950 70Redding, CA 4,118 3,456 3,858 260 42,829 14,341 30Reno, NV 9,078 7,336 8,395 683 150,877 29,367 73Richland-Kennewick-Pasco, WA 3,785 2,999 3,468 317 61,297 12,344 28
202 The Annual Report on Small Business and Competition Table A.4 Firms and Employment by Metropolitan Area and Employment Size of Firm, 1996—Continued Firms by Employment Size Employment by Employment 

Metropolitan Statistical Area Total 20 500 500 Total 20 

Richmond-Petersburg, VA 21,140 17,279 19,924 1,216 429,155 72,794 194Riverside-San Bernardino, CA 41,161 34,498 39,671 1,490 694,779 141,834 384Roanoke, VA 5,962 4,614 5,387 575 123,641 19,239 56Rochester, MN 2,454 1,821 2,190 264 62,446 7,901 24Rochester, NY 19,791 16,516 18,879 912 450,509 68,870 198Rockford, IL 7,747 6,139 7,207 540 156,809 26,903 80Rocky Mount, NC 2,787 2,150 2,524 263 57,580 9,007 26Sacramento, CA 29,212 24,604 27,977 1,235 462,321 100,510 240Saginaw-Bay City-Midland, MI 8,185 6,576 7,658 527 150,814 29,932 78St. Cloud, MN 3,927 3,105 3,653 274 73,455 13,761 39St. Joseph, MO 2,356 1,826 2,124 232 38,276 7,685 20St. Louis, MO–IL 54,758 45,993 52,868 1,890 1,143,030 193,155 552Salem, OR 7,492 6,284 7,115 377 98,978 25,582 61Salinas, CA 7,416 6,171 6,987 429 96,913 25,357 59Salt Lake City-Ogden, UT 26,215 21,555 24,992 1,223 537,434 90,785 261San Angelo, TX 2,314 1,816 2,111 203 32,524 7,296 18San Antonio, TX 26,390 21,910 25,072 1,318 536,418 91,638 244San Diego, CA 52,500 44,927 50,878 1,622 874,076 178,406 484San Francisco, CA 52,247 44,435 50,720 1,527 883,390 175,001 472San Jose, CA 36,474 30,077 35,024 1,450 845,089 124,419 377San Luis Obispo-Atasc.-Paso Robles, CA 5,677 4,870 5,444 233 61,674 20,085 42Santa Barbara-Santa Maria-Lompoc, CA 9,311 7,780 8,845 466 122,652 32,493 80Santa Cruz-Watsonville, CA 6,015 5,156 5,766 249 70,051 20,734 47Santa Fe, NM 4,442 3,724 4,167 275 48,569 14,537 32Santa Rosa, CA 11,526 9,854 11,048 478 138,949 39,042 93Sarasota-Bradenton, FL 14,137 12,202 13,461 676 189,927 43,890 100Savannah, GA 6,230 4,838 5,645 585 108,893 20,662 53Scranton-Wilkes-Barre-Hazleton, PA 12,839 10,633 12,229 610 238,414 42,599 130Seattle-Bellevue-Everett, WA 62,428 53,474 60,545 1,883 1,072,021 208,914 553Sharon, PA 2,573 2,010 2,341 232 42,503 8,859 24Sheboygan, WI 2,256 1,752 2,084 172 51,278 8,169 24Sherman-Denison, TX 2,252 1,796 2,027 225 35,053 7,374 17
Supplementary Tables 203

Shreveport-Bossier City, LA 7,742 6,131 7,151 591 144,761 26,801 74Sioux City, IA–NE 2,951 2,208 2,694 257 59,189 9,823 30Sioux Falls, SD 4,732 3,641 4,337 395 90,782 15,455 46South Bend, IN 5,763 4,388 5,239 524 116,525 20,103 59Spokane, WA 10,044 8,163 9,461 583 153,967 34,136 91Springfield, IL 4,966 3,907 4,535 431 78,592 16,296 40Springfield, MO 8,118 6,598 7,606 512 135,211 26,987 69Springfield, MA 11,390 9,375 10,814 576 215,075 40,948 113Stamford-Norwalk, CT 13,337 11,219 12,691 646 208,242 41,862 107State College, PA 2,724 2,116 2,501 223 44,841 9,002 26Steubenville-Weirton, OH–WV 2,539 2,076 2,353 186 44,309 8,686 19Stockton-Lodi, CA 8,706 7,016 8,111 595 132,449 28,809 75Sumter, SC 1,665 1,278 1,482 183 34,296 5,743 16Syracuse, NY 14,292 11,679 13,504 788 278,843 48,917 138Tacoma, WA 13,061 10,927 12,465 596 182,656 43,313 109Tallahassee, FL 5,991 4,770 5,477 514 92,097 19,973 48Tampa-St. Petersburg-Clearwater, FL 49,597 42,984 47,830 1,767 892,869 162,046 398Terre Haute, IN 3,090 2,425 2,794 296 57,172 10,536 27Texarkana, TX-Texarkana, AR 2,510 1,942 2,281 229 37,872 8,602 21Toledo, OH 12,450 9,865 11,683 767 272,853 45,015 135Topeka, KS 4,103 3,163 3,746 357 77,006 13,190 39Trenton, NJ 8,074 6,536 7,524 550 155,206 26,530 74Tucson, AZ 15,193 12,508 14,365 828 253,420 53,347 144Tulsa, OK 18,479 15,252 17,507 972 321,016 61,145 170Tuscaloosa, AL 3,448 2,704 3,171 277 61,314 12,542 31Tyler, TX 4,318 3,389 3,939 379 64,942 14,007 35Utica-Rome, NY 5,531 4,628 5,186 345 98,717 18,770 51Vallejo-Fairfield-Napa, CA 8,576 7,074 8,049 527 118,973 29,755 69Ventura, CA 14,410 11,990 13,677 733 209,265 48,804 123Victoria, TX 1,988 1,535 1,772 216 26,182 6,859 15Vineland-Millville-Bridgeton, NJ 2,839 2,323 2,651 188 44,460 9,742 25Visalia-Tulare-Porterville, CA 5,279 4,315 4,943 336 74,189 18,157 47Waco, TX 4,277 3,331 3,877 400 80,357 14,211 38Washington, DC–MD–VA–WV 98,398 83,922 95,954 2,444 1,900,513 344,990 987Waterbury, CT 4,799 3,973 4,537 262 69,294 NA 43Waterloo-Cedar Falls, IA 2,816 2,100 2,543 273 56,371 9,656 28Wausau, WI 3,011 2,287 2,762 249 56,704 10,147 29West Palm Beach-Boca Raton, FL 30,394 26,731 29,403 991 384,573 95,389 219Wheeling, WV–OH 3,360 2,724 3,096 264 50,097 11,868 28
204 The Annual Report on Small Business and Competition Table A.4 Firms and Employment by Metropolitan Area and Employment Size of Firm, 1996—Continued Firms by Employment Size Employment by Employment 

Metropolitan Statistical Area Total 20 500 500 Total 20 

Wichita, KS 11,531 9,233 10,817 714 235,000 39,465 117Wichita Falls, TX 3,195 2,541 2,903 292 47,565 10,628 24Williamsport, PA 2,623 2,032 2,381 242 47,176 8,781 25Wilmington-Newark, DE–MD 14,017 11,234 12,956 1,061 264,508 43,258 118Wilmington, NC 6,350 5,227 5,935 415 82,274 21,255 49Worcester, MA–CT 9,985 8,091 9,398 587 198,288 32,736 102Yakima, WA 4,299 3,516 4,045 254 56,849 14,512 40Yolo, CA 3,044 2,298 2,747 297 52,237 9,981 27York, PA 6,867 5,411 6,388 479 146,714 24,303 75Youngstown-Warren, OH 11,902 9,909 11,387 515 209,031 43,618 119Yuba City, CA 2,280 1,855 2,101 179 24,600 7,312 15Yuma, AZ 2,150 1,658 1,950 200 29,702 7,163 18

NA=Not available. Notes: For metropolitan statistical area data, a firm is defined as an aggregation of all establishments owned by a parent company within an MSA. Establis

with active payroll in any quarter. Employment is measured in March; thus, some firms will have no employment and some annual payroll. For more http://www.sba.gov/advo/stats/. Source: U.S. Small Business Administration, Office of Advocacy, based on data provided by the U.S. Department of Commerce, Bureau of the Census.
Supplementary Tables 205

Table A.5 Employer Firms by Major Industry and Employment Size of Firm, 1996 (Annual Payroll and Estimated Receipts in Thousands of Dollars)

Employment Size of Firm

Industry Total 0 20 20–99 100–499 500 

Total, All Industries

Firms 5,478,047 717,991 4,909,983 476,312 76,136 5,462,431 

Establishments 6,738,476 720,241 4,976,014 636,285 280,635 5,892,934 

Employment 102,187,297 0 19,881,502 18,643,192 14,649,808 53,174,502 

Annual Payroll 2,848,623,049 27,583,182 481,008,640 465,229,685 384,020,002 1,330,258,327 

Estimated Receipts 16,654,636,336 138,006,624 2,805,149,395 2,817,214,145 2,168,502,766 7,790,866,306 

Agricultural Services, 

Forestry and Fishing

Firms 111,513 24,936 106,313 4,671 386 111,370 

Establishments 113,128 24,938 106,371 4,836 637 111,844 

Employment 664,356 0 374,787 158,616 53,530 586,933 

Annual Payroll 13,290,974 505,195 7,261,203 3,169,143 1,031,613 11,461,959 

Estimated Receipts 40,701,517 1,625,058 20,599,356 8,549,901 3,627,597 32,776,854 

Mining

Firms 21,102 2,414 17,838 2,328 548 20,714 

Establishments 26,874 2,424 18,038 2,840 1,476 22,354 

Employment 574,328 0 73,098 86,295 77,995 237,388 

Annual Payroll 26,489,852 164,622 2,278,619 3,021,095 3,284,976 8,584,690 

Estimated Receipts 163,886,514 891,901 17,180,118 18,385,837 18,877,203 54,443,158 

Construction

Firms 651,915 106,730 601,725 44,897 4,631 651,253 

Establishments 658,402 106,737 601,935 45,630 6,093 653,658 

Employment 5,207,460 0 2,264,980 1,643,794 750,682 4,659,456 

Annual Payroll 160,892,030 3,175,447 59,034,782 52,510,825 27,347,360 138,892,967 

Estimated Receipts 726,935,549 14,705,333 281,025,572 223,963,410 120,959,118 625,948,100 
206 The Annual Report on Small Business and Competition Table A.5 Employer Firms by Major Industry and Employment Size of Firm, 1996 (Annual Payroll and Estimated Receipts in Thousands of Dollars)—Continued Employment Size of Firm Industry Total 0 20 20–99 100–499 500 

Manufacturing Firms 332,565 29,008 244,110 67,057 16,475 327,642 

Establishments 393,356 29,031 244,583 71,421 28,174 344,178 

Employment 18,558,485 0 1,362,365 2,775,718 3,005,042 7,143,125 

Annual Payroll 659,657,111 2,124,329 35,520,129 78,888,124 90,253,462 204,661,715 

Estimated Receipts 3,546,269,039 12,563,794 160,297,454 361,221,182 480,765,372 1,002,284,008 

Transportation, Communications, and Public Utilities Firms 217,710 31,210 191,306 20,805 3,942 216,053 

Establishments 295,464 31,266 193,385 26,647 12,611 232,643 

Employment 6,057,265 0 748,806 797,288 635,867 2,181,961 

Annual Payroll 211,886,361 1,144,993 17,420,287 20,406,195 18,738,405 56,564,887 

Estimated Receipts 1,078,776,322 4,909,717 82,764,634 86,120,959 81,235,978 250,121,571 

Wholesale Trade

Firms 416,958 43,407 358,215 47,232 8,159 413,606 

Establishments 531,514 43,549 364,912 68,944 28,992 462,848 

Employment 6,664,886 0 1,636,885 1,713,269 1,044,493 4,394,647 

Annual Payroll 240,322,798 1,797,841 51,347,094 55,350,532 36,012,208 142,709,834 

Estimated Receipts 4,045,198,787 32,177,510 924,044,623 1,004,232,674 602,298,331 2,530,575,628 

Retail Trade

Firms 1,103,549 138,428 970,910 116,297 13,305 1,100,512 

Establishments 1,579,291 139,469 992,901 165,003 76,973 1,234,877 

Employment 21,487,341 0 4,422,117 4,367,106 2,221,268 11,010,491 

Annual Payroll 317,660,125 3,552,866 59,902,569 65,682,488 36,261,174 161,846,231 

Estimated Receipts 2,424,796,916 23,702,023 491,803,022 546,173,234 302,825,673 1,340,801,929 
Supplementary Tables 207

Finance, Insurance, 

and Real Estate

Firms 453,319 58,066 419,719 24,707 5,783 450,209 

Establishments 650,131 58,263 427,346 44,928 29,559 501,833 

Employment 7,185,291 0 1,303,771 942,724 820,996 3,067,491 

Annual Payroll 284,755,623 2,425,992 38,641,722 31,624,997 29,824,247 100,090,966 

Estimated Receipts 2,260,550,402 12,027,744 208,432,475 177,926,476 210,380,695 596,739,646 

Services

Firms 2,175,597 267,338 1,975,649 158,667 32,635 2,166,951 

Establishments 2,461,303 268,024 1,997,740 205,826 96,120 2,299,686 

Employment 35,747,905 0 7,660,695 6,152,400 6,039,935 19,853,030 

Annual Payroll 932,959,203 12,341,737 208,948,086 154,521,463 141,266,557 504,736,106 

Estimated Receipts 2,363,338,307 33,419,017 615,131,486 390,328,144 347,532,799 1,352,992,429 

Unclassified

Firms 29,013 16,540 28,803 210 0 29,013 

Establishments 29,013 16,540 28,803 210 0 29,013 

Employment 39,980 0 33,998 5,982 0 39,980 

Annual Payroll 708,972 350,160 654,149 54,823 0 708,972 

Estimated Receipts 4,182,983 1,984,527 3,870,655 312,328 0 4,182,983 

Notes: Employment is measured in March; thus, some firms will have zero employment and some annual payroll. For industry data, a firm is defined as a

establishments owned by a parent company within an industry. Establishments are locations with active payroll in any quarter. For more detailed data, see http://www

Source: U.S. Small Business Administration, Office of Advocacy, based on data provided by the U.S. Department of Commerce, Bureau of the Census.
208 The Annual Report on Small Business and Competition Table A.6 Employer Firms, Establishments, Employment, Payroll, and Receipts by Major Industry and Firm Size, 

(Annual Payroll and Estimated Receipts in Thousands of Dollars) Estimated Receipt Size of Firm (Millions of Dollars) Industry Total 1 1–2.9 3–4.9 5 5–7.49 7.5–99

Total, All Industries Firms 5,478,047 4,361,647 668,488 164,733 5,194,868 89,277 180,5

Establishments 6,738,476 4,399,280 737,787 211,028 5,348,095 131,622 478,9

Employment 102,187,297 16,953,892 11,081,179 5,108,073 33,143,144 3,981,359 21,614,7

Annual Payroll 2,848,623,049 266,172,292 258,602,148 133,605,746 658,380,186 108,233,527 640,013,8

Estimated Receipts 16,654,636,336 1,098,368,819 1,132,279,773 633,728,839 2,864,377,431 544,075,950 3,813,027,6

Agricultural Services, Firms 111,513 105,840 4,266 583 110,689 249 4

Forestry and Fishing Establishments 113,128 105,883 4,336 615 110,834 269 7

Employment 664,356 397,792 101,331 29,371 528,494 16,860 N

Annual Payroll 13,290,974 6,757,631 2,452,589 725,255 9,935,475 427,172 N

Estimated Receipts 40,701,517 18,019,144 6,634,861 2,165,801 26,819,806 1,380,939 N

Mining Firms 21,102 13,740 3,811 1,057 18,608 614 1,4

Establishments 26,874 13,799 3,931 1,153 18,883 715 2,6

Employment 574,328 50,168 45,417 20,801 116,386 17,297 111,4

Annual Payroll 26,489,852 1,057,263 1,367,322 729,983 3,154,568 634,973 4,809,6

Estimated Receipts 163,886,514 4,276,724 6,497,207 3,945,233 14,719,164 3,551,509 26,259,2

Construction Firms 651,915 533,400 78,643 17,300 629,343 8,637 13,2

Establishments 658,402 533,481 78,830 17,458 629,769 8,804 15,3

Employment 5,207,460 1,638,598 1,081,956 463,962 3,184,516 334,726 1,182,4

Annual Payroll 160,892,030 31,246,046 31,274,965 15,701,066 78,222,077 12,208,982 48,479,1

Estimated Receipts 726,935,549 139,014,895 131,824,796 65,844,305 336,683,996 51,818,968 228,167,1

Manufacturing Firms 332,565 200,131 62,760 20,871 283,762 12,809 31,3

Establishments 393,356 200,360 63,473 21,768 285,601 13,799 47,1

Employment 18,558,485 902,742 1,123,092 706,200 2,732,034 620,639 4,256,7

Annual Payroll 659,657,111 15,901,505 27,755,339 19,514,970 63,171,814 17,981,586 130,585,8

Estimated Receipts 3,546,269,039 63,022,645 110,030,113 79,787,274 252,840,032 76,667,648 648,809,3

Transportation, Firms 217,710 174,594 25,632 5,936 206,162 3,229 6,8

Communications, and Establishments 295,464 175,942 27,778 7,559 211,279 4,667 19,5Public Utilities Employment 6,057,265 624,521 457,054 219,118 1,300,693 173,356 902,1

Annual Payroll 211,886,361 10,243,563 10,927,266 5,846,780 27,017,609 4,866,665 28,367,2

Estimated Receipts 1,078,776,322 43,719,085 42,796,399 22,315,759 108,831,243 18,826,117 121,827,4
Supplementary Tables 209

Wholesale Trade Firms 416,958 158,461 111,619 45,783 315,863 28,675 66,0

Establishments 531,514 158,891 113,237 47,875 320,003 31,225 100,6

Employment 6,664,886 291,517 599,020 423,061 1,313,598 376,527 2,257,0

Annual Payroll 240,322,798 4,392,451 13,711,444 12,128,265 30,232,160 11,875,177 81,361,9

Estimated Receipts 4,045,198,787 65,198,438 202,664,254 176,579,776 444,442,468 173,301,933 1,329,190,7

Retail Trade Firms 1,103,549 875,215 152,021 28,517 1,055,753 13,829 31,4

Establishments 1,579,291 888,161 176,335 44,738 1,109,234 28,381 127,9

Employment 21,487,341 4,171,904 2,715,513 952,585 7,840,002 665,980 3,298,5

Annual Payroll 317,660,125 38,683,485 36,487,180 14,808,186 89,978,851 10,709,822 66,137,3

Estimated Receipts 2,424,796,916 248,845,447 249,956,847 106,647,327 605,449,621 80,902,815 629,569,2

Finance, Insurance, Firms 453,319 371,410 48,159 10,673 430,242 5,893 13,9

and Real Estate Establishments 650,131 374,254 53,924 14,966 443,144 10,015 49,3

Employment 7,185,291 931,210 541,705 247,866 1,720,781 199,604 1,160,0

Annual Payroll 284,755,623 18,446,425 17,265,604 8,486,494 44,198,523 6,907,911 44,441,4

Estimated Receipts 2,260,550,402 90,792,955 79,391,521 39,987,022 210,171,498 34,390,408 258,536,4

Services Firms 2,175,597 1,901,959 184,406 36,322 2,122,687 17,519 31,3

Establishments 2,461,303 1,919,998 215,518 54,854 2,190,370 33,728 115,4

Employment 35,747,905 7,910,434 4,412,102 2,044,562 14,367,098 1,576,032 8,394,8

Annual Payroll 932,959,203 138,981,951 117,246,046 55,638,313 311,866,310 42,602,093 234,537,1

Estimated Receipts 2,363,338,307 422,715,703 301,818,776 136,304,192 860,838,671 103,126,827 565,452,2

Unclassified Firms 29,013 28,511 425 42 28,978 19 

Establishments 29,013 28,511 425 42 28,978 19 

Employment 39,980 35,006 3,989 547 39,542 338 N

Annual Payroll 708,972 461,972 114,393 26,434 602,799 19,146 N

Estimated Receipts 4,182,983 2,763,783 664,999 152,150 3,580,932 108,786 N

NA=Not available.Note: For industry data, a firm is defined as an aggregation of all establishments owned by a parent company within an industry. Establishments are location

in any quarter. Employment is measured in March. For more detailed data, see http://www.sba.gov/advo/stats/.

Source: U.S. Small Business Administration, Office of Advocacy, based on data provided by the U.S. Department of Commerce, Bureau of Census.
210 The Annual Report on Small Business and Competition

Total Returns 20,052.9 21,990.2 22,446.0 23,240.7

Under 25,0002 12,037.4 13,091.1 13,278.6 13,593.3

25,000–49,999 2,038.2 2,263.8 2,404.6 2,517.5

50,000–99,999 1,774.4 1,966.9 1,981.7 2,098.9

100,000–499,999 2,828.3 3,086.1 3,119.1 3,291.0

500,000–999,999 610.8 682.8 719.5 749.1

1,000,000 or more 763.8 899.5 942.5 990.9

Corporations, Total 3,716.7 4,342.4 4,441.2 4,631.4

Under 25,0002 878.7 1,028.9 1,030.0 1,059.7

25,000–49,999 252.0 275.3 288.4 286.0

50,000–99,999 358.9 427.3 446.8 480.4

100,000–249,999 661.7 744.9 736.1 798.4

250,000–499,999 500.0 611.1 623.9 645.7

500,000–999,999 416.0 488.6 512.7 520.8

1,000,000 or more 649.4 766.3 803.3 840.4

Partnerships, Total 3 1,553.6 1,493.9 1,580.9 1,654.2

Under 25,0002 962.6 899.1 931.3 956.2

25,000–49,999 126.0 120.8 133.5 140.6

50,000–99,999 133.4 131.0 142.3 145.7

100,000–249,999 139.9 147.2 158.6 174.4

250,000–499,999 82.5 80.3 86.5 94.0

500,000–999,999 52.1 53.6 59.4 63.6

1,000,000 or more 57.1 61.9 69.3 79.7

Nonfarm Sole

Proprietorships, Total 14,782.6 16,153.9 16,423.9 16,955.1

Under 2,5002 3,750.1 4,205.2 4,139.5 4,261.2

2,500–4,999 1,714.5 1,819.1 1,954.1 1,963.9

5,000–9,999 2,011.7 2,175.7 2,254.4 2,258.6

10,000–24,999 2,719.8 2,963.1 2,969.3 3,093.7

25,000–49,999 1,660.2 1,867.7 1,982.7 2,090.9

50,000–99,999 1,282.1 1,408.6 1,392.6 1,472.8

100,000–499,999 1,444.2 1,502.6 1,514.0 1,578.5

500,000–999,999 142.7 140.6 147.4 164.7

1,000,000 or more 57.3 71.3 69.9 70.8

1 Size classes are based on the sum of business receipts (gross amounts from sales and operations and

gross rents for all industries) except for the finance, insurance, and real estate industry. For this industry, positive net rental income is included, which is the sum of business receipts and investment income. 2 Includes returns with no receipts as defined above.

3 Total receipts include, in part, only the net income or loss from farming and rentals. An effort is made to

include rental (although not farm) gross receipts in the receipts used for the size distribution.

Note: Business tax returns overcount the number of businesses when businesses file more than

one tax return.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of the Treasury, Internal Revenue Service.
Supplementary Tables 211

Firms 1995–1996 Firm Births 597,792 572,442 597,503 289 95.8 100.0

Firm Deaths 512,402 485,509 512,024 378 94.8 99.9

Net Change 85,390 86,933 85,479 89 —. —.

1994–1995 Firm Births 594,369 568,896 594,119 250 95.7 100.0

Firm Deaths 497,246 472,441 496,874 372 95.0 99.9

Net Change 97,123 96,455 97,245 122 99.3 —.

1993–1994 Firm Births 570,587 546,437 570,337 250 95.8 100.0

Firm Deaths 503,563 476,667 503,125 438 94.7 99.9

Net Change 67,024 69,770 67,212 188 —. —.

1992–1993 Firm Births 564,504 539,601 564,093 411 95.6 99.9

Firm Deaths 492,651 466,550 492,266 385 94.7 99.9

Net Change 71,853 73,051 71,827 26 — 100.0 .

1991–1992 Firm Births 544,596 519,014 544,278 318 95.3 99.9

Firm Deaths 521,606 492,746 521,176 430 94.5 99.9

Net Change 22,990 26,268 23,102 112 —. —.

1990–1991 Firm Births 541,141 515,870 540,889 252 95.3 100.0

Firm Deaths 546,518 516,964 546,149 369 94.6 99.9

Net Change 5,377 1,094 5,260 117 —. —.

1989–1990 Firm Births 584,892 558,478 584,660 232 95.5 100.0

Firm Deaths 531,400 502,685 530,991 409 94.6 99.9

Net Change 53,492 55,793 53,669 177 —. —.

1990–1995 Firm Births 1,797,117 1,679,831 1,795,661 1,456 93.5 99.9

Firm Deaths 1,546,705 1,426,040 1,545,007 1,698 92.2 99.9

Net Change 250,412 253,791 250,654 242 —. —.

Employment 1995–1996 Firm Births 3,255,676 1,844,516 3,055,596 200,080 56.7 93.9

Firm Deaths 3,099,589 1,559,598 2,808,493 291,096 50.3 90.6

Continuing

Firms 1,711,158 1,150,535 1,212,409 498,749 67.2 70.9

Net Change 1,867,245 1,435,453 1,459,512 407,733 76.9 78.2

1994–1995 Firm Births 3,322,001 1,836,153 3,049,456 272,545 55.3 91.8

Firm Deaths 2,822,627 1,516,552 2,633,587 189,040 53.7 93.3

Continuing 

Firms 3,092,193 1,358,182 2,197,436 894,757 43.9 71.1

Net Change 3,591,567 1,677,783 2,613,305 978,262 46.7 72.8

1993–1994 Firm Births 3,105,753 1,760,322 2,889,507 216,246 56.7 93.0

Firm Deaths 3,077,307 1,549,072 2,800,933 276,374 50.3 91.0

Continuing 

Firms 1,916,014 1,100,290 1,504,776 411,238 57.4 78.5

Net Change 1,944,460 1,311,540 1,593,350 351,110 67.5 81.9 

1992–1993 Firm Births 3,438,106 1,750,662 3,053,765 384,341 50.9 88.8

Firm Deaths 2,906,260 1,515,896 2,697,656 208,604 52.2 92.8

Continuing 

Firms 1,416,407 1,241,062 1,431,127 14,720 87.6 —.

Net Change 1,948,253 1,475,828 1,787,236 161,017 75.8 91.7

1991–1992 Firm Births 3,200,969 1,703,491 2,863,799 337,170 53.2 89.5

Firm Deaths 3,126,463 1,602,579 2,894,127 232,336 51.3 92.6

Continuing

Firms 448,605 1,041,557 875,026 426,421 —. —.

Net Change 523,111 1,142,469 844,698 321,587 —. —.
212 The Annual Report on Small Business and Competition

Employment 1990–1991 Firm Births 3,105,363 1,712,856 2,907,351 198,012 55.2 93.6

Firm Deaths 3,208,099 1,723,159 3,044,470 163,629 53.7 94.9

Continuing

Firms 1,058,980 561,228 570,399 488,581 —. —.

Net Change 1,161,716 550,925 707,518 454,198 —. —.

1989–1990 Firm Births 3,211,064 1,886,311 3,090,643 120,421 58.7 96.2

Firm Deaths 3,198,829 1,683,174 2,988,436 210,393 52.6 93.4

Continuing

Firms 1,830,946 1,313,100 1,300,511 530,435 71.7 71.0

Net Change 1,843,181 1,516,237 1,402,718 440,463 82.3 76.1

1990–1995 Firm Births 13,304,645 6,514,382 12,126,607 1,178,038 49.0 91.1

Firm Deaths 11,808,721 5,611,968 11,113,149 695,572 47.5 94.1

Continuing

Firms 5,357,860 2,457,482 4,228,021 1,129,839 45.9 78.9

Net Change 6,853,784 3,359,896 5,241,479 1,612,305 49.0 76.5 

Notes: 1990–1995 represents firm births that survived until 1995, and firm deaths are firms that existed

in 1990. The data represent activity from March of the beginning year to March of the ending year.

Establishments with no employment in the first quarter of the beginning year were excluded. New firm births

are classified by their employment size at the first quarter. Percent of size class is not calculated when size classes change in opposite directions. New firms represent new original establishments and deaths represent closed

original establishments.

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

Department of Commerce, Bureau of the Census.
Supplementary Tables 213

Table A.9 Establishment and Employment Changes from Births and Deaths by Firm Size, 1995–1996

Employment Size of Firm (1994)

Data Type Total 1–4 5–9 10–19 20–99 100–499 500Establishments

Establishments in 1995 5,878,957 2,562,699 996,249 617,026 635,628 278,239 789,1

Changes Due to Establishment:

Employment Expansions 1,714,598 574,590 315,078 222,668 242,076 101,134 259,0Employment Contractions 1,571,826 346,063 348,125 246,276 253,980 99,602 277,7Births, New Firms (Original Locations) 597,792 450,061 85,223 37,158 22,666 2,395 2Births, Existing Firms (Secondary Locations) 99,665 428 444 999 6,609 16,009 75,1Deaths, Original Locations 512,402 381,079 70,172 34,258 23,532 2,983 3Deaths, Secondary Locations 94,024 1,979 2,500 4,063 11,500 12,991 60,9

Establishments in 1996 5,969,988 2,630,130 1,009,244 616,862 629,871 280,669 803,2

Net Change 91,031 67,431 12,995 164 5,757 2,430 14,0

Percent Change, Total 1.5 2.6 1.3 0.0 0.9 0.9 

New Firms and Deaths of Original Locations 1.5 2.7 1.5 0.5 0.1 0.2 

Continuing Firms (Secondary Locations) 0.1 0.1 0.2 0.5 0.8 1.1 

Employment in Establishments

Employment in Establishments in 1995 100,282,036 5,387,315 6,432,580 7,727,492 18,413,574 14,658,639 47,662,4

Changes Due to Establishment:

Employment Expansions 10,284,766 1,274,425 906,962 926,632 1,887,431 1,356,247 3,933,0Employment Contractions 9,330,604 435,933 704,280 804,057 1,771,845 1,433,422 4,181,0Births, New Firms (Original Locations) 3,255,676 807,783 546,966 489,767 823,500 387,580 200,0Births, Existing Firms (Secondary Locations) 2,652,623 2,733 3,398 7,916 72,889 286,502 2,279,1Deaths, Original Locations 3,099,589 664,178 450,828 444,592 827,718 421,177 291,0Deaths, Secondary Locations 1,895,627 2,985 6,900 17,376 106,618 229,310 1,532,4

Employment in Establishments in 1996 102,149,281 6,369,160 6,727,898 7,885,782 18,491,213 14,605,059 48,070,1Net Change 1,867,245 981,845 295,318 158,290 77,639 53,580 407,7

Percent Change, Total 1.9 18.2 4.6 2.0 0.4 0.4 

New Firms and Deaths of Original Locations 0.2 2.7 1.5 0.6 0.0 0.2 

Continuing Firms 1.7 15.6 3.1 1.5 0.4 0.1 

Notes: Represents activity from March 1995 to March 1996. Longitudinal data for private Establishments having active payroll in the first quarter of the year. 

no employment in the first quarter were excluded). New firm births are classified by their employment size at the first quarter. Existing establishments with ownerconsidered new firms.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department of Commerce, Bureau of the Census.
214 The Annual Report on Small Business and Competition

United States 6,190,907 6,330,117 2.2 10,488 10,507 0.2

Region I

Connecticut 92,941 94,289 1.5 31 125 108 13.6 50

Maine 34,662 36,660 5.8 4 75 71 5.3 40

Massachusetts 158,096 162,792 3.0 13 224 221 1.3 31

New Hampshire 35,575 36,622 2.9 14 54 61 13.0 4

Rhode Island 30,816 31,155 1.1 39 24 25 4.2 16

Vermont 19,742 20,014 1.4 34 39 40 2.6 19

Region II

New Jersey 214,648 212,820 0.9 49 192 192 — 25 .

New York 445,277 446,048 0.2 46 506 521 3.0 17

Region III

Delaware 22,739 24,116 6.1 3 21 19 9.5 46

District of Columbia 23,409 23,050 1.5 50 14 14 — 25 .

Maryland 121,932 125,755 3.1 12 174 190 9.2 7

Pennsylvania 236,276 238,308 0.9 43 408 440 7.8 8

Virginia 149,916 152,460 1.7 25 198 196 1.0 29

West Virginia 38,253 37,970 0.7 48 54 54 — 25 .

Region IV

Alabama 85,797 86,841 1.2 37 151 167 10.6 5

Florida 348,339 355,429 2.0 21 453 458 1.1 23

Georgia 169,367 173,643 2.5 18 289 241 16.6 51

Kentucky 78,044 78,958 1.2 38 136 136 — 25 .

Mississippi 49,916 50,852 1.9 22 85 91 7.1 9

North Carolina 154,759 159,745 3.2 11 291 277 4.8 38

South Carolina 80,353 82,673 2.9 16 112 109 2.7 34

Tennessee 106,644 108,263 1.5 29 263 268 1.9 22

Region V

Illinois 266,358 270,471 1.5 27 374 383 2.4 21

Indiana 121,801 123,555 1.4 32 203 183 9.9 47

Michigan 204,323 208,598 2.1 20 303 287 5.3 39

Minnesota 124,514 121,688 2.3 51 254 265 4.3 15

Ohio 225,489 228,772 1.5 30 358 361 0.8 24

Wisconsin 116,965 118,766 1.5 28 219 232 5.9 13

Region VI

Arkansas 57,808 58,526 1.2 35 99 115 16.2 1

Louisiana 88,027 90,539 2.9 17 142 149 4.9 14

New Mexico 39,969 40,462 1.2 36 91 86 5.5 41

Oklahoma 71,627 72,648 1.4 33 164 161 1.8 32

Texas 368,663 375,357 1.8 23 854 845 1.1 30

Region VII

Iowa 66,971 67,453 0.7 45 195 173 11.3 49

Kansas 64,074 65,155 1.7 26 137 134 2.2 33

Missouri 117,612 125,833 7.0 1 255 246 3.5 35

Nebraska 42,878 43,344 1.1 40 120 109 9.2 45
Supplementary Tables 215

Region VIII

Colorado 114,521 120,898 5.6 5 206 184 10.7 48

Montana 28,749 29,259 1.8 24 70 67 4.3 37

North Dakota 18,667 18,831 0.9 42 54 52 3.7 36

South Dakota 21,196 21,370 0.8 44 50 53 6.0 12

Utah 45,281 47,465 4.8 6 75 80 6.7 10

Wyoming 17,601 18,000 2.3 19 32 30 6.3 42

Region IX

Arizona 93,837 97,009 3.4 10 142 164 15.5 2

California 800,091 837,802 4.7 7 1,549 1,587 2.5 20

Hawaii 26,974 26,881 0.3 47 52 59 13.5 3

Nevada 37,122 39,518 6.5 2 51 56 9.8 6

Region X

Alaska 15,631 15,788 1.0 41 34 35 2.9 18

Idaho 34,626 36,003 4.0 9 73 68 6.8 43

Oregon 94,384 97,147 2.9 15 191 175 8.4 44

Washington 167,647 174,516 4.1 8 253 269 6.3 11

Notes: Employer firms and self-employment overlap as some of the self-employed have employees. Firms

represent a summation of establishments owned by a parent company within a state; thus, some firms are double counted at the U.S. level when a firm is in more than one state. The self-employed include agricultural 

and nonagricultural industries. The self-employed are individuals aged 16 and over whose primary occupation

is self-employment.

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

Department of Labor, Employment and Training Administration for employer firms and Bureau of Labor Statistics

for self-employment.
216 The Annual Report on Small Business and Competition

United States 842,357 885,416 5.1 786,482 798,917 1.6

Region I 41,116 44,399 8.0 27,071 25,492 5.8

Connecticut 9,457 9,628 1.8 23 4,126 3,375 18.2 51

Maine 4,461 5,297 18.7 3 2,873 2,823 1.7 30

Massachusetts 16,635 17,708 6.5 13 12,808 12,437 2.9 36

New Hampshire 4,961 6,135 23.7 2 3,070 2,791 9.1 48

Rhode Island 3,416 3,367 1.4 38 2,619 2,649 1.1 18

Vermont 2,186 2,264 3.6 19 1,575 1,417 10.0 49

Region II 84,086 83,965 0.1 109,283 108,746 0.5

New Jersey 27,315 26,837 1.7 40 35,417 34,349 3.0 37

New York 56,771 57,128 0.6 30 73,866 74,397 0.7 22

Region III 72,043 80,414 11.6 112,287 113,385 1.0

Delaware 3,461 3,483 0.6 29 51,272 52,184 1.8 16

District of Columbia 4,087 3,225 21.1 50 1,497 1,462 2.3 34

Maryland 13,895 20,501 47.5 1 18,632 18,066 3.0 38

Pennsylvania 25,433 28,945 13.8 5 19,459 20,900 7.4 7

Virginia 20,960 21,231 1.3 28 19,047 18,704 1.8 31

West Virginia 4,207 3,029 28.0 51 2,380 2,069 13.1 50

Region IV 150,918 162,752 7.8 185,744 193,360 4.1

Alabama 10,965 10,523 4.0 41 7,686 7,742 0.7 21

Florida 49,870 56,283 12.9 7 104,113 108,268 4.0 13

Georgia 26,440 29,984 13.4 6 26,902 29,321 9.0 6

Kentucky 9,133 9,471 3.7 17 8,060 8,397 4.2 12

Mississippi 6,180 6,185 0.1 31 5,288 4,910 7.1 46

North Carolina 21,857 23,084 5.6 15 17,861 19,078 6.8 9

South Carolina 10,856 11,040 1.7 24 8,049 8,149 1.2 17

Tennessee 15,617 16,182 3.6 18 7,785 7,495 3.7 42

Region V 118,829 117,535 1.1 122,527 120,805 1.4

Illinois 28,064 28,009 0.2 32 36,210 36,090 0.3 28

Indiana 14,260 14,471 1.5 26 12,620 12,734 0.9 19

Michigan 24,387 24,795 1.7 25 31,994 31,260 2.3 33

Minnesota 13,557 13,469 0.6 36 12,639 12,655 0.1 26

Ohio 25,795 24,102 6.6 44 20,517 20,105 2.0 32

Wisconsin 12,766 12,689 0.6 35 8,547 7,961 6.9 45

Region VI 85,440 85,855 0.5 67,726 68,525 1.2

Arkansas 7,344 5,998 18.3 49 6,010 6,994 16.4 2

Louisiana 10,087 10,897 8.0 11 11,531 11,152 3.3 39

New Mexico 4,975 4,959 0.3 33 3,042 2,919 4.0 43

Oklahoma 9,003 9,213 2.3 21 8,105 8,162 0.7 23

Texas 54,031 54,788 1.4 27 39,038 39,298 0.7 24

Region VII 31,415 31,942 1.7 22,963 23,338 1.6

Iowa 6,014 5,971 0.7 37 4,589 4,695 2.3 14

Kansas 6,693 7,243 8.2 10 4,376 4,847 10.8 5

Missouri 14,763 14,540 1.5 39 10,545 10,273 2.6 35

Nebraska 3,945 4,188 6.2 14 3,453 3,523 2.0 15
Supplementary Tables 217

Region VIII 39,762 41,266 3.8 29,843 30,830 3.3

Colorado 20,317 22,463 10.6 9 16,749 15,670 6.4 44

Montana 4,144 3,764 9.2 47 2,325 3,219 38.5 1

North Dakota 1,668 1,526 8.5 45 925 933 0.9 20

South Dakota 1,835 1,961 6.9 12 1,382 1,440 4.2 11

Utah 9,433 9,391 0.4 34 6,295 7,301 16.0 4

Wyoming 2,365 2,161 8.6 46 2,167 2,267 4.6 10

Region IX 164,681 178,428 8.3 83,210 89,108 7.1

Arizona 13,920 13,135 5.6 43 12,153 11,262 7.3 47

California 138,726 153,412 10.6 8 44,043 47,055 6.8 8

Hawaii 3,992 3,622 9.3 48 3,792 3,792 — 27 .

Nevada 8,043 8,259 2.7 20 23,222 26,999 16.3 3

Region X 54,067 58,860 8.9 25,828 25,328 1.9

Alaska 2,535 2,401 5.3 42 1,103 1,063 3.6 41

Idaho 5,242 5,502 5.0 16 2,504 2,489 0.6 29

Oregon 14,995 15,275 1.9 22 9,267 9,289 0.2 25

Washington 31,295 35,682 14.0 4 12,954 12,487 3.6 40

Notes: New firms are firms that plan to begin to hire employees. New business incorporations are firms

that are either beginning as a corporation, or converting from a sole proprietorship or partnership.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by U.S. Department

of Labor, Employment and Training Administration for new firms and the Dun & Bradstreet Corporation for new

business incorporations.
218 The Annual Report on Small Business and Competition Table A.12 Business Terminations, Bankruptcies, and Failures by SBA Region and State, 1996 and 1997 Business Terminations Business Bankruptcies Busine

Percent Percent 

1996 1997 Change Rank 1996 1997 Change Rank 1996 1997 

United States 849,839 857,073 0.9 53,207 53,826 1.2 71,931 83,384 Region I 43,441 43,886 1.0 1,953 2,011 3.0 3,064 3,44Connecticut 12,598 11,481 8.9 42 230 205 10.9 46 536 63

Maine 4,529 4,263 5.9 39 267 310 16.1 6 299 39

Massachusetts 14,702 15,479 5.3 17 1,041 965 7.3 42 1,612 1,66

New Hampshire 5,141 6,025 17.2 6 92 187 103.3 1 375 41Rhode Island 3,595 3,941 9.6 11 181 180 0.6 30 134 18

Vermont 2,876 2,697 6.2 40 142 164 15.5 8 108 148 

Region II 81,538 89,375 9.6 4,330 4,265 1.5 7,406 7,69New Jersey 25,898 26,054 0.6 30 1,067 1,112 4.2 19 2,460 2,64New York 55,640 63,321 13.8 7 3,263 3,153 3.4 37 4,946 5,054 

Region III 86,857 78,244 9.9 5,363 5,600 4.4 6,071 5,926 

Delaware 2,528 3,786 49.8 1 239 214 10.5 45 49 3

District of Columbia 5,695 3,519 38.2 50 119 100 16.0 49 121 9

Maryland 20,147 11,666 42.1 51 1,468 1,678 14.3 9 1,621 1,480 

Pennsylvania 31,180 30,967 0.7 32 1,870 1,885 0.8 27 2,922 3,124 Virginia 22,558 22,317 1.1 33 1,342 1,356 1.0 26 1,058 87

West Virginia 4,749 5,989 26.1 3 325 367 12.9 11 300 319 Region IV 156,726 168,028 7.2 7,357 7,560 2.8 8,090 8,27Alabama 11,458 11,741 2.5 26 772 876 13.5 10 542 63Florida 54,191 63,768 17.7 5 2,026 2,162 6.7 16 2,676 2,58

Georgia 24,441 25,187 3.1 24 1,801 1,642 8.8 43 1,306 1,18

Kentucky 9,359 10,068 7.6 15 431 449 4.2 20 642 568 

Mississippi 7,159 6,989 2.4 36 281 299 6.4 17 183 14

North Carolina 23,112 22,657 2.0 35 703 720 2.4 22 1,038 1,03

South Carolina 10,815 10,891 0.7 29 258 346 34.1 4 372 41Tennessee 16,191 16,727 3.3 22 1,085 1,066 1.8 34 1,331 1,71

Region V 127,283 114,671 9.9 8,099 8,274 2.2 8,787 11,404 Illinois 34,400 28,596 16.9 45 1,806 1,788 1.0 31 2,568 3,40

Indiana 14,838 15,434 4.0 20 756 683 9.7 44 850 852 
Supplementary Tables 219

Michigan 26,059 19,368 25.7 47 1,072 1,106 3.2 21 1,559 1,934 Minnesota 11,532 12,616 9.4 12 2,250 2,478 10.1 14 596 1,18Ohio 26,330 25,276 4.0 37 1,065 1,006 5.5 40 2,280 2,82

Wisconsin 14,124 13,381 5.3 38 1,150 1,213 5.5 18 934 1,20Region VI 91,839 89,955 2.1 6,353 6,432 1.2 9,318 10,930 

Arkansas 7,719 5,691 26.3 48 486 539 10.9 12 1,005 1,11Louisiana 13,634 11,242 17.5 46 621 674 8.5 15 272 300 New Mexico 5,838 6,960 19.2 4 390 384 1.5 33 423 64

Oklahoma 8,897 9,161 3.0 25 1,388 1,369 1.4 32 1,560 1,546 

Texas 55,751 56,901 2.1 27 3,468 3,466 0.1 29 6,058 7,322 

Region VII 39,237 39,684 1.1 1,932 1,931 0.1 3,005 3,724 

Iowa 7,507 7,465 0.6 31 574 505 12.0 48 458 506 

Kansas 7,860 8,116 3.3 23 420 412 1.9 35 1,095 1,249 

Missouri 19,067 18,760 1.6 34 663 733 10.6 13 1,060 1,490 

Nebraska 4,803 5,343 11.2 8 275 281 2.2 24 392 479 Region VIII 30,851 34,585 12.1 1,763 1,697 3.7 3,173 4,408 

Colorado 10,953 14,305 30.6 2 779 518 33.5 51 2,254 3,082 

Montana 4,324 4,481 3.6 21 219 278 26.9 5 179 189 North Dakota 1,968 1,831 7.0 41 152 155 2.0 25 81 138 South Dakota 2,433 2,696 10.8 9 216 221 2.3 23 159 28Utah 8,243 8,824 7.0 16 294 434 47.6 3 378 58Wyoming 2,930 2,448 16.5 44 103 91 11.7 47 122 13

Region IX 135,591 143,102 5.5 13,244 12,569 5.1 18,760 22,560 

Arizona 17,157 15,077 12.1 43 880 846 3.9 38 1,010 1,20

California 107,936 117,222 8.6 13 11,748 11,137 5.2 39 16,879 20,089 

Hawaii 3,746 3,933 5.0 18 187 187 28 395 630 Nevada 6,752 6,870 1.7 28 429 399 7.0 41 476 634 

Region X 56,476 55,543 1.7 2,813 3,487 24.0 4,257 5,01Alaska 2,492 2,691 8.0 14 183 147 19.7 50 184 17

Idaho 5,431 5,696 4.9 19 460 532 15.7 7 539 67Oregon 16,569 11,762 29.0 49 751 1,434 90.9 2 839 1,186 Washington 31,984 35,394 10.7 10 1,419 1,374 3.2 36 2,695 2,97

Notes: Business terminations are business closings (state unemployment insurance data). Business failures are business closings with a financial loss to on

Business bankruptcies are firms that file for bankruptcy with the U.S. court system.

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by U.S. Department of Labor, Employment and Training Administratio

nations; Administrative Office of the U.S. Courts, Statistical Analysis and Reports Division, for business bankruptcies; and the Dun & Bradstreet Corporation for b
220 The Annual Report on Small Business and Competition Table A.13 Nonfarm Sole Proprietorships and their Receipts by Gender of Owner and Industry Group, 1994 an

1994 1995 

All Women- Women’s All Women- Women’s 

Nonfarm Owned Share Nonfarm Owned Share 

Industry Businesses Businesses of Total Businesses Businesses of Total Nonfarm Sole Proprietorships U.S. Total 18,108,776 6,046,617 33.4 18,391,237 6,135,898 33.4 Agricultural Services, Forestry, and Fishing 555,138 100,035 18.0 580,093 99,417 17.1 Mining, Construction, and Manufacturing 2,700,069 264,159 9.8 2,805,456 261,546 9.3 Transportation, Communications, and Public Utilities 792,583 103,442 13.1 787,856 117,332 14.9 Wholesale and Retail Trade 3,431,291 1,448,040 42.2 3,599,515 1,439,057 40.0 Finance, Insurance and Real Estate 1,545,943 564,869 36.5 1,448,501 516,672 35.7 

Services 9,083,752 3,566,073 39.3 9,169,816 3,701,874 40.4 Receipts (Thousands of Dollars)U.S. Total 790,630,020 116,382,745 14.7 807,363,637 122,096,236 15.1 Agricultural Services,

Forestry, and Fishing 20,341,354 2,291,309 11.3 19,806,466 1,878,118 9.5 

Mining, Construction, and

Manufacturing 146,707,341 8,312,413 5.7 145,319,149 8,565,800 5.9 

Transportation,

Communications, and PublicUtilities 39,534,586 3,533,654 8.9 38,819,981 3,718,401 9.6 

Wholesale and Retail Trade 241,434,176 36,872,584 15.3 253,215,143 38,469,318 15.2 

Finance, Insurance and Real

Estate 58,405,768 12,141,812 20.8 59,369,042 13,529,855 22.8 Services 284,206,794 53,230,972 18.7 290,833,856 55,934,744 19.2 

Note: Detail may not add to totals because of disclosure rules regarding the release of information for specific taxpayers.Source: U.S. Small Business Administration, Office of Advocacy, from specific tabulations prepared by the U.S. Department of the Treasury, Internal Revenu
Supplementary Tables 221

United States 4,114,787 5,888,883 43.1 13,695,480 17,253,143 26.0

Region I 247,254 336,641 36.2 819,319 1,014,250 23.8

Connecticut 60,924 79,931 31.2 47 196,537 237,705 20.9 37

Maine 23,922 35,260 47.4 17 88,208 109,360 24.0 29

Massachusetts 111,376 147,572 32.5 46 356,780 442,848 24.1 28

New Hampshire 22,713 31,492 38.7 34 79,771 97,772 22.6 32

Rhode Island 14,517 21,353 47.1 18 52,780 67,641 28.2 19

Vermont 13,802 21,033 52.4 9 45,243 58,924 30.2 12

Region II 402,285 560,742 39.4 1,337,461 1,676,904 25.4

New Jersey 117,373 164,798 40.4 29 406,792 517,204 27.1 23

New York 284,912 395,944 39.0 31 930,669 1,159,700 24.6 27

Region III 386,932 547,918 41.6 1,275,511 1,620,401 27.0

Delaware 9,727 14,904 53.2 7 30,976 42,228 36.3 3

District of Columbia 10,987 14,599 32.9 44 29,244 35,344 20.9 38

Maryland 81,891 121,777 48.7 16 244,071 328,403 34.6 5

Pennsylvania 167,362 227,500 35.9 39 595,653 728,063 22.2 34

Virginia 94,416 138,494 46.7 19 297,541 391,451 31.6 8

West Virginia 22,549 30,644 35.9 40 78,026 94,912 21.6 36

Region IV 643,443 990,180 53.9 2,255,180 2,986,803 32.4

Alabama 48,018 71,466 48.8 15 178,119 227,119 27.5 22

Florida 221,361 352,048 59.0 4 735,810 1,000,542 36.0 4

Georgia 88,050 143,045 62.5 2 305,382 425,118 39.2 2

Kentucky 53,454 74,280 39.0 32 193,806 236,525 22.0 35

Mississippi 28,976 40,879 41.1 27 112,245 135,497 20.7 41

North Carolina 93,532 142,516 52.4 10 329,373 439,301 33.4 6

South Carolina 42,604 64,812 52.1 11 149,190 197,330 32.3 7

Tennessee 67,448 101,134 49.9 13 251,255 325,371 29.5 14

Region V 712,370 1,018,037 42.9 2,335,756 2,967,770 27.1

Illinois 177,057 250,613 41.5 26 573,973 726,974 26.7 24

Indiana 89,949 125,411 39.4 30 294,570 364,253 23.7 30

Michigan 133,958 193,820 44.7 21 426,656 551,091 29.2 16

Minnesota 88,137 124,143 40.9 28 280,249 358,921 28.1 20

Ohio 154,084 224,693 45.8 20 521,123 666,183 27.8 21

Wisconsin 69,185 99,357 43.6 22 239,185 300,348 25.6 25

Region VI 478,546 664,998 39.0 1,671,035 2,006,843 20.1

Arkansas 35,469 50,440 42.2 25 134,766 159,820 18.6 45

Louisiana 55,852 76,849 37.6 35 204,723 236,589 15.6 48

New Mexico 25,397 40,636 60.0 3 82,253 107,377 30.5 9

Oklahoma 63,690 82,894 30.2 48 223,676 246,936 10.4 51

Texas 298,138 414,179 38.9 33 1,025,617 1,256,121 22.5 33
222 The Annual Report on Small Business and Competition

Region VII 227,040 298,991 31.7 739,656 871,292 17.8

Missouri 87,658 117,885 34.5 43 174,121 206,840 18.8 44

Iowa 53,592 71,040 32.6 45 169,593 191,262 12.8 50

Kansas 53,505 66,429 24.2 49 293,131 348,978 19.1 43

Nebraska 32,285 43,637 35.2 42 102,811 124,212 20.8 39

Region VIII 173,827 240,782 38.5 551,525 673,828 22.2

Colorado 89,411 121,659 36.1 38 262,597 323,147 23.1 31

Montana 17,747 25,310 42.6 24 63,623 75,331 18.4 46

North Dakota 12,689 15,355 21.0 50 42,717 48,368 13.2 49

South Dakota 13,374 18,215 36.2 37 47,829 57,084 19.4 42

Utah 29,810 45,626 53.1 8 100,186 129,202 29.0 18

Wyoming 10,796 14,617 35.4 41 34,573 40,696 17.7 47

Region IX 660,915 956,960 44.8 2,121,872 2,674,500 26.0

Arizona 60,567 93,300 54.0 6 191,908 248,337 29.4 15

California 559,821 801,487 43.2 23 1,809,252 2,259,327 24.9 26

Hawaii 21,696 29,743 37.1 36 60,928 79,050 29.7 13

Nevada 18,831 32,430 72.2 1 59,784 87,786 46.8 1

Region X 187,579 268,229 43.0 588,165 759,552 29.1

Alaska 19,380 13,976 27.9 51 48,784 58,898 20.7 40

Idaho 18,973 29,946 57.8 5 68,006 88,712 30.4 10

Oregon 58,941 87,970 49.3 14 185,151 238,967 29.1 17

Washington 90,285 136,337 51.0 12 286,224 372,975 30.3 11

Note: The survey excluded non-S corporations and business tax returns with less than $500 in business

receipts per year.

Source: U.S. Small Business Administration, Office of Advocacy, based upon data published by the U.S.

Department of Commerce, Bureau of the Census, 1992 Economic Census, Women-Owned Businesses.
Supplementary Tables 223

Table A.15 Minority-Owned Firms by SBA Region and State, 1987 and 1992

Asians, Pacific Islanders,

Black Hispanic American Indians, and Alaska Natives Total 

Percent Percent Percent 

1987 1992 Change Rank 1987 1992 Change Rank 1987 1992 Change Rank 1987 

United States 424,165 620,912 46.4 422,373 771,708 82.7 376,711 606,423 61.0 1,223,249 1,99Region I 9,769 14,216 45.5 5,798 13,978 141.1 7,116 12,904 81.3 22,683 4Connecticut 4,061 5,714 40.7 38 2,235 4,502 101.4 23 2,051 3,485 69.9 26 8,347 1Maine 131 235 79.4 5 139 427 207.2 1 233 483 107.3 5 503 Massachusetts 4,761 7,225 51.8 20 2,636 6,914 162.3 10 3,916 7,009 79.0 15 11,313 2New Hampshire 229 46 79.9 51 244 487 99.6 24 333 666 100.0 6 806 Rhode Island 489 857 75.3 8 426 1,297 204.5 3 472 987 109.1 4 1,387 Vermont 98 139 41.8 36 118 351 197.5 4 111 274 146.8 1 327 Region II 50,845 71,449 40.5 40,348 72,799 80.4 48,922 86,169 76.1 140,115 23New Jersey 14,556 20,137 38.3 41 12,094 22,198 83.5 36 12,665 23,116 82.5 12 39,315 6New York 36,289 51,312 41.4 37 28,254 50,601 79.1 41 36,257 63,053 73.9 19 100,800 16Region III 9,674 12,171 25.8 9,420 22,391 137.7 25,143 42,416 68.7 44,237 7Delaware 1,399 2,060 47.2 24 184 497 170.1 8 479 809 68.9 27 2,062 District of Columbia 8,275 10,111 22.2 49 762 1,452 90.6 29 807 1,393 72.6 20 9,844 1Maryland 21,678 35,758 65.0 12 2,931 7,289 148.7 13 7,954 13,697 72.2 22 32,563 5Pennsylvania 11,728 15,917 35.7 43 2,650 5,186 95.7 26 7,189 12,053 67.7 29 21,567 3Virginia 18,781 26,100 39.0 40 2,716 7,654 181.8 7 8,163 13,752 68.5 28 29,660 4West Virginia 727 1,093 50.3 21 177 313 76.8 43 551 712 29.2 48 1,455 Region IV 35,612 55,078 54.7 69,273 131,611 90.0 22,663 42,674 88.3 127,548 22Alabama 10,085 14,707 45.8 26 397 1,029 159.2 12 1,007 1,777 76.5 18 11,489 1Florida 25,527 40,371 58.2 15 64,413 118,208 83.5 37 8,902 17,499 96.6 8 98,842 17Georgia 21,283 38,264 79.8 3 1,931 5,501 184.8 6 4,221 8,961 112.3 3 27,435 5Kentucky 3,738 5,097 36.4 42 359 752 109.5 22 899 1,614 79.5 14 4,996 Mississippi 9,667 14,067 45.5 28 308 660 114.3 20 1,178 1,765 49.8 40 11,153 1North Carolina 19,487 29,221 50.0 22 918 2,802 205.2 2 3,827 6,155 60.8 33 24,232 3South Carolina 12,815 18,343 43.1 33 393 1,057 169.0 9 965 1,877 94.5 9 14,173 2Tennessee 10,423 14,920 43.1 32 554 1,602 189.2 5 1,664 3,026 81.9 13 12,641 1Region V 24,878 36,782 47.8 17,351 33,492 93.0 28,895 45,145 56.2 71,124 11Illinois 19,011 28,433 49.6 23 9,636 18,368 90.6 28 14,872 21,743 46.2 44 43,519 6Indiana 5,867 8,349 42.3 34 1,427 2,454 72.0 44 1,808 3,193 76.6 17 9,102 1Michigan 13,708 19,695 43.7 31 2,654 5,036 89.8 30 4,729 7,409 56.7 36 21,091 3Minnesota 1,448 2,785 92.3 2 751 1,583 110.8 21 2,024 3,168 56.5 37 4,223 
224 The Annual Report on Small Business and Competition Table A.15 Minority-Owned Firms by SBA Region and State, 1987 and 1992—Continued Asians, Pacific Islanders, Black Hispanic American Indians and Alaska Natives Total 

1987 1992 Change Rank 1987 1992 Change Rank 1987 1992 Change Rank 1987 

Ohio 15,983 22,690 42.0 35 1,989 4,289 115.6 19 4,011 7,146 78.2 16 21,983 3Wisconsin 2,381 3,446 44.7 29 894 1,762 97.1 25 1,451 2,486 71.3 24 4,726 Region VI 19,723 26,050 32.1 113,590 186,033 63.8 32,054 55,038 71.7 165,367 26Arkansas 4,392 5,738 30.6 47 324 701 116.4 18 658 1,214 84.5 11 5,374 Louisiana 15,331 20,312 32.5 46 2,697 4,983 84.8 35 2,808 4,826 71.9 23 20,836 3New Mexico 587 925 57.6 16 14,299 21,586 51.0 48 2,155 4,608 113.8 2 17,041 2Oklahoma 3,461 4,621 33.5 44 1,516 2,854 88.3 32 3,751 5,627 50.0 39 8,728 1Texas 35,725 50,008 40.0 39 94,754 155,909 64.5 45 22,682 38,763 70.9 25 153,161 24Region VII 3,026 4,184 38.3 3,882 6,618 70.5 4,627 6,974 51.0 11,535 1Iowa 703 1,106 57.3 17 475 859 80.8 40 617 1,011 66.0 30 1,795 Kansas 2,323 3,078 32.5 45 1,541 2,396 55.5 46 1,366 1,842 34.8 47 5,230 Missouri 7,832 9,973 27.3 48 1,247 2,216 77.7 42 2,193 3,451 57.4 35 11,272 1Nebraska 863 1,350 56.4 18 619 1,147 85.3 34 451 670 48.6 41 1,933 Region VIII 2,948 4,485 52.1 11,901 17,881 50.2 6,331 9,681 52.9 21,180 3Colorado 2,871 4,372 52.3 19 9,516 13,817 45.2 49 3,543 5,788 63.4 31 15,930 2Montana 77 113 46.8 25 304 568 86.8 33 612 845 38.1 46 993 North Dakota 57 117 105.3 1 88 116 31.8 50 329 385 17.0 50 474 South Dakota 63 111 76.2 7 109 239 119.3 17 375 555 48.0 42 547 Utah 202 354 75.2 9 1,300 2,375 82.7 38 1,239 1,746 40.9 45 2,741 Wyoming 81 97 19.8 50 584 766 31.2 51 233 362 55.4 38 898 Region IX 49,539 71,904 45.1 145,050 274,644 89.3 183,832 279,685 52.1 378,421 62Arizona 1,811 2,936 62.1 13 9,845 17,835 81.2 39 3,398 5,852 72.2 21 15,054 2California 47,728 68,968 44.5 30 132,212 249,717 88.9 31 147,633 232,672 57.6 34 327,573 55Hawaii 399 717 79.7 4 1,226 3,192 160.4 11 31,406 38,392 22.2 49 33,031 4Nevada 1,002 1,736 73.3 10 1,767 3,900 120.7 16 1,395 2,769 98.5 7 4,164 Region X 601 891 48.3 5,760 12,262 112.9 17,128 25,737 50.3 23,489 3Alaska 507 739 45.8 27 502 766 52.6 47 5,034 3,916 22.2 51 6,043 

Idaho 94 152 61.7 14 974 1,865 91.5 27 513 759 48.0 43 1,581 Oregon 848 1,447 70.6 11 1,598 3,538 121.4 15 3,340 5,414 62.1 32 5,786 1Washington 2,583 4,575 77.1 6 2,686 6,093 126.8 14 8,241 15,648 89.9 10 13,510 2

Note: Survey excluded non-S corporations and business tax returns with less than $500 in business receipts during the year.Source: U.S. Small Business Administration, Office of Advocacy, based upon data from the U.S. Department of Commerce, Bureau of the Census.
Supplementary Tables 225

Table A.16 Characteristics of Firms, 1992 (Percentage of Firms, unless Specified)

Survived Year Closed Firms until Home-

(Number) 1992 1993 1994 1995 1996 Based 

Total, All Firms 17,253,143 7.3 6.7 5.8 4.7 75.5 56.6 Number of Employees03 14,554,022 8.3 7.7 6.5 5.1 72.4 60.3 

1–4 1,716,076 3.7 1.4 2.1 3.2 89.6 27.3 5–9 503,808 1.0 1.6 2.6 3.3 91.5 13.6 10–19 256,110 1.4 1.3 2.3 2.2 92.9 8.2 20–49 144,734 0.4 1.4 3.7 2.4 92.1 6.1 50–99 45,331 1.1 1.0 1.7 1.7 94.4 1.4 100 33,062 1.4 2.7 3.8 0.8 91.3 0.3 

Race, Origin, and GenderHispanic 771,708 8.2 7.2 4.9 5.5 74.3 49.2 Black 620,912 10.3 8.0 6.8 6.0 68.9 55.6 Other Minority 606,438 5.1 6.4 4.7 4.6 79.2 36.1 Women 5,888,883 8.5 7.0 5.9 5.1 73.5 58.2 Nonminority Male 10,114,456 6.6 6.5 5.9 4.6 76.4 51.9 IndustryAgricultural Services, Forestry, Fishing, and Mining 583,253 8.3 3.9 4.0 7.0 76.8 57.7 Construction 1,829,620 7.9 9.2 4.3 6.8 71.8 77.5 Manufacturing 517,714 5.1 4.6 5.3 3.4 81.6 51.7 Transportation, Communications, and Public Utilities 698,903 8.5 7.2 5.7 7.6 70.9 52.4 Wholesale Trade 538,339 6.9 6.7 5.6 3.0 77.7 52.7 Retail Trade 2,478,045 6.9 4.8 5.5 5.0 77.8 41.6 Finance, Insurance, and Real Estate 1,941,029 3.6 3.9 6.3 3.7 82.6 35.5 Services 7,784,016 8.0 7.3 6.2 4.2 74.3 55.8 Not Classified 882,224 11.4 9.5 6.6 4.8 67.6 58.1 

Note: About 3 percent of the employer size category of 0 are firms that reported payroll but no employees. The survey excluded non-S corporations (often la

business tax returns with less than $500 in business receipts. Includes allocations for nonresponding owners. Other Minority includes Asian, Pacific Islander, AAlaska Native.

Source: U.S. Small Business Administration, Office of Advocacy, based on data from the U.S. Department of Commerce, Bureau of the Census, Charac

Owners, 1992.
226 The Annual Report on Small Business and Competition Table A.17 Characteristics of Business Owners, 1992 (Percentage of Owners, unless Specified) Year the Owner Acquired or Started the Firm Owner’s Age 

Owners Before 1980– 1986– Under 

(Number) 1980 1985 1988 1989 1990 1991 1992 25 25–34 35–44 45–54 5

Total, All Firms 19,287,649 22.4 19.6 18.0 8.3 8.5 9.2 14.1 2.4 15.0 28.7 24.3 1Number of Employees 0 15,583,586 20.0 18.2 17.6 8.3 8.8 10.1 16.9 2.8 16.2 27.8 23.1 11–4 1,716,076 28.4 25.3 20.3 8.8 7.5 5.9 3.8 0.6 11.0 33.1 28.7 15–9 503,808 34.6 24.0 19.2 6.5 8.0 5.0 2.8 1.0 10.0 31.4 30.1 110–19 256,110 32.4 24.4 18.0 7.9 6.5 6.2 4.5 1.5 11.5 34.0 25.6 120–49 144,734 32.0 25.9 17.1 6.3 5.4 8.8 4.5 1.2 10.6 29.0 29.0 150–99 45,331 39.5 23.1 16.5 7.9 4.5 4.1 4.5 1.4 10.3 24.5 26.4 2100 33,062 35.1 31.1 19.8 4.0 4.0 2.2 3.9 2.1 8.0 26.7 32.0 2

Race, Origin, and Gender Hispanic 811,287 16.0 18.1 16.1 7.7 10.2 11.1 20.8 3.1 20.0 29.3 26.2 1Black 638,203 20.1 17.3 15.5 8.0 8.8 10.7 19.6 1.7 13.2 28.8 26.9 1Other Minority 697,710 15.5 18.7 16.4 9.2 10.4 11.8 18.1 3.1 14.7 32.6 27.7 1Women 6,447,988 17.7 19.1 18.6 7.3 9.3 10.7 17.3 2.9 15.8 28.8 23.4 1Nonminority Male 11,498,830 25.3 20.0 17.9 8.8 8.0 8.2 11.9 2.1 14.3 28.5 24.4 1IndustryAgricultural Services, Forestry, Fishing, and Mining 648,074 25.5 18.6 17.5 7.8 9.1 8.5 12.9 4.2 13.9 32.9 20.5 1Construction 1,973,461 24.7 16.2 13.2 9.4 9.4 9.5 17.7 3.1 21.1 29.8 21.9 1Manufacturing 639,469 26.2 20.7 17.4 6.4 7.8 9.0 12.5 1.6 15.3 29.5 21.9 1Transportation, Communications, and Public Utilities 752,946 16.8 18.0 18.2 9.2 8.4 9.1 20.3 2.6 14.6 27.8 26.6 1Wholesale Trade 648,722 24.2 18.9 19.0 7.5 9.3 10.6 10.5 1.8 11.1 27.8 28.0 1Retail Trade 2,717,455 22.1 18.3 16.7 7.7 8.7 10.4 16.0 2.4 16.7 27.5 24.4 1Finance, Insurance, and Real Estate 2,797,739 28.9 24.6 20.8 6.6 5.1 7.9 6.2 0.9 6.9 21.2 27.3 2Services 8,216,918 19.6 19.8 18.7 9.1 9.6 9.1 14.2 2.4 16.4 31.3 23.6 1Not Classified 892,865 16.1 15.0 16.5 7.0 7.8 10.7 26.9 6.5 15.1 29.8 23.5 1

Note: About 3 percent of the employer size category of 0 are firms that reported payroll but no employees. The survey excluded C corporations (often large com

tax returns with less than $500 in business receipts. Includes allocations for nonresponding owners. Other Minority includes Asian, Pacific Islander, American Indian, 

Source: U.S. Small Business Administration, Office of Advocacy, based on data from the U.S. Department of Commerce, Bureau of the Census, Charac

Owners, 1992.
Supplementary Tables 227

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

Note: Firms were traced beginning in 1976 and observed, if available, every other year beginning in

1978 and ending in 1986. Business dissolution includes businesses that disappear for any reason at all,

including failure, bankruptcy, owner retirement, owner health, or the desire to enter a more profitable

endeavor. It has been estimated that about 15 percent of business dissolutions represent actual failures.

Source: U.S. Small Business Administration, Office of Advocacy, Small Business Data Base, 1978–1990

USEEM file.
228 The Annual Report on Small Business and Competition

Alabama 1,550 119 384 591 1,094 456 27 70.6 43

Alaska 328 22 78 103 203 125 51 61.9 51

Arizona 2,038 217 724 686 1,627 411 24 79.8 18

Arkansas 1,032 63 248 363 674 358 34 65.3 48

California 28,333 3,905 12,517 9,793 26,215 2,118 1 92.5 1

Colorado 2,389 229 901 806 1,936 453 22 81.0 17

Connecticut 3,367 314 1,166 1,301 2,781 586 16 82.6 11

Delaware 457 32 126 157 315 142 46 68.9 44

District of Columbia 328 26 94 120 240 88 51 73.2 38

Florida 12,757 2,360 6,254 3,129 11,743 1,014 3 92.1 2

Georgia 4,103 383 1,276 1,541 3,200 903 12 78.0 23

Hawaii 431 34 176 150 360 71 47 83.5 8

Idaho 575 51 165 212 428 147 43 74.4 36

Illinois 9,489 857 3,054 4,053 7,964 1,525 4 83.9 7

Indiana 3,255 240 764 1,444 2,448 807 17 75.2 33

Iowa 1,493 90 355 621 1,066 427 29 71.4 42

Kansas 1,318 88 365 540 993 325 31 75.3 32

Kentucky 1,732 128 379 678 1,185 547 25 68.4 46

Louisiana 1,550 144 529 536 1,209 341 27 78.0 22

Maine 1,020 66 310 395 771 249 35 75.6 30

Maryland 2,305 218 734 854 1,806 499 23 78.4 21

Massachusetts 6,293 636 2,174 2,579 5,389 904 10 85.6 6

Michigan 6,338 469 1,838 2,902 5,209 1,129 9 82.2 13

Minnesota 3,426 298 1,041 1,447 2,786 640 15 81.3 16

Mississippi 955 65 189 319 573 382 37 60.0 53

Missouri 2,674 200 693 1,114 2,007 667 20 75.1 34

Montana 390 25 109 157 291 99 49 74.6 35

Nebraska 784 50 187 324 561 223 38 71.6 41

Nevada 712 69 235 246 550 162 40 77.2 26

New Hampshire 1,308 121 408 505 1,034 274 32 79.1 19

New Jersey 8,842 902 3,281 3,501 7,684 1,158 6 86.9 5

New Mexico 583 49 204 197 450 133 42 77.2 28

New York 15,934 1,790 7,040 5,479 14,309 1,625 2 89.8 3

North Carolina 3,833 359 1,088 1,490 2,937 896 13 76.6 29

North Dakota 463 21 106 185 312 151 45 67.4 47

Ohio 6,754 495 1,938 3,112 5,545 1,209 8 82.1 14

Oklahoma 1,416 110 477 506 1,093 323 30 77.2 27

Oregon 2,762 248 978 1,076 2,302 460 19 83.3 9

Pennsylvania 7,106 563 2,199 3,059 5,821 1,285 7 81.9 15

Puerto Rico 708 61 179 282 522 186 41 73.7 37

Rhode Island 959 80 291 420 791 168 36 82.5 12

South Carolina 1,693 152 459 608 1,219 474 26 72.0 40

South Dakota 423 17 88 161 266 157 48 62.9 50

Tennessee 2,629 184 667 1,047 1,898 731 21 72.2 39

Texas 9,258 1,193 3,732 3,134 8,059 1,199 5 87.0 4

Utah 1,126 106 342 429 877 249 33 77.9 24

Vermont 759 46 212 315 573 186 39 75.5 31

Virgin Islands 144 11 36 52 99 45 53 68.8 45

Virginia 2,891 298 930 1,018 2,246 645 18 77.7 25

Washington 4,850 446 1,755 1,828 4,029 821 11 83.1 10

West Virginia 560 26 107 210 343 217 44 61.3 52

Wisconsin 3,443 269 936 1,516 2,721 722 14 79.0 20

Wyoming 378 22 81 143 246 132 50 65.1 49

Unknown 14,400 1,360 4,722 6,102 12,184 2,216 — 84.6 —

Notes: State totals do not add to the U.S. total as businesses can be in more than one state. Large firms

are more likely than small firms to be in more than one state; the result is less small business representation in

the states than in the United States overall. The data represents businesses within the state, and not necessarily

products exported from the state

Source: U.S. Small Business Administration, Office of Advocacy, from data from the U.S. Department of

Commerce, International Trade Administration.
Supplementary Tables 229

United States 483,127 503,756 4.3 3,623,409 3,871,337 6.8

Region I 27,959 29,314 4.8 213,273 229,882 7.8

Connecticut 8,263 8,747 5.9 4 59,337 64,259 8.3 8

Maine 2,018 2,060 2.1 47 13,432 14,239 6.0 30

Massachusetts 12,846 13,531 5.3 10 105,677 114,254 8.1 9

New Hampshire 2,329 2,393 2.7 40 15,449 16,734 8.3 7

Rhode Island 1,446 1,497 3.6 25 12,415 13,151 5.9 31

Vermont 1,058 1,086 2.6 41 6,963 7,247 4.1 47

Region II 58,033 60,463 4.2 431,858 460,831 6.7

New Jersey 15,672 16,358 4.4 19 132,501 140,747 6.2 25

New York 42,361 44,105 4.1 22 299,357 320,084 6.9 20

Region III 44,297 45,579 2.9 382,728 405,524 6.0

Delaware 1,843 1,901 3.1 32 11,929 12,897 8.1 10

District of Columbia 2,165 2,229 2.9 37 29,448 30,305 2.9 49

Maryland 7,420 7,604 2.5 44 70,667 75,737 7.2 16

Pennsylvania 22,579 23,295 3.2 30 157,228 165,518 5.3 37

Virginia 8,174 8,371 2.4 45 96,563 103,608 7.3 14

West Virginia 2,116 2,180 3.0 35 16,893 17,460 3.4 48

Region IV 66,446 69,255 4.2 595,779 635,309 6.6

Alabama 5,285 5,438 2.9 39 48,185 50,490 4.8 44

Florida 17,940 18,498 3.1 34 171,163 182,170 6.4 22

Georgia 11,227 11,773 4.9 13 101,801 109,720 7.8 11

Kentucky 4,717 4,898 3.9 24 42,910 45,684 6.5 21

Mississippi 3,251 3,360 3.4 29 25,153 26,489 5.3 35

North Carolina 10,208 10,780 5.6 6 96,083 103,383 7.6 12

South Carolina 3,820 3,941 3.2 31 42,695 45,330 6.2 28

Tennessee 9,999 10,567 5.7 5 67,790 72,046 6.3 24

Region V 71,259 74,342 4. 691,889 732,265 5.8

Illinois 22,390 23,819 6.4 2 182,879 194,539 6.4 23

Indiana 8,300 8,624 3.9 23 76,212 80,046 5.0 41

Michigan 10,932 11,139 1.9 50 139,438 147,199 5.6 32

Minnesota 7,261 7,666 5.6 7 72,179 76,643 6.2 27

Ohio 15,701 16,194 3.1 33 152,092 160,524 5.5 33

Wisconsin 6,676 6,900 3.4 27 69,089 73,314 6.1 29

Region VI 67,434 70,402 4.4 365,237 394,784 8.1

Arkansas 3,492 3,565 2.1 48 25,121 26,435 5.2 39

Louisiana 6,320 6,595 4.4 20 46,122 48,991 6.2 26

New Mexico 2,196 2,251 2.5 43 17,830 18,621 4.4 46

Oklahoma 5,664 5,777 2.0 49 33,602 35,388 5.3 34

Texas 49,763 52,215 4.9 12 242,562 265,350 9.4 2

Region VII 19,550 20,128 3.0 156,884 167,317 6.7

Iowa 4,329 4,429 2.3 46 33,825 35,565 5.1 40

Kansas 4,320 4,432 2.6 42 32,030 34,269 7.0 19

Missouri 8,099 8,334 2.9 38 70,153 75,147 7.1 17

Nebraska 2,803 2,933 4.7 16 20,876 22,337 7.0 18
230 The Annual Report on Small Business and Competition

Region VIII 16,478 17,225 4.5 109,730 118,191 7.7

Colorado 8,446 8,824 4.5 18 57,086 62,108 8.8 4

Montana 1,662 1,733 4.2 21 8,142 8,506 4.5 45

North Dakota 1,061 1,099 3.6 26 6,934 7,301 5.3 36

South Dakota 1,512 1,591 5.2 11 7,532 7,899 4.9 42

Utah 2,849 3,004 5.4 9 24,653 26,734 8.4 6

Wyoming 947 975 2.9 36 5,383 5,644 4.8 43

Region IX 89,927 94,220 4.8 535,700 574,487 7.2

Arizona 6,214 6,559 5.5 8 52,870 57,620 9.0 3

California 77,899 81,618 4.8 15 440,619 472,326 7.2 15

Hawaii 2,464 2,478 0.6 51 16,941 17,398 2.7 50

Nevada 3,350 3,566 6.4 1 25,270 27,144 7.4 13

Region X 21,745 22,829 5.0 140,334 152,747 8.8

Alaska 1,316 1,361 3.4 28 9,503 9,567 0.7 51

Idaho 2,564 2,687 4.8 14 12,403 13,055 5.3 38

Oregon 6,516 6,911 6.1 3 41,461 44,987 8.5 5

Washington 11,350 11,871 4.6 17 76,969 85,138 10.6 1

Source: U.S. Small Business Administration, Office of Advocacy, from data provided by the U.S. Department

of Commerce, Bureau of Economic Analysis.
Supplementary Tables 231

Table A.21 Fastest Growing Industries and Industries Generating the Most Jobs, December 1996 and December 1997 (Thousands)SIC Absolute Percent 

December Codes Change Change 

(1987) Industry 1996 1997 1996–1997 1996–1997 Fastest Growing Industries

Two-Digit SIC Level

6700 Holding and Other Investment Offices 212.2 232.0 19.8 9.3 6200 Security and Commodity Brokers 566.8 612.8 46.0 8.1 7900 Amusement and Recreation Services 1,323.7 1,424.6 100.9 7.6 7300 Business Services 7,488.1 7,979.0 490.9 6.6 8700 Engineering and Management Services 2,892.8 3,081.3 188.5 6.5 7800 Motion Pictures 530.6 562.9 32.3 6.1 4500 Transportation by Air 1,183.5 1,254.5 71.0 6.0 8900 Services, NEC 46.9 49.6 2.7 5.8 6100 Nondepository Institutions 532.9 561.9 29.0 5.4 5900 Miscellaneous Retail Establishments 2,974.8 3,122.4 147.6 5.0 

Three-Digit SIC Level

7370 Computer and Data Processing Services 1,258.9 1,424.1 165.2 13.1 3720 Aircraft and Parts 480.3 527.2 46.9 9.8 7810 Motion Picture Production and Services 226.6 247.1 20.5 9.0 8740 Management and Public Relations 908.2 989.3 81.1 8.9 7840 Video Tape Rental 159.5 173.7 14.2 8.9 6280 Security and Commodity Services 114.9 124.9 10.0 8.7 5590 Automotive Dealers, NEC 9.3 10.1 0.8 8.6 5930 Used Merchandise Stores 109.7 119.1 9.4 8.6 780 Landscape and Horticultural Services 362.4 392.8 30.4 8.4 1380 Oil and Gas Field Services 175.4 190.0 14.6 8.3 
232 The Annual Report on Small Business and Competition Table A.21 Fastest Growing Industries and Industries Generating the Most Jobs, December 1996 and December 

(Thousands)—Continued SIC Absolute Percent 

December Codes Change Change 

(1987) Industry 1996 1997 1996–1997 1996–1997 

Four-Digit SIC Level 2061 Raw Cane Sugar 6.4 8.2 1.8 28.1 

3533 Oil and Gas Field Machinery 41.8 49.3 7.5 17.9 3715 Truck Trailers 33.6 39.3 5.7 17.0 8743 Public Relations Services 36.8 42.5 5.7 15.5 3728 Aircraft Parts and Equipment, NEC 127.2 146.6 19.4 15.3 7371 Computer Programming Services 284.4 327.1 42.7 15.0 7372 Prepackaged Software 207.3 237.9 30.6 14.8 8742 Management Consulting Services 317.5 357.3 39.8 12.5 7373 Computer Integrated Systems Design 148.4 166.3 17.9 12.1 7382 Security Systems Services 54.4 60.5 6.1 11.2 Industries Generating the Most Jobs

Two-Digit SIC Level

7300 Business Services 7,488.1 7,979.0 490.9 6.6 8000 Health Services 9,577.3 9,807.5 230.2 2.4 8700 Engineering and Management Services 2,892.8 3,081.3 188.5 6.5 1700 Special Trade Contractors 3,421.3 3,579.6 158.3 4.6 5000 Wholesale Trade—Durable Goods 3,854.0 4,006.0 152.0 3.9 5900 Miscellaneous Retail Establishments 2,974.8 3,122.4 147.6 5.0 5800 Eating and Drinking Places 7,500.1 7,637.6 137.5 1.8 5300 General Merchandise Stores 3,068.0 3,184.2 116.2 3.8 7900 Amusement and Recreation Services 1,323.7 1,424.6 100.9 7.6 8300 Social Services 2,433.5 2,526.6 93.1 3.8 
Supplementary Tables 233

Three-Digit SIC Level

7370 Computer and Data Processing Services 1,258.9 1,424.1 165.2 13.1 7360 Personnel Supply Services 2,762.7 2,916.8 154.1 5.6 7380 Miscellaneous Business Services 1,652.5 1,772.6 120.1 7.3 5310 Department Stores 2,676.5 2,781.3 104.8 3.9 8740 Management and Public Relations 908.2 989.3 81.1 8.9 8060 Hospitals 3,839.5 3,919.3 79.8 2.1 7990 Miscellaneous Amusement and Recreation Services 963.2 1,041.4 78.2 8.1 8010 Offices and Clinics of Medical Doctors 1,707.9 1,785.4 77.5 4.5 5940 Miscellaneous Shopping Goods Stores 1,134.7 1,204.3 69.6 6.1 4510 Air Transportation, Scheduled 1,021.9 1,081.6 59.7 5.8 

Four-Digit SIC Level

7363 Help Supply Services 2,440.4 2,563.1 122.7 5.0 8062 General Medical and Surgical Hospitals 3,543.5 3,614.6 71.1 2.0 7371 Computer Programming Services 284.4 327.1 42.7 15.0 8742 Management Consulting Services 317.5 357.3 39.8 12.5 7381 Detective and Armored Car Services 550.4 586.8 36.4 6.6 8711 Engineering Services 653.5 688.4 34.9 5.3 7361 Employment Agencies 322.3 353.7 31.4 9.7 7372 Prepackaged Software 207.3 237.9 30.6 14.8 4512 Air Transportation, Scheduled 516.6 542.9 26.3 5.1 7997 Membership Sports and Recreation Clubs 293.3 318.3 25.0 8.5 

NEC=Not elsewhere classifiedNote: Small-business-dominated industries are industries in which a minimum of 60 percent of employment is in firms with fewer than 500 employees. L

nated industries are industries in which a minimum of 60 percent of employment is in firms with 500 or more employees. The remaining industries are classified 

Source: U.S. Small Business Administration, Office of Advocacy, from employment data provided by the U.S. Department of Labor, Bureau of Labor Statisti

firm size data provided by the U.S. Department of Commerce, Bureau of the Census.
234 The Annual Report on Small Business and Competition Table A.22 U.S. Business Measures, 1975–1996 Nonagricultural Business Self Tax New Year Firms I Firms II Establishments 1 Employment Returns New Firms Incorporations Terminations Bankru

1996 6,190,907 5,478,047 6,738,476 8,971,000 23,240,700 842,357 790,569 849,839 53,21995 6,105,470 5,369,068 6,612,721 8,901,000 22,446,000 819,477 770,206 863,699 50,51994 6,035,538 5,276,964 6,509,065 9,003,000 21,990,200 806,855 741,654 803,290 50,81993 5,900,156 5,193,642 6,401,233 8,959,000 23,552,722 757,529 706,537 802,702 62,31992 5,791,214 5,095,356 6,319,300 8,576,000 23,137,412 736,773 666,800 819,336 69,81991 5,740,233 5,051,025 6,200,859 8,850,000 22,799,565 726,437 628,604 820,445 70,61990 5,689,402 5,073,795 6,175,559 8,719,000 22,376,070 769,124 647,675 837,511 63,91989 5,568,000 5,021,315 6,106,922 8,605,000 21,921,715 744,654 676,567 830,478 62,41988 5,513,000 4,954,645 6,016,367 8,519,000 20,986,927 733,021 685,095 763,299 62,81987 5,420,000 NA 5,937,061 8,201,000 20,771,586 748,274 685,572 723,997 81,41986 5,230,000 NA 5,806,973 7,881,000 20,048,931 724,520 702,101 809,001 79,91985 5,142,000 NA 5,701,485 7,810,000 19,540,673 714,502 664,235 748,438 70,61984 5,009,000 NA 5,517,715 7,785,000 18,771,420 690,812 634,991 679,932 64,21983 4,837,000 NA 5,306,787 7,575,000 17,955,044 633,000 600,420 728,081 62,41982 4,777,000 NA 4,633,960 7,262,000 17,271,668 595,000 566,942 717,462 69,21981 NA NA 4,586,510 7,097,000 16,599,292 NA 581,242 NA 48,01980 NA NA 4,543,167 7,000,000 16,791,788 NA 533,520 NA 43,21979 NA NA 4,535,653 6,791,000 16,192,000 NA 524,565 NA N1978 NA NA 4,409,223 6,429,000 15,629,000 NA 478,019 NA N1977 NA NA 4,352,295 6,114,000 14,741,000 NA 436,170 NA N1976 NA NA 4,142,809 5,783,000 14,536,000 NA 375,766 NA N1975 NA NA 4,114,262 5,705,000 13,979,000 NA 326,345 NA N

1 Units with paid employees in the fourth quarter through 1982. 1983 on includes units active in any quarter of the year.2 Commercial and industrial failures through 1983. 1984 on includes all industries.

Sources: U.S. Small Business Administration, Office of Advocacy, from data provided by the following sources: Firms I from the U.S. Department of Lab

Training Administration (aggregation of state level firms). Firms II from the U.S. Department of Commerce, Bureau of the Census. Establishments from the U.S. DeparBureau of the Census. Nonagricultural self-employment from the U.S. Department of Labor, Bureau of Labor Statistics. Business tax returns from the U.S. DepartInternal Revenue Service. New firms from the U.S. Department of Labor, Employment and Training Administration (state-level firms that plan to begin to hire empporations from the Dun & Bradstreet Corporation (new corporations or a redesignation by sole proprietorships and partnerships). Terminations from the U.S. DEmployment and Training Administration (state-level business closings). Bankruptcies from the Administrative Office of the U.S. Courts, Statistical Analysis and Reness bankruptcy filings). Failures from the Dun & Bradstreet Corporation (state-level business closings while owing debts).
Procurement

Synopsis

The federal government spends about $200 billion a year on the procurement of goods and services. Small firms annually receive more than 20

percent of all prime contract dollars and another 10–14 percent of the federal procurement pie in subcontracts. Large firms receive more than 60 percent of all federal procurement dollars.

Federal contract markets are changing at an unparalleled pace. Two

recent laws, the Federal Acquisition Streamlining Act (FASA), enacted in

1994, and the Federal Acquisition Reform Act (FARA) or Clinger-Cohen Act,

enacted in 1996, have had an unprecedented impact on the federal procurement process. Additional reforms were enacted in December 1997 in the

HUBZone and contract bundling legislation.

The 1994 and 1996 laws were designed to make the government operate more like a commercial buyer and make it easier and more appealing for

businesses to participate in government markets. Many of the implemented

changes are benefiting small firms, although some longstanding small business protections have been weakened or eliminated in the process.

In FY 1997, small businesses won $63.7 billion in federal contract

awards, including $41.2 billion in direct contract awards from the federal

government and an additional $22.5 billion in subcontracts from prime contractors working directly for the federal government.

The $63.7 billion total represents 32.6 percent of the $195.3 billion in

contract actions awarded by the federal government in FY 1997, a slight

decrease from the previous year’s 34 percent small business share. Prime

contract dollars awarded to small businesses increased very slightly, from

$41.1 billion in FY 1996 to $41.3 billion in FY 1997. The overall share

decreased by more than 1 percent because a smaller share of subcontract

dollars were awarded to small firms.

The percentage of prime contracts awarded in FY 1997 to small minority- and women-owned businesses remained at levels consistent with FY

1996. In FY 1997, minority-owned firms were awarded $11.1 billion in prime

contracts or 5.7 percent of total federal contract dollars. Women-owned

firms were awarded $3.6 billion in prime contracts or 1.8 percent of federal

buys for the same period.
the United States. This amount includes contracting for the purchase of goods

and services such as research and development, educational and training

courses, paint, tools, toiletries, military weapons, housing, and hardware.

Costs associated with payment for these goods and services support federal

civilian and military personnel around the world.

The government awarded small businesses $41.3 billion in prime contract dollars, including $33.2 billion in actions over $25,000 and $8.1 billion

in actions of $25,000 or less (Tables B.1 and B.2, and Chart B.1).1 Small businesses received about 21 percent of all prime contract dollars awarded,

including those in contracts for foreign military sales, directed sources of supply (National Industries for the Blind/National Industries for the Severely

Handicapped), and educational institutions, nonprofit organizations, and state

and local governments. Adding the dollar value of small business subcontracts

increases the total by an additional $22.5 billion to $63.7 billion. The small

business share of this total in FY 1997 was 32.6 percent.2

Sources of Small Business Awards by

Agency/Department

S ome 62 percent ($20.6 billion) of the total $33.2 billion in prime contract

dollars over $25,000 awarded to small businesses in FY 1997 resulted from

Department of Defense (DOD) awards (Table B.3). The next largest source of

federal contracting awards to small businesses was the General Services

Administration, which accounted for 8.7 percent ($2.9 billion) of the total dollars awarded to small businesses in FY 1997, followed by the Department of

Transportation with 5.1 percent ($1.7 billion), and the National Aeronautics

and Space Administration with 3.4 percent ($1.1 billion).

Small Business Share of Purchasing Agency Awards

The small business share of agency procurement budgets is one measure of

small businesses’ ability to win contracts from the principal procurement

centers of the federal government. For example, although the Department of

Defense accounted for 61.9 percent of all contract dollars over $25,000

236 The Annual Report on Small Business and Competition

1 A small firm is defined for procurement purposes by size standards established by the U.S. Small

Business Administration. Typically, for most purposes, the SBA’s Office of Advocacy defines a small business as

having fewer than 500 employees and not dominant in its field. For detailed definitions for procurement purposes, see SBA’s small business size regulations at 13 CFR 121.9, published January 1, 1996. 2 Data on subcontracting awards are based on federal agency reports required by Public Law 95–507,

Section 221(h).
awarded to small businesses in FY 1997 (Table B.3), this amounted to only

17.6 percent of DOD’s total (Table B.5).

As measured by their share of agency budgets, small businesses were

most successful in winning awards from the Department of the Interior, where

they gained 49.4 percent of the agency’s total award dollars, followed by the

Department of Transportation (45.2 percent), the Department of Agriculture

(44.4 percent), the Nuclear Regulatory Commission (42.6 percent), and the

Smithsonian Institution (42.4 percent). Small businesses won less than 42 percent of prime contract award dollars in all other major federal agencies in FY

1997 (Table B.5).

Product/Service Categories

The federal contracting markets encompass three major categories of goods

and services: supplies and equipment, research and development, and

other services and construction (Table B.6). The volume of award dollars in

each of the three major procurement categories shifted slightly as a percentage of total awards from FY 1996 to FY 1997. 

The services and construction category, which includes activities as diverse

as architectural and engineering services, data processing, telecommunications,

Procurement 237

Small Business

19%

Source: Federal Procurement Data System, The FPDS Federal Procurement Report, 

January, 1998.

Small Business

21%

Other

79%

Other

81%

Small Business

47%

Other

53%

Actions Under $25,000 Actions Over $25,000
in FY 1996.

Small businesses experienced a market share increase in two of the three

major categories from FY 1996 to FY 1997. In research and development, the

small business share increased slightly from 12.3 percent to 13.3 percent

(Table B.7). Small firms also increased their market share of supplies and

equipment from 14.9 percent to 15.4 percent. But their share of services and

construction contract awards declined from 23.6 percent to 22.5 percent. 

Size of Federal Contract Actions

The federal contracting process involves a relatively small number of very

substantial purchases and a large number of smaller awards. Some 91 percent ($178.1 billion) of the FY 1997 federal procurement dollars were awarded in contract actions over $25,000 (Table B.1). These large transactions, however, accounted for only 3 percent of the contract actions executed during the

period. Conversely, 97 percent of the total number of contract actions were

issued in contract actions of $25,000 or less; these contracts were valued at

$17.2 billion.3

Small businesses are significantly more successful in competing for smaller awards than they are in competing for larger contracts. They were awarded

about one-half (46.9 percent) of total federal dollars in contract actions of

$25,000 or less, but just 18.6 percent of the larger awards over $25,000. The

financial returns are, of course, much greater for the small businesses that win

larger awards.

The Federal Acquisition Streamlining Act of 1994 (FASA), signed into

law on October 13, 1994, simplified the federal contracting process. Prior

to enactment of FASA, only procurements of $25,000 or less could be set

aside for small businesses with limited competition. Government procurement personnel may now follow a simplified small business acquisition

process for purchases between $2,500 and $100,000 as long as there is a

reasonable expectation of bids being received from two or more responsible

small businesses whose bids are competitive and commensurate with market expectations.

238 The Annual Report on Small Business and Competition

3 The Federal Procurement Data System (FPDS) has been publishing data on contract awards since FY

1979. From FY 1979 to FY 1983, the FPDS published detailed data on all contract awards over $10,000. Starting

in FY 1983, the Department of Defense (DOD) increased its reporting threshold from $10,000 to $25,000; for

civilian agencies, a similar change began in FY 1986. For FY 1994, the threshold has been raised to $100,000

for civilian agencies and the DOD. Unless otherwise stated, the discussions of federal procurement in this and

subsequent sections of this report reflect contract actions over $25,000.
external R&D budgets for the program.4 The required percentage was 1.25

percent in FY 1992, 1.5 percent in FY 1993 and FY 1994, 2.0 percent in FY

1995 and FY 1996, and 2.5 percent beginning in FY 1997.

The SBIR program has three phases. Phase I is a limited effort, usually for

six months, to determine the scientific and technical merit and feasibility of an

idea. This phase has been restricted by legislation to ideas “that appear to have

commercial potential.” The amount that can be awarded in Phase I has been

raised from $50,000 to $100,000.

Only those small businesses that win Phase I are eligible to apply for Phase

II, the detailed research and development phase that lasts about two years and

often ends with the development of a prototype product or process. Commercial

potential also receives increased emphasis in Phase II. The amount that can be

awarded in Phase II has been raised from $500,000 to $750,000.

Small businesses conduct Phase III with non-SBIR funds to pursue commercial applications of the R&D funded in Phases I and II. Phase III is the keystone of the program and involves private sector investment and support for

introducing the innovation into the marketplace. Phase III may involve nonSBIR R&D or production contracts with a federal agency for products or

processes intended for use by the federal government.

In the first 15 years of the program, almost $7.7 billion was awarded to

small businesses in 45,200 Phase I and II projects (Table B.8). The program has

been very competitive: on average, 7.75 proposals have been received for

every Phase I award. 

Agencies using SBIR contracts include the Departments of Commerce,

Defense, Education, and Transportation, the Environmental Protection Agency,

the National Aeronautics and Space Administration, the Nuclear Regulatory

Commission and, initially, the Department of the Interior. SBIR awards are

made in the form of grants at the Departments of Agriculture, Energy, and

Health and Human Services, and the National Science Foundation, and thus

are not included in any R&D data in other tables in this appendix.

In FY 1997, awards were made in every state, the District of Columbia,

and Puerto Rico, with concentrations in technology-rich California and

Massachusetts (Table B.9).

Procurement 239

4 The Small Business Innovation Research program began as a government-wide program in FY 1983. The

program was extended in the Small Business Innovation Research Program Reauthorization Act of 1992. This

act expanded the size of the program and reauthorized it for an additional seven years, through FY 2000.
Procurement From Minority- and Women-Owned

Businesses

Relative to their representation in the business population, small womenand minority-owned businesses still account for a small percentage of

total federal award dollars (Chart B.2). The gap is greatest for women-owned

businesses, which constitute approximately one-third of the total nonagricultural business population of the United States. Small women-owned businesses obtained only 1.8 percent of the FY 1997 federal contract dollars (Table

240 The Annual Report on Small Business and Competition

Source: Federal Procurement Data System, The FPDS Federal Procurement Report, 

January 1998. Billions of Dollars

Total Awards All Small 

Firms

Minority–

Owned Firms

Women–

Owned Firms

0

50

100

150

200

5 For additional information, see Harry J. Chmelynski and Jonathan Skolnik, The Pattern of Federal

Procurement From Minority and Women-Owned Small Business, report no. PB93–182582, prepared by Jack

Faucett Associates for the U.S. Small Business Administration, Office of Advocacy (Springfield, Va.: National

Technical Information Service, 1993). The Faucett study indicates that women-owned firms, after adjustments

were made for comparable procurement/industry characteristics, competed for and won contracts over a fiveyear period with a value that exceeded the annual rate of growth in federal contracting overall and in the gross

domestic product. Bureau of the Census data indicate that there were 5.9 million women-owned businesses in

1992 and 1.2 million minority-owned businesses in the United States in 1987. See also U.S. Department of

Commerce, Bureau of the Census, 1987 Survey of Minority-Owned Business Enterprises, Summary

(Washington, D.C. : U.S. Government Printing Office, August 1991) and idem: Women-Owned Business, 1992,

(Washington, D.C. : U.S. Government Printing Office, August 1990).
received 82.7 percent of the value of their contract actions in this category.

Conversely, 17.3 percent of award dollars to small women-owned businesses

were in smaller awards of less than $25,000, compared with only 4.4 percent

of minority-owned contractors’ awards. The percentage of contract dollars

awarded in FY 1997 to both women- and minority-owned businesses is consistent with the dollars awarded in FY 1996, although both groups increased

their share slightly (Tables B.10 and B.11). 

Changes in the Procurement Markets

Federal contract markets are changing at an unparalleled pace. The Federal

Acquisition Streamlining Act (FASA), enacted in 1994, and the Federal

Acquisition Reform Act (FARA), enacted in 1996, have had an unprecedented

impact on the federal procurement process. Additional reforms were implemented in the December 1997 enactment of both HUBZone and contract

bundling legislation.6

The 1994 and 1996 laws are designed to save money, reduce paperwork

burdens on federal contractors, facilitate the acquisition of commercial products, enhance the use of simplified procedures for small purchases, transform

the acquisition process to electronic commerce, and improve the efficiency of

the laws governing the procurement of goods and services.

The Small Business Administration has instituted an electronic gateway

to procurement information, the Procurement Marketing and Access

Network, or Pro-Net. This Internet-based data base of information on more

than 175,000 small, small disadvantaged, and women-owned businesses will

serve as an automated source list for contracting officers, a marketing tool for

small firms, and a link to procurement opportunities and important information on federal contracting. 

Procurement 241

6 The Office of Advocacy in July of 1997 released a research study by Eagle Eye Publishers, Inc., Bundled

Contract Study FY91–FY95, report no. PB97–180731, prepared for the U.S. Small Business Administration,

Office of Advocacy (Springfield, Va: National Technical Information Service, 1997). This study showed that contract consolidation by government agencies is increasing and causing harm to small businesses. The contract

bundling legislation that was enacted is intended to restrict unnecessary contract consolidations. The HUBZone

legislation is intended to provide federal contracting opportunities for small businesses located in historically

underutilized business zones. Both the HUBZone and contract bundling provisions, which were introduced as

individual bills initially, were included in the Small Business Reauthorization Act of 1997 (P.L. 105–135), signed

by President Clinton on December 2, 1997.
Procurement 243

Table B.2 Federal Contract Actions over $25,000, 

FY 1984–FY 1997 244

Table B.3 Distribution of Small Business Share of Dollars in

Contract Actions over $25,000 by Procuring 

Agency Source, FY 1997 245

Table B.4 Procurement Dollars in Contract Actions over 

$25,000 by Major Agency Source, 

FY 1984–FY 1997 246

Table B.5 Small Business Share of Dollars in Contract Actions 

over $25,000 by Major Procuring Agency, 

Fiscal Years 1996 and 1997 247

Table B.6 Distribution of Prime Contract Actions over 

$25,000 by Major Product or Service Category 

for FY 1996 and FY 1997 247

Table B.7 Small Business Share of Dollars in Contract Actions 

over $25,000 by Major Product or Service Category, 

FY 1996 and FY 1997 248

Table B.8 Small Business Innovation Research Program, 

FY 1983–FY 1997 248

Table B.9 SBIR Awards by State, FY 1997 249

Table B.10 Total Federal Contract Actions to Small, WomenOwned, and Minority-Owned Businesses, FY 1997 250

Table B.11 Annual Change in the Dollar Volume of Contract 

Actions over $25,000 Awarded to Small, WomenOwned, and Minority-Owned Businesses, 

FY 1980–FY 1997 251
244 The Annual Report on Small Business and Competition

Table B.2 Federal Contract Actions over $25,000, FY 1984–FY 1997

Thousands of Dollars Fiscal Small Business

Year Total Small Business Share (Percent)

1997 178,068,039 33,190,421 18.6

1996 184,339,968 34,646,839 18.8

1995 185,424,009 34,518,628 18.6

1994 181,575,711 30,388,992 16.7

1993 184,419,699 30,608,569 16.6

1992 183,081,207 29,523,629 16.1

1991 193,550,425 30,121,644 15.6

1990 179,286,902 27,565,861 15.4

1989 172,612,189 25,753,580 14.9

1988 176,544,042 26,481,763 15.0

1987 181,750,326 28,046,374 15.4

1986 183,681,389 28,863,410 15.7

1985 188,186,629 26,708,810 14.2

1984 168,101,394 25,536,585 15.2

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, January 29, 1996, January 13, 1997, and January 1998); and

idem, “Special Report S89522C” (prepared for the U.S. Small Business Administration, Office of Advocacy,

June 12, 1989).

Actions under $25,000 17,218,902 8,082,760 46.9

Actions over $25,000 178,068,039 33,190,421 18.6

(Reported Individually)

Source: Federal Procurement Data System, Federal Procurement Report (Washington, D.C.: U.S.

Government Printing Office, January 1998).
Procurement 245

Total, All Agencies 33,190,421 100.00 —

Advisory Committee on Federal Prevailing Rate 80 48 

Agency for International Development 119,757 0.36 18

Commodity Futures Trading Commission 666 *43

Consumer Product Safety Commission 654* 44

Corporation for National and Community Service 306* 45

Department of Agriculture 1,005,055 3.03 6

Department of Commerce 318,679 0.96 13

Department of Defense 20,550,349 61.92 1

Department of Education 84,947 0.26 19

Department of Energy 471,722 1.42 11

Department of Health and Human Services 737,900 2.22 8

Department of Housing and Urban Development 29,109 0.09 23

Department of the Interior 485,355 1.46 10

Department of Justice 738,432 2.22 7

Department of Labor 165,005 0.50 17

Department of State 186,951 0.56 14

Department of the Treasury 493,698 1.49 9

Department of Transportation 1,699,366 5.12 3

Department of Veterans Affairs 1,040,338 3.13 5

Environmental Protection Agency 179,386 0.54 15

Equal Employment Opportunity Commission 2,141* 34

Executive Office of the President 6,553 0.02 28

Federal Communications Commission (8)* 50

Federal Election Commission 1,549* 39

Federal Emergency Management Agency 55,800 0.17 20

Federal Trade Commission 4,745 0.01 29

General Services Administration 2,890,564 8.71 2

International Trade Commission 701* 42

National Aeronautics and Space Administration 1,134,670 3.42 4

National Archives and Records Administration 4,590 0.01 30

National Capital Planning Commission 126* 47

National Foundation on the Arts and the Humanities 1,021* 41

National Labor Relations Board 2,391* 33

National Mediation Board 1,188* 40

National Science Foundation 13,391 0.04 27
246 The Annual Report on Small Business and Competition

Selective Service System 229 * 46

Small Business Administration 17,352 0.05 25

Smithsonian Institution 26,709 0.08 24

Social Security Administration 169,715 0.51 16

Tennessee Valley Authority 458,089 1.38 12

U.S. Arms Control and Disarmament Agency 2,134 * 35

U.S. Holocaust Memorial Museum 44 * 49

U.S. Soldiers’ and Airmen’s Home 2,013 * 37

U.S. Trade and Development Agency 1,851 * 38

U.S. Information Agency 15,541 0.05 26

* Less than 0.01 percent.

Source: Federal Procurement Data System, Federal Procurement Report (Washington, D.C.: U.S.

Government Printing Office, January 1998).

Table B.4 Procurement Dollars in Contract Actions over $25,000 by Major

Agency Source, FY 1984–FY 1997

Total Percent of Total (Billions of

Fiscal Year Dollars) DOD DOE NASA Other

1997 178.1 65.6 8.9 6.3 19.2

1996 184.3 66.2 8.6 6.1 19.0

1995 185.4 64.0 9.1 6.3 20.5

1994 181.6 65.4 9.9 6.3 18.5

1993 184.4 66.7 10.0 6.4 16.8

1992 183.1 66.3 10.1 6.6 16.9

1991 193.6 70.2 9.5 6.1 14.2

1990 179.3 72.0 9.7 6.4 11.9

1989 172.6 75.0 8.8 5.7 10.6

1988 176.5 76.9 8.2 4.9 10.0

1987 181.8 78.6 7.7 4.2 9.5

1986 183.7 79.6 7.3 4.0 9.0

1985 188.2 80.0 7.7 4.0 8.3

1984 168.1 79.3 7.9 4.0 9.0

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, January 29, 1996, January 13, 1997); and idem, “Special Report

87458A” (prepared for the U.S. Small Business Administration, Office of Advocacy, May 19, 1988).
Procurement 247

Total, All Agencies 178,068,039 33,190,421 17.6 18.6 —

Department of Defense 116,857,949 20,550,349 17.4 17.6 19

Department of Energy 15,849,351 471,722 2.8 3.0 25

National Aeronautics and Space Administration 11,182,066 1,134,670 9.2 10.1 23

General Services Administration 7,027,695 2,890,564 50.7 41.1 7

Tennessee Valley Authority 4,087,309 458,089 10.3 11.2 22

Department of Transportation 3,756,610 1,699,366 40.9 45.2 2

Department of Health and Human Services 2,945,968 737,900 22.3 25.0 15

Department of Veterans Affairs 2,941,924 1,040,338 31.5 35.4 11

Department of Justice 2,657,631 738,432 26.9 27.8 13

Department of Agriculture 2,263,241 1,005,055 45.1 44.4 4

Department of the Treasury 1,842,729 493,698 26.5 26.8 14

Department of the Interior 983,227 485,355 48.4 49.4 1

Environmental Protection Agency 926,048 179,386 17.8 19.4 17

Department of Labor 876,228 165,005 23.2 18.8 18

Department of Commerce 776,600 318,679 37.6 41.0 9

Department of Education 656,343 84,947 15.7 12.9 20

Department of State 569,651 186,951 32.2 32.8 12

Social Security Administration 376,974 169,715 28.5 45.0 3

Agency for International Development 291,442 119,757 24.6 41.1 8

Federal Emergency Management Agency 271,992 55,800 27.3 20.5 16

Department of Housing and Urban Development 249,775 29,109 22.4 11.7 21

National Science Foundation 231,303 13,391 5.2 5.8 24

Office of Personnel Management 80,488 30,464 36.5 37.8 10

Nuclear Regulatory Commission 69,500 29,605 50.4 42.6 5

Smithsonian Institution 62,956 26,709 28.7 42.4 6

All agencies are represented in the total dollars for FY 1996; the organizations listed are those agencies

that awarded at least $100 million in individual contract actions over $25,000 in FY 1996

Source: Federal Procurement Data System, Federal Procurement Report (Washington, D.C.: U.S.

Government Printing Office, January 17, 1997, and January 1998)

Table B.6 Distribution of Prime Contract Actions over $25,000 by Major

Product or Service Category for FY 1996 and FY 1997 (Percent)

Product/Service Category FY 1996 FY 1997

Total 100.0 100.0

Research and Development 15.4 14.6

Other Services and Construction 49.3 49.8

Supplies and Equipment 35.3 35.6

Source: Federal Procurement Data System, Federal Procurement Report (Washington, D.C.: U.S.

Government Printing Office, January 29, 1996 and January 16, 1997).
248 The Annual Report on Small Business and Competition

Research and Development

Total 28,313,561 26,001,140

Small Business 3,470,871 12.3 3,447,847 13.3

Other Services and Construction

Total 90,876,707 88,594,028

Small Business 21,461,928 23.6 19,946,987 22.5

Supplies and Equipment

Total 65,149,700 63,472,871

Small Business 9,714,040 14.9 9,795,587 15.4

Source: Federal Procurement Data System, Federal Procurement Report (Washington, D.C.: U.S.

Government Printing Office, January 13, 1997, and January 1998)

Table B.8 Small Business Innovation Research Program, 

FY 1983–FY 1997

Phase I Phase II Total

Number Number Number Number Awards in

Fiscal of of of of Millions

Year Proposals Awards Proposals Awards of Dollars

Total 256,131 33,121 27,422 12,079 7,653.9

1997 19,585 3,371 2,420 1,404 1,066.7

1996 18,378 2,841 2,678 1,191 916.3

1995 20,185 3,085 2,856 1,263 981.7

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 1997).
Procurement 249

Arizona 68 5,184 29 14,931 97 20,115

Arkansas 11 1,020 0 0 11 1,020

California 693 58,757 326 192,505 1,019 251,262

Colorado 146 11,993 55 33,193 201 45,186

Connecticut 79 6,385 39 24,498 118 30,883

Delaware 15 1,120 9 4,424 24 5,544

District of Columbia 8 649 6 3,856 14 4,505

Florida 76 6,391 35 20,454 111 26,845

Georgia 36 2,864 12 8,538 48 11,402

Hawaii 11 901 3 1,533 14 2,434

Idaho 3 193 1 749 4 942

Illinois 53 4,593 14 9,341 67 13,934

Indiana 14 1,158 11 6,143 25 7,301

Iowa 3 225 2 1,078 5 1,303

Kansas 6 569 3 1,699 9 2,268

Kentucky 8 655 3 3,352 11 4,007

Louisiana 6 459 2 480 8 939

Maine 3 190 2 1,389 5 1,579

Maryland 184 15,537 55 34,125 239 49,662

Massachusetts 508 43,007 202 123,124 710 166,131

Michigan 71 6,082 31 18,507 102 24,589

Minnesota 54 4,440 20 12,893 74 17,333

Mississippi 3 195 2 888 5 1,083

Missouri 15 1,260 5 2,323 20 3,583

Montana 5 330 0 0 5 330

Nebraska 6 485 3 921 9 1,406

Nevada 9 705 3 1,615 12 2,320

New Hampshire 39 3,233 24 14,860 63 18,093

New Jersey 97 8,002 40 24,982 137 32,984

New Mexico 58 4,505 24 13,440 82 17,945

New York 125 10,331 67 37,229 192 47,560

North Carolina 36 3,233 20 12,606 56 15,839

North Dakota 6 429 1 220 7 649

Ohio 121 10,369 41 25,834 162 36,203

Oklahoma 9 655 3 1,993 12 2,648

Oregon 43 3,703 24 14,018 67 17,721

Pennsylvania 114 9,494 56 32,895 170 42,389

Puerto Rico 1 70 0 0 1 70

Rhode Island 1 6 5 3,340 6 3,346

South Carolina 7 595 1 746 8 1,341

South Dakota 6 462 1 294 7 756

Tennessee 30 2,449 12 5,990 42 8,439

Texas 135 11,264 41 25,696 176 36,960

Utah 30 2,583 15 8,113 45 10,696

Vermont 14 1,133 1 750 15 1,883

Virginia 199 16,071 80 52,676 279 68,747

Washington 85 7,039 29 16,778 114 23,817

West Virginia 1 74 2 1,168 3 1,242

Wisconsin 32 2,800 12 7,683 44 10,483

Wyoming 3 204 4 1,944 7 2,148

Source: U.S. Small Business Administration, Office of Advocacy, based upon SBA’s Office of Technology data.
250 The Annual Report on Small Business and Competition

Total 195,286,941 178,068,039 17,218,902

Small Business 41,273,181 33,190,421 8,082,760

Percent of Total 21.1 18.6 46.9

Women-Owned Business 3,590,307 2,968,462 621,845

Percent of Total 1.8 1.7 3.6

Minority-Owned Business 11,132,622 10,640,771 491,851

Percent of Total 5.7 6.0 2.9

Source: Federal Procurement Data System, Federal Procurement Report, (Washington, D.C.: U.S.

Government Printing Office, January 1998).
Table B.11 Annual Change in the Dollar Volume of Contract Actions over $25,000 Awarded to Small, Women-Minority-Owned Businesses, FY 1980–FY 1997 (Thousands of Dollars)

Total, All Business Small Business Women-Owned Business Minority-O

Total Change from Prior Year Total Change from Prior Year Total Change from Prior Year Total Ch

(Thousands (Thousands (Thousands (Thousands

of Dollars) Dollars Percent of Dollars) Dollars Percent of Dollars) Dollars Percent of Dollars) 

1997 195,286,941 17,218,902 9.7 41,273,181 8,082,760 24.4 3,590,307 621,845 20.9 11,132,622 1996 178,068,039 2,783,936 1.5 33,190,421 1,383,158 4.3 2,968,462 148,214 5.3 10,640,771 

1995 180,851,975 6,164,024 3.5 31,807,263 3,384,230 11.9 2,820,248 508,700 22.0 10,519,469 1994 174,687,951 3,649,028 2.0 28,423,033 475,592 1.7 2,311,548 262,828 12.8 9,059,488 

1993 178,336,979 550,598 0.3 27,947,441 282,308 1.0 2,048,720 56,155 2.8 8,804,020 1992 177,786,381 11,815,839 6.2 28,229,749 617,609 2.1 1,992,565 227,399 12.9 7,796,107 

1991 189,602,220 18,301,330 10.7 28,847,358 3,445,732 13.6 1,765,166 287,272 19.4 6,486,289 1990 171,300,890 2,605,909 1.5 25,401,626 1,685,455 7.1 1,477,894 74,955 5.3 5,690,060 1989 168,694,981 5,402,604 3.1 23,716,171 1,955,147 7.6 1,402,939 75,215 5.7 5,333,888 

1988 174,097,585 7,441,007 4.1 25,671,318 2,256,401 8.1 1,327,724 74,839 6.0 5,192,506 

1987 181,538,592 2,111,635 1.1 27,927,719 852,373 3.0 1,252,885 56,034 4.7 4,849,125 

1986 183,650,227 4,335,239 2.3 28,780,092 2,077,397 7.8 1,196,851 102,643 9.4 4,285,925 

1985 187,985,466 20,051,980 11.9 26,702,695 1,196,672 4.7 1,094,208 238,077 27.8 3,884,639 

1984 167,933,486 12,345,380 7.9 25,506,023 3,425,999 15.5 856,131 244,755 40.0 4,004,139 1983 155,588,106 3,190,222 2.1 22,080,024 1,478,539 6.3 611,376 60,775 11.0 3,187,091 

1982 152,397,884 23,533,140 18.3 23,558,563 3,489,774 17.4 550,601 534,772 49.3 2,858,911 

1981 128,864,744 27,971,359 27.7 20,068,789 4,742,668 30.9 1,085,373 297,844 37.8 2,635,008 1980 100,893,385 .— — 15,326,121 — — 787,529 — — 1,821,921 

Source: Federal Procurement Data System, “Special Report S89522C” (prepared for the U.S. Small Business Administration, Office of Advocacy, June 12, 198

Procurement Report (Washington, D.C.: U.S. Government Printing Office, July 10, 1990, March 13, 1991, February 3, 1994, and January 13, 1997).

Procurement 251
FEDERAL

PROCUREMENT

PREFERENCE GOALS

THE

U.S. SMALL BUSINESS

ADMINISTRATION

OFFICE OF 

GOVERNMENT 

CONTRACTING AND

MINORITY ENTERPRISE

DEVELOPMENT
Washington, DC 20500 

Dear Mr. President:

We are pleased to present, for your consideration, the fiscal year 1997 report on

participation in Federal procurement by small business concerns, including

those owned and controlled by women and socially and economically disadvantaged

individuals, and those firms participating in the 8(a) Business Development (8(a) BD)

program. In fiscal year 1997, the Executive Branch of the Federal Government exceeded the government-wide small business goal of 23 percent and the small disadvantaged

business (SDB) goal of 5 percent established by the Small Business Act 15(g)(1), but

failed to achieve the 5 percent women-owned small business goal.

The agencies exceeded the small business prime contract goal by awarding 24.8

percent ($42.5 billion) to small businesses out of the $171.4 billion awarded in fiscal

year 1997. The agencies exceeded the government-wide small disadvantaged business

prime contract goal of 5 percent by awarding 7.0 percent ($12.1 billion, which

includes SDB and 8(a) contracts) to those firms. Federal agencies, however, failed to

achieve the 5 percent women-owned small business prime contract goal, awarding

only 2.1 percent ($3.6 billion) to women-owned small businesses.

The Federal Government’s large business prime contractors subcontracted $71.5

billion in fiscal year 1997. While there is no statutory government-wide small business

subcontract goal, Federal prime contractors exceeded the aggregate proposed goal of

40.3 percent by awarding 41.1 percent ($29.4 billion) to small businesses. This represents nearly $8.2 billion more than projected. Also, Federal prime contractors exceeded the small disadvantaged business subcontracting goal of 5.9 percent by awarding

6.3 percent ($4.5 billion) to such firms. Large prime contractors failed to achieve the

women-owned small business subcontracting goal of 5.0 percent, awarding 4.1 percent ($2.9 billion) to women-owned small firms.

Please note that while we are reporting the accomplishments of each of the departments and agencies that establish goals, we have restricted our analysis and comments

to data from 20 Federal agencies with the largest contracting budgets. These 20 agencies

represent approximately 99 percent of Federal prime and subcontracts awarded.

Respectfully submitted,

AIDA ALVAREZ

Administrator

Enclosure
SBA Guidance 260

Small Business Prime Contract Awards 262

Small Business Subcontract Awards 265

Minority Small Business Awards: The 8(a) Program 268

Small Disadvantaged Business Prime Contracts 271

Small Disadvantaged Business Subcontracts 274

Women-Owned Small Business Prime Contracts 277

Women-Owned Small Business Subcontracts 280

Appendix: Guidance on Goal Setting under Procurement Preference Programs 285

Tables 289
Synopsis

By law, Federal agencies are required to provide small, women-owned

small businesses and small disadvantaged businesses the “maximum practicable opportunity” to participate in Federal contracts for goods and services. To this end, agencies consult annually with the U.S. Small Business

Administration (SBA) and set goals for the percentage of dollars to be awarded through prime contracts or subcontracts to small firms, small disadvantaged firms (including those participating in the 8(a) Business Development

(8(a) BD) program, and small women-owned firms. At the end of the year,

agencies report to the SBA on their success in meeting the goals. SBA has

assigned “account executives” to the largest Federal agencies. These individuals work with the agencies to develop proactive strategies that will open

new areas of opportunity to the small business community.

In fiscal year 1997, the Executive Branch of the Federal Government met

or exceeded all of its small business prime contract goals with the exception

of the women-owned small business goal. The agencies met their overall small

business prime contract goal of 24.8 percent by awarding 24.8 percent ($42.5

billion) to small businesses out of the $171.4 billion total dollars awarded in

fiscal year 1997; the agencies also met the 8(a) goal of 1.7 percent by awarding 1.7 percent ($2.9 billion) in prime contracts to 8(a) firms. Federal agencies exceeded the small disadvantaged business prime contract goal of 4.3

percent by awarding 5.3 percent ($9.2 billion) to small disadvantaged businesses. Despite a determined effort, Federal agencies failed to achieve the

established women-owned small business prime contract goal of 4.6 percent

by awarding those firms 2.1 percent ($3.6 billion) of prime contract awards.

Federal agencies also exceeded the small business subcontracting and

small disadvantaged business subcontracting goals. The Federal

Government’s large business prime contractors subcontracted $71.5 billion

in fiscal year 1997. Federal prime contractors exceeded the small business

subcontract goal of 40.3 percent by awarding 41.1 percent ($29.4 billion)

to small businesses. They exceeded the small disadvantaged business subcontracting goal of 5.9 percent by awarding 6.3 percent ($4.5 billion) of

subcontract awards to small disadvantaged businesses. The Federal

Government’s large prime contractors failed to achieve the women-owned

small business subcontracting goal of 5.0 percent, awarding 4.1 percent

($2.9 billion) to women-owned small business firms.

In this report, the SBA summarizes Federal agency performance in meeting their goals and provides detailed comments from the 20 Federal agencies

with the largest contracting budgets. In the goal-setting process, agencies are
The policy of the United States, as stated in the Small Business Act, is that

small businesses, women-owned small businesses and small businesses

owned and controlled by socially and economically disadvantaged individuals are to be provided with the maximum practicable opportunity to participate in the performance of contracts let by the Federal Government. To that

end, Public Law 95–507, as amended, requires the head of each Federal

agency, after consultation with the SBA, to establish aggressive, yet achievable, goals for the award of contracts to small, small disadvantaged and

women-owned small businesses.

Overall goals are established on a government-wide basis. However, it is

important to note that goals differ from agency to agency. Goals are established on an individual agency-by-agency basis because each agency has a

different procurement mix based on its specific mission. For example, the

Department of Defense (DOD) purchases a large number of aircraft, and there

are not many small businesses providing this end product, whereas the

General Services Administration (GSA) purchases common commodities like

paper clips, paper, computers, etc., where there are numerous small business

suppliers. It is therefore appropriate to establish different dollar and percentage goals for these agencies. It is the mission of the SBA to work with Federal

agencies to establish challenging, yet meaningful, goals that will encourage

agencies to take risks that will enhance the ability of small businesses to participate in the government’s prime and subcontracting opportunities.

In establishing goals, agencies use judgment based on their careful consideration of a variety of factors such as historical performance, anticipated budget or mission changes affecting their procurement needs, changes in acquisition

procedures and anticipated major acquisitions that will deviate from “usual”

award practices. If these goals are not set at recommended levels consistent with

the SBA’s analysis, the SBA will not concur with the agency, and a goal at a more

appropriate level will be negotiated and subsequently established.

SBA Guidance

Each year, Federal agencies provide the SBA with estimates of the total dollar amount of (1) all prime contracts to be awarded during the year and (2)

subcontracts to be awarded by all of the agency’s “reporting prime contractors.”1 All goals are expressed in terms of dollars and percentages. However,

if there is a variance, up or down, from the projected base amounts upon

260 The Annual Report on Federal Procurement Preference Goals

1 “Reporting prime contractors” are defined in the Federal Government’s Standard Form 295. See the

appendix for detailed instructions provided to agencies.
y 

Business Act;

• Prime contract awards to small businesses owned and controlled by

socially and economically disadvantaged individuals, other than 8(a);

• Prime contract awards to small businesses owned and controlled by

women;

• Subcontracts awarded by prime contractors to small businesses;

• Subcontracts awarded by prime contractors to small businesses owned

and controlled by socially and economically disadvantaged individuals; and,

• Subcontracts awarded by prime contractors to small businesses owned

and controlled by women.

In the unlikely event that consultations between SBA and an agency fail to

result in a mutually agreeable goal, the Office of Federal Procurement Policy

(OFPP) at the Office of Management and Budget (OMB) shall make the final

determination of what goals are appropriate under the circumstances.

At the end of each fiscal year, Public Law 95–507, as amended, requires

the head of each agency to report to the SBA Administrator on the agency’s

achievement of goals for the year, with appropriate justification for failure to

meet specific goals.2

Women-owned small businesses benefited significantly from procurement reform in 1994. The Federal Acquisition Streamlining Act of 1994 (P.L.

103–355 signed October 13, 1994), more commonly known as FASA,

requires a 5 percent government-wide goal for women-owned small businesses. Women-owned small businesses are specifically incorporated into the

procurement preference goaling process and added as a class for subcontract

plan goals.

The SBA’s detailed analysis and comments cover only the 20 Federal

agencies with the largest contracting budgets. These 20 agencies represent

approximately 99 percent of Federal procurement awards reported to the

Federal Procurement Data Center. Tabular data on many of the smaller agencies are also included for FY 1997.

Fiscal Year 1997 261

2 Public Law 100-656 requires this information in the annual state of small business report.
centage awarded to small businesses, 24.8 percent, met the projected goals:

small firms gained almost $143 million more than had been estimated. For

purposes of this report, the General Services Administration’s Federal Supply

Service (FSS) projections and achievements will be evaluated separately from

the GSA’s non-FSS projections and achievements, as appropriate.

The Departments of Commerce, Defense, Health and Human Services,

Interior, State, Transportation, Treasury, the General Services Administration

(Non-Federal Supply Service), National Aeronautics and Space

Administration, and the Social Security Administration either met or exceeded their percentage goals for prime contracting to small business. Nine of

those agencies also exceeded their dollar goals. The Departments of Justice,

Veterans Affairs, the Tennessee Valley Authority and the Agency for

International Development also exceeded the dollar value projection of

awards to small business concerns.

The largest single agency percentage increase over the projected total

came from the Department of Transportation, which awarded 33.5 percentage

points more than projected, achieving 64 percent of its prime contract awards

to small business. The next largest percentage gain was from the Social

Security Administration, which awarded 51.1 percent—21.1 percentage

points higher than projected.

The largest dollar increase over the projected total came from the

Department of Veterans Affairs (DVA), despite the agency having missed the

projected percentage goal by just 0.7 percentage point. It increased its dollar

total for small business by $547.1 million, to more than $1.4 billion. The second largest dollar share gain was from the Department of Transportation,

which awarded more than $971 million to small businesses—$455.5 million

more than projected.

Agency Shortfalls

The Small Business Administration is charged in Public Law 95–507, as

amended, with the responsibility to analyze and comment on shortfalls by

major reporting agencies. The Departments of Agriculture, Education, Energy,

Housing and Urban Development, Justice, Labor, Veterans Affairs, the

Environmental Protection Agency, the General Services Administration

(Federal Supply Schedule), the Tennessee Valley Authority, and the U.S.

Agency for International Development missed their percentage goals for prime

contract awards to small business concerns.

262 The Annual Report on Federal Procurement Preference Goals
to small businesses in FY 1997 were slightly less than $1.2 billion. 

Department of Education

The Department of Education (DOEd) failed to reach its small business prime

contract goal of 23.4 percent by 5.3 percentage points. DOEd just missed its

small business prime contract dollar goal of $109 million by $1.7 million. The

actual prime contract dollar total awarded to small businesses in FY 1997 was

$107.3 million.

Department of Energy

The Department of Energy (DOE) failed to reach its small business prime contract goal of 20.0 percent by 2.5 percentage points. DOE also missed its small

business prime contract dollar goal of $3 million by $349.7 million. The actual prime contract dollar total awarded to small businesses in FY 1997 was

$2.65 million. According to DOE’s report, the shortfall can be attributed to

declines in awards to small businesses by maintenance and operations (M&O)

contractors and the “corresponding centripetal forces for ‘bundling’ contracts.”

Department of Housing and Urban Development

The Department of Housing and Urban Development (HUD) failed to reach

its small business prime contract goal of 43.0 percent by 16.5 percentage

points. HUD also missed its small business prime contract dollar goal of

$330.9 million by $231.7 million. The actual small business prime contract

dollar total awarded was $99.2 million. HUD’s report stated that departmental awards to small, small disadvantaged businesses, and women-owned small

businesses sharply declined in FY 1997 because of a substantial decrease

(from $355 million in FY 1995 to $85 million in FY 1996 to $40 million in FY

1997) in field contracting activity, HUD’s greatest source of small business

contract awards.

Department of Justice

The Department of Justice (DOJ) missed its small business prime contract goal

by 4.5 percent, awarding 30 percent of its prime contracts to small business

concerns. However, DOJ exceeded its small business prime contract dollar

goal of $707.2 million by $28.6 million. The actual prime contract dollar

amount awarded to small businesses in FY 1997 was $735.8 million.

Fiscal Year 1997 263
$199.1 million. DOL reported that the failure to reach the FY 1997 goals can

be attributed to an increase in the number of large construction and operations contracts. Although this negatively impacted DOL’s prime contract

awards to small business concerns, it was matched by a marked increase in

the agency’s contractors’ subcontracting to small business.

Department of Veterans Affairs

Despite failing to meet its percentage goal for small business prime contract

awards by 0.7 percentage point, the Department of Veterans Affairs exceeded

its goal for dollar awards by $547.1 million—by awarding more than $1.4 billion of its prime contract awards to small business.

Environmental Protection Agency

The Environmental Protection Agency (EPA) failed to reach its small business

prime contract goal of 25.0 percent by 4.0 percentage points. EPA also missed

its small business prime contract dollar goal of $300.0 million by $108.0 million. The actual prime contract dollar total awarded to small businesses in FY

1997 was $192.0 million. 

General Services Administration (Federal Supply Service)

The General Services Administration’s Federal Supply Service (GSA/FSS)

missed its goal for small business prime contract awards by 45.5 percent.

GSA/FSS also missed its goal for dollar awards to small business by $1.25 billion. GSA/FSS awarded more than $2.1 billion, or 31.1 percent, in prime contract dollar awards to small business in FY 1997.

Tennessee Valley Authority

The Tennessee Valley Authority (TVA) failed to reach its small business prime

contract goal of 18.0 percent by 1.3 percentage points. However, TVA exceeded its small business prime contract dollar goal of $452.3 million by $59.8

million. The actual prime contract dollar amount awarded to small businesses

in FY 1997 was $452.3 million. 

U.S. Agency for International Development

The U.S. Agency for International Development (USAID) failed to reach its

small business prime contract goal of 35.2 percent by 11.5 percentage points.

264 The Annual Report on Federal Procurement Preference Goals
Small Business Subcontract Awards

Federal prime contractors awarded slightly less than $71.5 billion in Federal

funds to subcontractors in FY 1997 (Tables 3 and 4). Of this total, approximately $29.4 billion—41.1 percent—went to small firms. This share was 0.8

percentage point higher than projected. Subcontracts awarded totaled $18.8

billion more than expected, and the dollar share to small businesses was nearly $8.2 billion more than projected.

Prime contractors to the 20 agencies with the largest contracting budgets

awarded approximately 99.8 percent of both the total small business subcontract dollars and the small business subcontract percentage. The following

agencies either met or exceeded their percentage subcontracting goals to

small business: the Departments of Agriculture, Defense, Energy, Housing and

Urban Development, Interior, State, Transportation, Treasury, Veterans Affairs;

and the General Services Administration’s Non-Federal Supply Service, the

National Aeronautics and Space Administration, the Social Security

Administration, the Tennessee Valley Authority, and the U.S. Agency for

International Development. Ten of those agencies, the Departments of

Defense, Energy, Housing and Urban Development, Interior, Transportation,

Veterans Affairs, and the National Aeronautics and Space Administration, the

Social Security Administration, the Tennessee Valley Authority, and the U.S.

Agency for International Development, also exceeded the dollar goal for subcontract awards to small business concerns.

Despite missing their percentage goals for subcontract awards to small

businesses, the Departments of Education, Justice and Labor exceeded their

projected dollar goals.

The largest single agency percentage increase over the projected total

came from the Social Security Administration, which awarded 42.6 percentage points more than projected—awarding 67.6 percent of its subcontract

awards to small business. The next largest percentage gain was from the

Department of State, which subcontracted 59.0 percent—19.0 percentage

points more than projected.

The largest dollar increase over the projected total came from the

Department of Defense, whose prime contractors increased the dollar total

for small business by almost $6.6 billion, to $22.5 billion. The second

largest dollar share gain was from the Department of Veterans Affairs. Its

prime contractors awarded almost $1.7 billion to small business—$1.5 billion more than projected.

Of all the agencies, USAID achieved the highest percentage goal for

small business subcontracts at 74.3 percent. The Social Security

Fiscal Year 1997 265
The following agencies failed to meet their percentage goals for subcontract dollars to small business: the Departments of Commerce, Education, Health and

Human Services, Justice, Labor, and the Environmental Protection Agency.

Despite missing the percentage goal for small business subcontracts, the

Departments of Education, Justice and Labor exceeded the dollar totals projected for small business subcontract awards. Only the Departments of Commerce,

Health and Human Services and the Environmental Protection Agency missed

both their percentage and dollar goals for subcontract awards to small business.

The Departments of Agriculture, Transportation and Treasury and the General

Services Administration’s Non-Federal Supply Service met or exceeded their percentage goals but missed their dollar goals for subcontract awards.

Department of Agriculture

The Department of Agriculture exceeded its percentage goal for subcontract

awards to small business concerns by 1.7 percent. However, USDA failed to

meet its dollar goal for subcontract awards by $77.9 million. USDA’s prime

contractors awarded $276 million in subcontracts to small business concerns.

Department of Commerce 

The Department of Commerce (DOC) failed to reach its small business subcontract goal of 44.0 percent by 3.9 percentage points. DOC also missed the

dollar goal by $18.8 million. The actual dollar amount subcontracted to small

business in FY 1997 was $54.7 million. DOC’s explanation for this is that their

inability to directly influence subcontract awards inhibits the agency’s ability

to unilaterally increase awards to small business subcontractors.

Department of Education

The Department of Education missed its percentage goal for small business

subcontract awards by 18.8 percent. However, DOEd exceeded the dollar

goal by $33.1 million. Its prime contractors reported small business subcontract awards totaling $36.9 million in FY 1997.

Department of Health and Human Services

The Department of Health and Human Services (DHHS) met neither its percentage nor its dollar goal for subcontract awards to small business concerns.

DHHS missed its percentage goal by 17.3 percent and its dollar goal by

266 The Annual Report on Federal Procurement Preference Goals
The Department of Justice failed to reach its small business subcontract goal of

51.5 percent by 0.7 percentage points. However, DOJ exceeded its small business subcontract dollar goal of $417.6 million by $6.1 million. The actual dollar amount subcontracted to small business in FY 1997 was $423.7 million.

Department of Labor

The Department of Labor failed to reach its small business subcontract goal of

58.9 percent by 2.1 percentage points. However, DOL exceeded its small business subcontract dollar goal of $100.2 million by $26.6 million. The actual dollar amount subcontracted to small business in FY 1997 was $126.8 million.

Department of Transportation

The Department of Transportation (DOT) failed to reach its small business subcontract dollar goal of $64.3 million by $108 million. However, DOT exceeded its small business subcontract percentage goal of 50 percent by 13.1 percent. The actual percentage subcontracted to small business in FY 1997 was

63.1 percent. 

Department of Treasury 

The Department of the Treasury (Treasury) failed to reach its small business

subcontract dollar goal of $141.1 million by $10.9 million. However, Treasury

exceeded its small business subcontract percentage goal of 32.0 percent by

12.4 percent. The actual percentage amount subcontracted to small business

in FY 1997 was 42.4 percent.

Environmental Protection Agency

The Environmental Protection Agency failed to reach its small business subcontract goal of 55.0 percent by 21.0 percentage points. EPA also failed to

reach its small business subcontract dollar goal of $82.5 million by $22.5 million. The actual dollar amount subcontracted to small business in FY 1997 was

$60 million.

General Services Administration (Non-Federal Supply Service)

The General Services Administration’s Non-Federal Supply Service failed to

reach its small business subcontract dollar goal of slightly more than $1.2

billion by $567.6 million. GSA/NFSS did exceed its percentage goal by 0.1

Fiscal Year 1997 267
cerns during fiscal year 1997; some of the contractors reduced their discretionary spending in order to economize; GSA’s prime contractors also produced more in-house rather than subcontracting out; and the public utility

contracts have historically posed a problem to the small, small disadvantaged, and women-owned business programs. Because of the nature of service required, GSA has very little leverage to negotiate higher subcontracting

goals in the small and disadvantaged categories.

Minority Small Business Awards: 

The 8(a) Program

The 8(a) Business Development (BD) program helps eligible small disadvantaged business concerns compete in the American economy through

business development. The 8(a) BD program provides Federal Government

contracts to small companies owned and controlled by socially and economically disadvantaged individuals who are certified by the U.S. Small

Administration. Under the program, the SBA, which acts as the prime contractor in the process, works with other Federal agencies to identify requirements suitable for the 8(a) BD program. The Federal agencies, with SBA assistance, then negotiate subcontracts with certified 8(a) BD program participants. 

The Federal Government awarded $2.9 billion (1.7 percent) of the total

amount awarded in prime contracts through the SBA to firms participating in

the 8(a) BD program in FY 1997 (Tables 5 and 6). The agencies met the percentage goal established for awards to 8(a) firms—1.7 percent, but fell just

short of meeting the dollar goal established for awards to these firms. Dollar

awards to 8(a) firms fell short of the goal by $85.6 million. 

The 20 agencies with the largest contracting budgets awarded approximately 98.3 percent of the 8(a) contract dollars. Nine of the 20 agencies—the

Departments of Commerce, Housing and Urban Development, Interior, Labor,

State, Transportation and Veterans Affairs, the National Aeronautics and Space

Administration, and Social Security Administration—either met or exceeded

their percentage goals for 8(a). With the exception of the Departments of

Housing and Urban Development and Interior, these agencies also exceeded

their dollar goals. Despite missing their percentage goals, the Department of

the Treasury and the U.S. Agency for International Development exceeded

their dollar goals for awards to 8(a) firms.

The Department of Defense has, by specific legislation, a goal of 5.0 percent for participation of small disadvantaged business and it sets a single goal

for total SDB participation, rather than separate goals for SDB and 8(a) awards.

268 The Annual Report on Federal Procurement Preference Goals
The next largest gain was from the Department of Veterans Affairs, which

awarded 6.9 percent—4.4 percentage points more than projected.

The largest dollar increase over the projected total came from the

Department of Veterans Affairs. It increased its dollar total for 8(a) contracts by

$223.8 million, to $286.6 million. The second largest dollar share gain was

from the Department of State, which awarded $91.1 million to 8(a) firms—

$35.7 million more than projected. 

Agency Shortfalls

The following agencies failed to achieve their percentage goals for 8(a) contracts: the Departments of Agriculture, Education, Energy, Health and Human

Services, Housing and Urban Development, and Treasury, the Environmental

Protection Agency, the General Services Administration’s Non-Federal Supply

Service, the Tennessee Valley Authority; and the U.S. Agency for International

Development. The Departments of Agriculture, Education, Energy, Health and

Human Services, Housing and Urban Development, and Interior, the

Environmental Protection Agency, the General Services Administration’s NonFederal Supply Service, the Social Security Administration, and the Tennessee

Valley Authority each missed their dollar goal for 8(a) contract awards.

Department of Agriculture

The Department of Agriculture missed both its 8(a) contract percentage and

dollar goals. USDA projected a percentage goal of 6.0 percent of its prime

contract awards to 8(a) firms, while only achieving a 2.7 percent goal. The

agency anticipated making $155.9 million in prime contract awards to 8(a)

firms; however, they just fell short of their goal by awarding $88.5 million in

8(a) prime contract awards—$67.4 million less than projected.

Department of Education

The Department of Education failed to reach its 8(a) goal of 5.0 percent by

1.7 percentage points. Education also missed its 8(a) contracts dollar goal of

$23.3 million by $4.0 million. The actual dollar amount to 8(a) contracts was

$19.3 million.

Department of Energy

The Department of Energy did not make its 8(a) contracts goal, missing it by

0.8 percentage point. DOE also failed to reach its 8(a) dollar goal of $450.0

Fiscal Year 1997 269
The Department of Health and Human Services failed to meet either its percentage or dollar goal for awards to 8(a) firms. DHHS projected 8.6 percent of

its prime contract awards were to be made to 8(a) firms, but only 7.0 percent

of their overall awards went to 8(a) firms. DHHS fell short of the $260.5 million projected for 8(a) awards. The agency awarded $224.0 million—$36.5

million less than projected.

Department of Housing and Urban Development

The Department of Housing and Urban Development exceeded its percentage

goal for awards to 8(a) firms. However, HUD missed its dollar goal for awards

to 8(a) firms by $30.3 million. HUD awarded $45.9 million in prime contracts

to 8(a) firms.

Department of Treasury

The Department of the Treasury exceeded its dollar goal of prime contract

awards to 8(a) firms by $3.9 million. Treasury awarded $125.3 million in

prime contracts to 8(a) concerns, but missed its 8(a) percentage goal by 1.0

percent. Treasury awarded 10.0 percent of its prime contracts to 8(a) firms. 

Environmental Protection Agency

The Environmental Protection Agency failed to reach its 8(a) contracts goal of

6.8 percent by 0.9 percentage point. EPA also missed its 8(a) contracts dollar

goal of $81.6 million by $27.7 million. The actual dollar amount to 8(a) contracts was $53.9 million.

General Services Administration (Non-Federal Supply Service)

The General Services Administration’s Non-Federal Supply Service missed

both its percentage and dollar goals for awards to 8(a) firms. GSA/NFSS failed

to meet its percentage goal by 3.2 percent, while missing its dollar goal by

$164.2 million. GSA/NFSS awarded $443.8 million—6.3 percent—in prime

contract awards to 8(a) firms. 

Social Security Administration

The Social Security Administration (SSA) exceeded its percentage goal for

awards to 8(a) firms by 9.3 percent, but missed its dollar goal by $7.9 million.

In FY 1997, the SSA awarded $42 million to 8(a) firms.

270 The Annual Report on Federal Procurement Preference Goals
U.S. Agency for International Development

The U.S. Agency for International Development failed to reach its 8(a) contracts goal of 10.4 percent by 2.6 percentage points, but exceeded its 8(a) contracts dollar goal of $47.3 million by $11.2 million. The actual dollar amount

in 8(a) contracts was $58.5 million.

Small Disadvantaged Business Prime Contracts

I

n FY 1997, the Federal Government awarded almost $9.2 billion, or 5.3 percent of the total $171.4 billion in prime contract dollars, to small disadvantaged businesses (SDBs). These accomplishments do not include contracts

awarded through the 8(a) program (Tables 7 and 8). Subcontract awards to 8(a)

firms are categorized as SDB subcontracts. The Federal agencies exceeded the

projected percentage goal by one full percentage point. Even more impressive

was the dollar achievement: the agencies exceeded the projected dollar

amount for SDB firms by $1.9 billion in FY 1997. The 20 agencies with the

largest contracting budgets awarded approximately 99.3 percent of the SDB

prime contract dollars. 

Thirteen of the 20 agencies—the Departments of Commerce, Defense,

Education, Energy, Health and Human Services, Interior, State, Transportation,

Treasury, and Veterans Affairs, the General Services Administration (both

Federal Supply Service and Non-Federal Supply Service), National

Aeronautics and Space Administration, and the Social Security

Administration—met or exceeded their percentage goals for SDB. Twelve of

these agencies also exceeded their dollar goals.

The largest single agency percentage increase over the projected total

came from the Department of Health and Human Services, which awarded

8.3 percentage points more than projected, achieving 11.5 percent in SDB

prime contracts. The next largest gain was from the Department of Education,

which awarded 8.2 percent—5.7 percentage points more than projected.

The largest dollar increase over the projected total came from the

Department of Defense. DOD increased its dollar total of prime contract

awards to SDB firms by $1.06 million, awarding $6.69 million to SDB firms in

FY 1997. The second largest dollar increase was posted by the General

Services Administration’s Federal Supply Schedule and Non-Federal Supply

Schedule SDB prime contracts. GSA increased its dollar total of Federal supply schedule SDB prime contracts by $290.4 million, to $431.8 million, and

increased its dollar total of Non-Federal Supply Schedule SDB prime contracts

by $79.9 million, to $311.9 million. 

Fiscal Year 1997 271
Agency Shortfalls

The SBA has reviewed and provided specific comments on the reports of the

six agencies that did not achieve either their percentage or dollar goals for

SDB prime contracts in FY 1997: the Departments of Agriculture, Housing and

Urban Development, Justice, and Labor, the Environmental Protection Agency

and the Tennessee Valley Authority.

Although it exceeded its percentage goal for SDB prime contract awards,

the Social Security Administration missed its dollar goal in FY 1997. The U.S.

Agency for International Development, while exceeding its percentage goal,

fell short of meeting its percentage goal for SDB prime contract awards.

Department of Agriculture

The Department of Agriculture failed to reach its SDB prime contract goal of

5.0 percent by 3.2 percentage points. USDA also missed its SDB prime contract dollar goal of $130.0 million by $72.2 million. The actual SDB prime

contract dollar amount awarded was $57.8 million. 

Department of Housing and Urban Development

The Department of Housing and Urban Development failed to reach its SDB

prime contract goal of 3.0 percent by 1.4 percentage points. HUD also missed

its SDB prime contract dollar goal of $23.1 million by $17.2 million. Actual

SDB prime contract dollars awarded totaled $5.9 million. HUD stated in its

report that departmental awards to small disadvantaged businesses declined

sharply in FY 1997 because of a substantial decrease (from $355 million in FY

1995 to $85 million in FY 1996 to $40 million in FY 1997) in field contract

activity contracts, historically HUD’s greatest source of small business contract

awards, including SDB competitive awards.

Field contracting consists primarily of the Office of Housing’s Property

Disposition Program, which manages and sells single- and multi-family properties nationwide. Because of several factors such as a steadily declining

inventory of properties, a reduction in the holding time of properties, and the

department deferring more work to purchasers, the requirement for contract

support to operate the Property Disposition Program has decreased. Because

this program accounts for a large share of small business awards, including

competitive SDB awards, the Department’s total dollar value and percentage

of awards to SDBs declined sharply.

272 The Annual Report on Federal Procurement Preference Goals
Department of Labor

The Department of Labor failed to reach its SDB prime contract goal of 5.0

percent by 3.6 percentage points. DOL also missed its SDB prime contract

dollar goal of $44.5 million by $30.2 million. The actual SDB prime contract

dollars awarded totaled $14.3 million. DOL attributes the missed goal to a significant decline in small purchases from SDB firms.

Department of State

The Department of State exceeded its percentage goal for prime contract

awards to SDB firms by one full percentage point—awarding 6.0 percent of its

prime contracts to SDB firms. However, the department missed its dollar goal

by $6.4 million. The State Department awarded $25.1 million in prime contracts to SDB firms in FY 1997. Because of a waiver granted by the Office of

Federal Procurement Policy, the State Department is authorized to exclude

certain SBA reporting requirements from its reporting data. According to the

department’s FY 1997 report, once the excluded categories were removed

from consideration, it met its 6.0 percent goal for SDB prime contracts.

Environmental Protection Agency

The Environmental Protection Agency did not meet either its percentage or

dollar goal for awards to SDB firms in FY 1997. EPA fell short by 1.2 percent

of meeting its FY 1997 percentage goal of 3.0 percent and missed its dollar

goal by $7.0 million, awarding $17.0 million to SDB firms in FY 1997.

Social Security Administration

The Social Security Administration exceeded its SDB prime contact goal of 5.4

percent by 1.9 percentage points, but missed its dollar goal of $20.7 million

by $7.0 million. The actual SDB prime contract dollar amount awarded was

$13.7 million. 

Tennessee Valley Authority

The Tennessee Valley Authority missed both its SDB prime contract percentage

goal of 2.7 percent by 0.9 percentage point and its dollar goal of $58.9 million by $10.5 million. The total SDB prime contract dollar amount awarded

was $48.4 million. 

Fiscal Year 1997 273
on FY 1997 accomplishments, the USAID states that because of incomplete

data collection from its overseas missions, both dollar awards and corresponding percentages are down. The agency is taking steps to address this issue and

believes that this will eliminate future declines.

Small Disadvantaged Business Subcontracts

Federal prime contractors awarded almost $71.5 billion in Federal funds to

subcontractors in FY 1997. Of this total, slightly less than $4.5 billion—6.3

percent—went to small disadvantaged business subcontractors (Tables 9 and

10). This share was 0.4 percentage points higher than projected. Subcontracts

to SDBs totaled $1.37 billion more than projected.

Prime contractors to the 20 agencies with the largest contracting budgets

awarded approximately 99.7 percent of the dollar value of these awards.

Twelve of the 20 agencies—the Departments of Agriculture, Defense, Energy,

Interior, State, Transportation, Treasury, and Veterans Affairs, the General

Services Administration Non-Federal Supply Service, Social Security

Administration, Tennessee Valley Authority, and U.S. Agency for International

Development—either met or exceeded their percentage goals for SDB subcontracting. Twelve agencies also exceeded their dollar goals.

The largest single agency percentage increase over the projected total

came from the Social Security Administration, which achieved 13.9 percentage points more than projected, awarding 18.9 percent for SDB subcontracting. The next largest percentage gain was from the Department of State. Its

prime contractors made contracts worth 6.0 percentage points more than projected in subcontract awards to SDBs.

Of all the agencies, the Social Security Administration established the

highest percentage goal for SDB subcontracting at 18.9 percent and exceeded its dollar goal by $6 million in FY 1997.

Agency Shortfalls

Eight of the 20 agencies missed their percentage goals for subcontract dollars

to SDBs, including the Departments of Commerce, Education, Health and

Human Services, Housing and Urban Development, Justice, and Labor, the

Environmental Protection Agency, and the National Aeronautics and Space

Administration. The Departments of Agriculture, Commerce, Health and

Human Services, Housing and Urban Development, Interior, Justice, and

Transportation, and the General Services Administration’s Non-Federal Supply

Service did not meet their dollar goals for FY 1997 subcontract awards. An

274 The Annual Report on Federal Procurement Preference Goals
The USDA exceeded its subcontract percentage goal by 0.3 percent, by awarding 5.3 percent of its subcontract opportunities to SDB firms. However, the

USDA failed to meet its dollar goal to SDB firms by $8.1 million. USDA’s prime

contractors awarded $32.1 million in subcontracts to SDB firms in FY 1997.

Department of Commerce

The Department of Commerce failed to reach its SDB subcontracting goal of

18.0 percent by 5.4 percentage points. DOC also missed its SDB subcontract

dollar goal of $30.1 million by $12.9 million. The actual dollar amount subcontracted to SDBs in FY 1997 was $17.2 million.

Department of Education

Despite missing its percentage goal for awards by its prime contractors to SDB

firms by 1.8 percent, the DOEd exceeded its SDB subcontract dollar goal by

$8.2 million. DOEd awarded 5.3 percent, or $8.9 million, of its subcontract

opportunities to SDB firms in FY 1997.

Department of Health and Human Services

The DHHS failed to meet both its percentage and dollar goals for subcontract

awards to SDB firms in FY 1997. DHHS fell short of its percentage goal of subcontract awards to SDBs by 4.4 percent and missed its dollar goal by $25.6

million. In FY 1997, DHHS awarded 7.0 percent, or $19.5 million, of its subcontracts to SDB firms.

Department of Housing and Urban Development

The HUD missed both its percentage and dollar goals for subcontract awards

to SDB firms. HUD established a 20.0 percent goal for subcontract awards to

SDB firms, while achieving 12.0 percent in subcontract awards to those

firms—an 8.0 percent shortfall. DHHS fell short of its dollar goal by $5.1 million. The department’s prime contractors awarded $14.1 million in subcontracts to SDB firms. In order to offset future declines, HUD will place greater

emphasis on increasing subcontracting opportunities for SDBs.

Department of the Interior

The Department of the Interior (DOI) exceeded its SDB subcontract goal of 3.5

percent by 1.3 percentage points. However, DOI just missed its SDB subcontract

Fiscal Year 1997 275
Department of Justice

The Department of Justice did not meet either its SDB subcontract percentage

or dollar goal in FY 1997. DOJ projected that 5.5 percent of its SDB subcontract awards would be made to SDB firms but missed it by 0.8 percentage

points. DOJ also missed its SDB subcontract dollar goal of $44.0 million by

$5.3 million. The actual dollar amount subcontracted to SDB in FY 1997 was

$38.7 million.

Department of Labor

The Department of Labor exceeded its SDB subcontract dollar goal of $26.1

million by $5.9 million but missed its percentage goal by 0.2 percentage

points. The actual percentage amount subcontracted to SDBs in FY 1997 was

11.7 percent. DOL is taking steps to reverse the shortfalls.

Department of Transportation

The Department of Transportation exceeded its SDB subcontract percentage

goal by 5.2 percent, but missed its SDB subcontract dollar goal by $20.7

million. The actual dollar amount subcontracted to SDB in FY 1997 was

$15.5 million. 

Environmental Protection Agency

The Environmental Protection Agency exceeded its projected dollar goal for

SDB subcontract awards by $0.5 million, while missing its percentage goal by

1.8 percent. EPA’s prime contractors awarded $17.0 million, or 9.2 percent of

its subcontracts to SDB firms.

General Services Administration (Non-Federal Supply Service)

The General Services Administration’s Non-Federal Supply Service subcontract awards to SDB firms totaled $88 million, falling short, by $62 million, of

the $150 million projected for subcontract awards. GSA/NFSS exceeded its

percentage goal for SDB subcontracts by 0.5 percent. GSA/NFSS saw 5.5 percent of its subcontract opportunities awarded to SDB firms. In its report, GSA

stated that they are adding provisions to ensure expanded small business participation in the procurement process.

276 The Annual Report on Federal Procurement Preference Goals
pggy p

ing 12.3 percent of its FY 1997 subcontracts to SDB firms. NASA states that an

“unanticipated” increase of 22 percent in prime contractor outsourcing, without a comparable increase in SDB subcontract awards, caused the shortfall.

Women-Owned Small Business Prime Contracts

I

n FY 1997, the Federal Government awarded 2.1 percent, or $3.6 billion of

a total of $171.4 billion, in prime contracts to women-owned small businesses (Tables 11 and 12). Both the total dollar amount and the percentage

awarded to women-owned small businesses fell below the projected goals

established by the agencies. Small women-owned firms received $4.3 billion

less than projected and 2.5 percentage points less than the overall share goal

of 4.6 percent.

The 20 agencies with the largest contracting budgets awarded approximately 99.0 percent of the women-owned small business (WOSB) prime contract dollars. Six of the 20 agencies—the Departments of Health and Human

Services, Interior, State, Treasury, Veterans Affairs, and the National

Aeronautics and Space Administration—either met or exceeded their percentage and dollar goals for prime contracting to WOSBs. The Social Security

Administration, while missing its dollar goal for awards to WOSBs, exceeded

its percentage goal. 

The largest single agency percentage increase over the projected total

came from the Department of State, which awarded 3.0 percentage points

more than projected and achieved 8.0 percent to WOSBs. The next largest percentage gain was from the Department of Veterans Affairs, which awarded 6.1

percent—2.6 percentage points higher than projected.

The largest dollar increase over the projected total came from the

Department of Veterans Affairs. It increased its dollar total for women-owned

small businesses by $166.0 million. DVA awarded $253.5 million to WOSBs.

The second largest dollar share gain was from the National Aeronautics and

Space Administration. NASA awarded $157.7 million—$25.7 million more

than the $132 million originally projected.

Agency Shortfalls

Thirteen of the 20 major agencies missed their percentage and/or dollar goals for

prime contracts to women-owned small businesses: the Departments of

Agriculture, Commerce, Defense, Education, Energy, Housing and Urban

Development, Justice, Labor, and Transportation, the Environmental Protection

Fiscal Year 1997 277
The Department of Agriculture missed its percentage goal for prime contracts

to WOSBs by 2.5 percent and missed its prime contract dollar goal of $130.0

million by $49.1 million. The actual prime contract dollar amount awarded to

WOSBs in FY 1997 was $80.9 million. 

Department of Commerce

The Department of Commerce failed to meet both its percentage and dollar

goals for awards to WOSBs. DOC awarded 5.7 percent, 2.3 percent less than

projected, in prime contracts to WOSBs. DOC missed its dollar goal by $15.5

million, awarding $46.3 million in prime contracts to WOSBs in FY 1997.

Although the agency missed its WOSB prime contract goals, DOC points out

that it exceeded its targets in the area of subcontract awards to these firms.

Department of Defense

The Department of Defense failed to reach its WOSB prime contract goal of

5.0 percent by 3.3 percent. DOD also missed its prime contract dollar goal of

$5.6 billion by $3.8 billion. The actual prime contract dollars awarded to

WOSBs in FY 1997 totaled $1.8 billion. In its report, DOD states that although

the department did not achieve the prime contract goal for awards to WOSBs,

it was able to maintain a respectable level of dollar awards to these firms

despite a $2.6 billion decline in total business awards. Although DOD spending has decreased at an annual rate of 2.2 percent since 1985, prime contract

awards to WOSBs have grown at a rate of 6.2 percent.

Department of Education

The Department of Education failed to reach its WOSB prime contract goal of

5.0 percent by 3.8 percentage points. DOEd also missed its WOSB contract

dollar goal of $23.3 million by $16.1 million. The actual prime contract dollar amount awarded to WOSBs FY 1997 was $7.2 million.

Department of Energy

The Department of Energy missed its WOSB prime contract goal of 2.1 percent by 0.9 percentage point. DOE also missed its WOSB prime contract dollar goal of $450.0 million by $129.1 million. The actual prime contract dollar

total awarded to WOSBs in FY 1997 was $320.9 million.

278 The Annual Report on Federal Procurement Preference Goals
prime contracts to WOSBs by $40 million. HUD awarded $6.2 million in

prime contracts to WOSBs. In its report, HUD indicates that the decline in

awards to WOSBs is attributable to a decrease in contracts in support for the

Property Disposition Program. As this program accounts for a large share of

small business awards, including those to WOSB firms, the dollar value and

percentage of awards to WOSBs has decreased.

Department of Justice

The Department of Justice failed to reach its WOSB prime contract goal of 5.0

percent by 3.0 percentage points. DOJ also missed its WOSB prime contract

dollar goal of $102.5 million by $54.7 million. The actual prime contract dollar total awarded to WOSB firms in FY 1997 was $47.8 million.

Department of Labor

The Department of Labor failed to reach its WOSB prime contract goal of 5.9

percent by 4.4 percentage points and missed its dollar goal of $52.0 million

by $37.1 million. The actual prime contract dollar total awarded to WOSBs in

FY 1997 was $14.9 million.

Department of Transportation

The Department of Transportation failed to reach its WOSB prime contract

goal of 5.0 percent by 1.0 percentage point and missed its dollar goal of $84.5

million by $24.1 million. The actual prime contract dollars awarded to WOSBs

in FY 1997 totaled $60.4 million.

Environmental Protection Agency

The Environmental Protection Agency missed its WOSB prime contract goal of

3.5 percent by 1.3 percentage points and its dollar goal of $36.0 million by

$16.0 million. Prime contract dollars awarded to WOSBs in FY 1997 totaled

$20.0 million.

General Services Administration (Non-Federal Supply Schedule)

The General Services Administration Non-Federal Supply Schedule contracts

failed to reach the WOSB prime contract goal of 5.0 percent by 2.5 percentage points. GSA NFSS also missed its WOSB prime contract dollar goal of

$321.6 million by $145.7 million. Prime contract dollars awarded to WOSBs

Fiscal Year 1997 279
that these initiatives will assist the small business community, including

WOSB firms, in successfully contracting with the agency.

Social Security Administration

The Social Security Administration exceeded its WOSB prime contract goal of

5.0 percent by 0.2 percentage points. However, SSA missed its WOSB prime

contract dollar goal of $19.2 million by $9.4 million. The actual prime contract dollars awarded to WOSBs in FY 1997 totaled $9.8 million.

Tennessee Valley Authority

The Tennessee Valley Authority came very close to its WOSB prime contract

goal of 1.9 percent but missed it by 0.4 percentage point. TVA also came close

to meeting its WOSB prime contract dollar goal of $41.2 million, awarding

$39.9 million to WOSBs. 

U.S. Agency for International Development

The U.S. Agency for International Development failed to reach its WOSB

prime contract goal of 5.0 percent by 2.0 percentage points. USAID came

close to meeting its WOSB prime contract dollar goal of $22.7 million, missing by only $0.5 million. The actual prime contract dollar amount awarded to

WOSBs in FY 1997 was $22.2 million.

Women-Owned Small Business Subcontracts

Federal prime contractors awarded $71.5 billion in Federal funds to subcontractors in FY 1997 (Tables 13 and 14). Of this total, $2.9 billion—4.1

percent—went to women-owned small businesses. This share was 0.9 percentage point less than projected. However, subcontracts totaled $300 million

more than initially projected.

Prime contractors to the 20 agencies with the largest contracting budgets

awarded approximately 99.7 percent of the dollar value of these awards.

Sixteen of the 20 agencies—the Departments of Commerce, Education,

Energy, Health and Human Services, Housing and Urban Development,

Interior, Justice, Labor, State, Transportation, Treasury, and Veterans Affairs, the

Environmental Protection Agency, the National Aeronautics and Space

Administration, the Social Security Administration, and the U.S. Agency for

International Development—either met or exceeded their percentage and/or

dollar goals for subcontracting to women-owned small businesses.

280 The Annual Report on Federal Procurement Preference Goals
points higher than projected.

The largest dollar increase over the projected total came from the

Department of Veterans Affairs. It increased its dollar total for subcontracts to

WOSBs by $251.1 million, to $255.5 million. The second largest dollar share

gain was from the National Aeronautics and Space Administration. It awarded

$369.5 million in subcontracts to WOSBs—$97.5 million more than projected. 

Of the 20 large agencies, the Department of Commerce set the highest

percentage goal for subcontracts to WOSBs at 8.0 percent. DOC achieved 9.4

percent—1.4 percentage points over the projected amount.

Ten of the 20 agencies missed their percentage and/or dollar goals for

subcontract dollars to WOSBs: the Departments of Agriculture, Commerce,

Defense, Education, Labor, and Transportation, the Environmental Protection

Agency, General Services Administration, Social Security Administration, and

the Tennessee Valley Authority.

Agency Shortfalls

Department of Agriculture

The Department of Agriculture came close to meeting its percentage goal for

subcontract awards to WOSBs. USDA’s prime contractors awarded 4.8 percent—0.2 percentage point less than the 5.0 percent projected for award to

WOSB firms. However, USDA missed its dollar goal by $11.2 million. USDA

awarded $29.0 million in subcontracts to WOSBs in FY 1997.

Department of Commerce

The Department of Commerce exceeded its WOSB subcontract goal by 1.4

percent. DOC’s subcontract awards to WOSBs totaled 9.4 percent. However,

DOC failed to reach its WOSB dollar goal of $13.4 million by $0.6 million. The

actual dollar amount subcontracted to WOSBs in FY 1997 was $12.8 million.

Department of Defense

The Department of Defense failed to reach its WOSB subcontract goal of 5.0

percent by 1.6 percentage points and its dollar goal of $1,976.8 million by

$101.8 million. The actual dollar amount subcontracted to women-owned small

businesses in FY 1997 was $1,875.0 million. DOD, in its report, noted that the

FY 1997 results surpassed their FY 1996 achievement of $1.6 billion.

Fiscal Year 1997 281
the department failed to meet its percentage goal by 2.8 percent, awarding 3.8

percent of its subcontract dollars to WOSBs. 

Department of Labor 

The Department of Labor exceeded the dollar goal established for WOSB subcontract awards by $1.8 million. DOL’s prime contractors awarded $10.8 million in subcontracts to WOSBs in FY 1997. DOL missed its percentage goal by

just 0.5 percent, awarding 4.8 percent of its subcontracts to WOSB firms. In its

report, DOL indicated the agency is analyzing the reasons for the shortfall and

taking steps to reverse the decline.

Department of Transportation

The Department of Transportation exceeded its WOSB subcontract goal of 5.0

percent by 7.1 percentage points but missed its dollar goal of $17.2 million by

$4.9 million. The actual dollar amount subcontracted to WOSB firms in FY

1997 was $12.3 million.

Environmental Protection Agency

The Environmental Protection Agency came very close to its WOSB subcontract goal but missed it by 0.1 percentage point. However, EPA exceeded its

WOSB subcontract dollar goal of $4.9 million by $1.1 million. The actual dollar amount subcontracted to women-owned small businesses in FY 1997 was

$6.0 million.

General Services Administration Non-Federal Supply Service

The General Services Administration Non-Federal Supply Service (NFSS) failed

to reach its women-owned small business goal of 5.0 percent by 0.5 percentage point. GSA also missed its women-owned small business subcontract dollar goal of $150.0 million by $77.3 million. The actual dollar amount subcontracted to women-owned small businesses in FY 1997 was $72.7 million.

In its report, GSA described its initiative to conduct focus groups and hold

roundtable discussions within the small business community to develop information to increase small business participation, including WOSBs, as prime

and subcontractors. 

282 The Annual Report on Federal Procurement Preference Goals
4.9 percent of its subcontracts to WOSB firms in FY 1997.

Tennessee Valley Authority

The Tennessee Valley Authority missed both its percentage and dollar goals for

subcontract awards to WOSB firms in FY 1997. TVA failed to meet its percentage goal by 0.5 percentage point, awarding 3.5 percent of its subcontracts

to WOSB firms. TVA also missed its dollar goal of $15.2 million by $3.6 million. In FY 1997, TVA’s prime contractors awarded $11.6 million in subcontracts to WOSBs.

Fiscal Year 1997 283
Guidance on Goal Setting under

Procurement Preference Programs

Background

Section 221 of Public Law 95–507 and Public Law 100–656, Sections 502

and 503, require the head of each Federal agency, after consultation with

the Small Business Administration, to establish realistic goals for the award of

contracts to small business concerns and to small business concerns owned

and controlled by socially and economically disadvantaged individuals. 

A government-wide goal of 20 percent of all prime contract awards for

small business concerns was established, in addition to a government-wide

goal of 5 percent of the total value of all prime contract and subcontract

awards for each fiscal year for small business concerns owned and controlled

by socially and economically disadvantaged individuals.

Public Law 103–355, dated October 13, 1994, established a governmentwide goal of 5 percent of the total value of all prime contract and subcontract

awards for small business concerns owned and controlled by women.

The SBA will not accept individual agency goals until the mandatory government-wide goals stated above are established.

Specific Guidance on Goal Setting Under

Procurement Preference Programs

The head of each Federal agency having procurement powers shall submit

to the Administrator of the Small Business Administration not later than

December 20, 1996, the following information for fiscal year 1997:

(1) an estimate of the total dollar amount of all prime contracts regardless

of dollar value to be awarded during the fiscal year, including awards to nonprofit organizations, educational institutions, all transportation services, and real

property leases, but excluding foreign military sales, nonappropriated funds

contracts, contracts to be awarded and performed entirely outside the United

States and, except for the General Services Administration (see Special

Instruction (2) on page 3), all Federal Supply Service Schedule Orders. Purchases

made with credit cards are exempt (see Special Instruction (6) on page 3);

(2) a goal for prime contract awards to be made to small business concerns

during the fiscal year, expressed in numbers, dollars, and as a percentage of (1)

above (Note: This dollar goal includes the dollar goals in (3), (4), and (5) below.);

Fiscal Year 1997 285
cerns owned and controlled by socially and economically disadvantaged individuals, other than 8(a), expressed in numbers, dollars, and as a percentage of

(1) above (see Special Instruction (9) on page 3;

(5) a goal for prime contract awards to be made to small business concerns owned and controlled by women, expressed in numbers, dollars, and as

a percentage of (1) above;

(6) an estimate of the total dollar amount of subcontracts to be awarded

by all of an agency’s “reporting prime contractors” (as identified in Standard

Form 295) during the fiscal year;

(7) a goal for subcontracts to be awarded by prime contractors to small

business concerns, expressed in numbers, dollars, and as a percentage of (6)

above (NOTE: This dollar amount includes dollar goals in (8) and (9) below.);

(8) a goal for subcontracts to be awarded by prime contractors to small

business concerns owned and controlled by socially and economically disadvantaged individuals, expressed in numbers, dollars, and as a percentage of

(6) above;

(9) a goal for subcontracts to be awarded by prime contractors to small

business concerns owned and controlled by women, expressed in numbers,

dollars, and as a percentage of (6) above;

(10) a detailed written presentation of the method used to establish the

estimates and goals submitted pursuant to paragraphs (1) through (9), along

with copies of the historical data upon which the estimates and goals are

based. Information about the numbers of contracts involved in the estimates

submitted pursuant to paragraphs (2) through (9) is required. This information

is needed to evaluate the estimates and the goals related thereto. In establishing contracting goals, identification and justification should be provided for

each class of contracts and the projected total value thereof determined by an

agency to have little or no subcontract possibilities.

Special Instructions

(1) Fiscal year 1997 goals are expected to reflect measurable improvement.

(2) Do not include Federal Supply Service (FSS) Schedule contracting dollars in proposed goals. In line with the policy established in FY 1981, GSA will

submit separate, consolidated proposed figures and goals, i.e., for items (1)

through (5) above, for all FSS contracts which will include all order requirements of all Federal agencies.

(3) All goals are expressed in terms of numbers, dollars, and percentages.

However, if there is any variance, up or down, from the projected base

286 The Annual Report on Federal Procurement Preference Goals
(5) In the event of extraordinary circumstances such as unexpected budget changes, requests for revised goals will be considered by SBA if received by

December 31, 1996.

(6) Purchases paid with credit cards do not require the reporting of socioeconomic status of the supplier or vendor. Establishing a system to track these

transactions for procurement preference goal setting and reporting may not be

cost effective and could create an unreasonable administrative paperwork burden. Credit card purchases are therefore exempt; however, if agencies do have

a system for tracking these transactions they may be included.

(7) The close of fiscal year 1996 marks the first year that a governmentwide goal for business concerns owned by women has been in place. With the

extraordinary growth in women-owned firms in the last few years, we believe

that this goal has become even more important and achievable and we ask

that you double your commitment to achieving this goal in fiscal year 1997.

(8) Reporting agencies are encouraged to coordinate goals required by

Section 221(g) with the Minority Business Development Plans mandated by

Executive Order 12432 dated July 14, 1983.

(9) Consistent with the Department of Justice affirmative action proposal

published in the Federal Register last May, small disadvantaged business (SDB)

(prime and subcontracting) goals may be adjusted in the latter part of this fiscal year, if appropriate, to reflect estimated industry benchmarks.

Referrals to OFPP

The Administrator of the Small Business Administration shall, within 30 days

of receipt of the agency goals, respond to each agency expressing agreement

or indicating reasons for disagreement. If interagency consultation fails to

resolve differences, such cases of disagreement shall be submitted by the

Administrator of the Small Business Administration to the Administrator of the

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 to the Administrator of the Small Business Administration on the extent of

achievements against the goals established in paragraphs (2) through (9). With

the exception of subcontract goals, agency reports of goal achievements shall be

based upon official SF279/SF281 data as recorded at the Federal Procurement

Data Center. Agency reports of goal achievements in subcontracting shall be

based upon official SF–295 data. These reports shall be submitted to the Small

Fiscal Year 1997 287
contracts awarded to small business concerns and small business concerns

owned and controlled by socially and economically disadvantaged individuals through noncompetitive negotiation, competition restricted to small business concerns owned and controlled by socially and economically disadvantaged individuals, competition restricted to small business concerns, and

unrestricted competition. The numbers for each of these categories should be

shown as follows: the number and dollar value of contracts awarded over

$25,000, and the number and dollar value of contracts awarded under

$25,000. Please be prepared to provide this information at the end of FY

1997. Include this information in two separate tables — one for small business

concerns, and one for small disadvantaged business concerns. Each table must

include information in all four categories listed above.

2. The Administrator of the SBA will analyze the reports submitted by the

individual agencies and submit a consolidated report to the President, as

required by Section 503 of Public Law 100–656.

288 The Annual Report on Federal Procurement Preference Goals
Table 2 Small Business Share of Federal Prime Contracts:

Performance by Other Federal Agencies, FY 1997 292

Table 3 Small Business Share of Federal Subcontracts:

Performance by Prime Contractors to Major Federal

Agencies, FY 1997 293

Table 4 Small Business Share of Federal Subcontracts:

Performance by Prime Contractors to Other Federal

Agencies, FY 1997 294

Table 5 8(a) Program Share of Federal Prime Contracts:

Performance by Major Federal Agencies, FY 1997 295

Table 6 8(a) Program Share of Federal Prime Contracts:

Performance by Other Federal Agencies, FY 1997 296

Table 7 Small and Disadvantaged Business Share of Federal

Prime Contracts: Performance by Major Federal 

Agencies, FY 1997 297

Table 8 Small and Disadvantaged Business Share of Federal

Prime Contracts: Performance by Other Federal 

Agencies, FY 1997 298

Table 9 Small and Disadvantaged Business Share of Federal

Subcontracts: Performance by Prime Contractors 

to Major Federal Agencies, FY 1997 299

Table 10 Small and Disadvantaged Business Share of Federal

Subcontracts: Performance by Prime Contractors 

to Other Federal Agencies, FY 1997 300

Table 11 Women-Owned Small Business Share of Federal 

Prime Contracts: Performance by Major Federal 

Agencies, FY 1997 301

Table 12 Women-Owned Small Business Share of Federal 

Prime Contracts: Performance by Other Federal 

Agencies, FY 1997 302

Table 13 Women-Owned Small Business Share of Federal

Subcontracts: Performance by Prime Contractors 

to Major Federal Agencies, FY 1997 303

Fiscal Year 1997 289
290 The Annual Report on Federal Procurement Preference Goals
Fiscal Year 1997 291

Table 1 Small Business Share of Federal Prime Contracts: Performance by Major Federal Agencies, FY 1997 (Millions of Dollars)

Agency Projections Actual Awa

SB Prime Contracts SB 

Total Dollars Dollars Percent Total Dollars Dol

Total 170,916.0 42,363.1 24.8 171,418.1 42,5Agriculture 2,599.0 1,325.5 51.0 3,268.6 1,1Commerce 772.4 339.9 44.0 812.6 3Defense 112,695.0 24,454.8 21.7 106,905.0 24,4Education 465.0 109.0 23.4 591.6 1Energy 15,000.0 3,000.0 20.0 15,160.3 2,6Health and Human Services 3,016.6 1,128.1 37.4 3,258.8 1,3Housing and Urban Development 769.6 330.9 43.0 374.7 Interior 877.6 482.7 55.0 1,112.4 7Justice 2,050.0 707.2 34.5 2,456.6 7Labor 883.8 210.7 23.8 1,017.1 1State 630.0 276.5 43.9 559.0 3Transportation 1,690.3 515.5 30.5 1,517.6 9Treasury 1,103.6 353.1 32.0 1,248.3 4Veterans Affairs 2,500.0 887.5 35.5 4,122.9 1,4Environmental Protection Agency 1,200.0 300.0 25.0 914.1 1General Services Administration

(Federal Supply Schedules) 4,890.5 3,380.7 77.0 6,771.7 2,1

General Services Administration 

(Non-Federal Supply Schedules) 6,414.2 2,566.0 40.0 7,061.2 2,9

National Aeronautics and Space Administration 9,400.0 987.0 10.5 9,605.0 1,0Social Security Administration 383.5 115.0 30.0 188.2 Tennessee Valley Authority 2,180.6 392.5 18.0 2,717.0 4U.S. Agency for International Development 455.6 160.3 35.2 743.3 1All Other Agencies 938.7 340.2 36.2 1,012.1 3

Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures submitted. Where no figures are shown, the a

set a goal in this category or did not submit an achievement report, or both.

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
292 The Annual Report on Federal Procurement Preference Goals

Total 938,693.6 340,219.1 36.2 1,012,078.1 347,311.8 34.3

American Battle Monuments Commission

Commission on Civil Rights

Commodity Futures Trading Commission 7,600.0 1,482.0 19.5

Consumer Product Safety Commission 2,789.5 1,673.7 60.0 3,291.4 1,974.8 60.0

Corporation for National Service 26,981.8 20,301.0 75.2

Equal Employment Opportunity Commission 10,600.0 6,360.0 60.0 8,132.0 2,921.0 35.9

Executive Office of the President 18,000.0 8,000.0 44.4 24,439.0 9,322.0 38.0

Export-Import Bank 3,902.4 1,365.8 35.0

Farm Credit Administration*

Federal Communications Commission 37,767.2 18,779.2 49.7 39,538.9 22,475.4 56.8

Federal Election Commission 2,816.0 925.0 32.8 4,835.0 1,704.0 35.2

Federal Emergency Management Agency 200,000.0 40,000.0 20.0 247,408.0 40,843.5 16.5

Federal Energy Regulatory Commission 14,423.0 4,737.0 32.8 17,922.5 5,938.3 33.1

Federal Maritime Commission 300.0 150.0 50.0 443.0 260.0 58.0

Federal Mediation and Conciliation Service 1,019.7 473.4 46.4 1,019.7 658.3 64.6

Federal Mine Safety and Health Review Comm. 175.0 100.0 57.1 262.0 262.0 100.0

Federal Trade Commission 8,000.0 5,200.0 65.0 8,000.0 5,400.0 66.0

International Trade Commission 3,426.0 685.0 20.0 3,426.0 685.2 20.0

Merit Systems Protection Board 1,000.0 800.0 80.0 801.0 500.0 62.4

National Archives and Records Administration 44,452.1 12,446.6 28.0 44,452.1 12,446.6 28.0

National Capital Planning Commission 300.0 90.0 30.0

National Endowment for the Arts 1,000.0 800.0 80.0 954.0 915.0 96.0

National Endowment for the Humanities 950.0 665.0 70.0 1,360.0 1,125.0 83.0

National Labor Relations Board 3,726.0 2,671.0 72.0 4,976.4 2,411.0 48.4

National Science Foundation 185,860.0 14,490.0 7.8 199,210.0 12,480.0 6.3

National Transportation Safety Board 2,000.0 800.0 40.0 6,824.5 1,390.0 20.4

Nuclear Regulatory Commission 59,567.4 22,387.7 37.6 78,146.2 38,340.6 49.1

Occupational Safety and Health Review Comm. 300.0 180.0 60.0 362.2 243.0 67.1

Office of Personnel Management 115,174.0 84,164.0 73.0 145,342.0 100,486.0 69.2

Securities and Exchange Commission** 40.0

Selective Service System 818.5 458.4 56.0 1,408.0 692.0 49.1

Small Business Administration 25,000.0 13,750.0 55.0 37,339.0 25,414.0 68.0

Smithsonian Institution 110,000.0 60,500.0 55.0 59,746.0 26,946.0 45.1

U.S. Arms Control and Disarmament Agency 4,245.0 1,384.3 32.6 4,939.2 1,778.1 36.4

United States Information Agency 46,500.0 14,400.0 31.0 67,500.0 29,700.0 44.0

* FCA stated no appropriated funding in FY 97.

** No record of proposed goals.

Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures

submitted. Where no figures are shown, the agency either did not set a goal in this category or did not submit an

achievement report, or both.

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
Fiscal Year 1997 293

Table 3 Small Business Share of Federal Subcontracts: Performance by Prime Contractors to Major Federal AgenFY 1997 (Millions of Dollars)

Agency Projections Actual Aw

SB Subcontracts 

Total Dollars Dollars Percent Total Dollars Do

Total 52,661.8 21,207.1 40.3 71,451.5 29,3Agriculture 804.2 353.9 44.0 604.1 2Commerce 167.0 73.5 44.0 136.2 Defense 39,536.0 15,972.5 40.4 54,429.0 22,5Education 9.3 3.8 40.7 168.6 Energy 800.0 320.0 40.0 1,516.2 8Health and Human Services 395.2 226.4 57.3 282.2 1Housing and Urban Development 95.5 40.1 42.0 120.4 Interior 100.0 40.0 40.0 69.8 Justice 800.0 417.6 52.2 822.5 4Labor 170.2 100.2 58.9 222.9 1State 60.0 24.0 40.0 74.4 Transportation 344.7 172.3 50.0 101.8 Treasury 441.0 141.1 32.0 307.5 1Veterans Affairs * 400.0 136.0 34.0 4,661.1 1,6Environmental Protection Agency 150.0 82.5 55.0 180.0 General Services Administration

(Federal Supply Schedules)**

General Services Administration

(Non-Federal Supply Schedules) 3,000.0 1,230.0 41.0 1,610.8 6

National Aeronautics and Space Administration 4,534.0 1,587.0 35.0 5,517.0 1,9Social Security Administration 3.5 0.9 25.0 32.6 Tennessee Valley Authority 380.0 133.0 35.0 330.3 1U.S. Agency for International Development 8.1 4.2 51.8 54.6 All Other Agencies 463.1 148.1 31.9 209.5 1

*VA proposed dollars are based on planned new subcontracts and their achievements are the cumulative dollars for all new and existing subcontracts.**GSA FSS did not submit any subcontract data.Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures submitted. Where no figures are shown, the a

set a goal in this category or did not submit an achievement report, or both. 

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
294 The Annual Report on Federal Procurement Preference Goals

Total 463,107.0 148,113.9 32.0 209,545.1 102,215.4 48.8

American Battle Monuments Commission

Commission on Civil Rights

Commodity Futures Trading Commission

Consumer Product Safety Commission

Corporation for National Service 665.5 630.5 94.7

Equal Employment Opportunity Commission

Executive Office of the President 1,400.0 500.0 36.0 1,134.0 871.6 77.0

Export-Import Bank

Farm Credit Administration

Federal Communications Commission

Federal Election Commission

Federal Emergency Management Agency 9,000.0 3,000.0 33.3 44,140.5 32,740.3 74.2

Federal Energy Regulatory Commission 1,366.0 571.0 41.8 13,364.9 5,478.9 41.0

Federal Maritime Commission

Federal Mediation and Conciliation Service

Federal Mine Safety and Health Review Comm.

Federal Trade Commission

International Trade Commission

Merit Systems Protection Board

National Archives and Records Administration 3,782.5 1,659.4 43.9 3,782.5 1,659.4 43.9

National Capital Planning Commission

National Endowment for the Arts

National Endowment for the Humanities

National Labor Relations Board

National Science Foundation 109,940.0 35,740.0 29.9 103,450.0 31,060.0 30.0

National Transportation Safety Board

Nuclear Regulatory Commission 3,350.0 2,645.0 79.0 5,813.2 4,048.2 69.6

Occupational Safety and Health Review Comm.

Office of Personnel Management 317,203.0 97,768.0 82.3 9,948.0 7,582.0 76.2

Securities and Exchange Commission

Selective Service System

Small Business Administration

Smithsonian Institution 1,500.0 600.0 40.0 23,312.0 15,575.0 66.8

U.S. Arms Control and Disarmament Agency

United States Information Agency 14,900.0 5,000.0 34.0 4,600.0 3,200.0 69.6

Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures

submitted. Where no figures are shown, the agency either did not set a goal in this category or did not submit an

achievement report, or both.

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
Fiscal Year 1997 295

Table 5 8(a) Program Share of Federal Prime Contracts: Performance by Major Federal Agencies, FY 1997 (Millions of Dollars)

Agency Projections Actual Aw

8(a) Prime Contracts 8(a

Total Dollars Dollars Percent Total Dollars Doll

Total 170,916.0 2,987.1 1.7 171,418.1 2,90Agriculture 2,599.0 155.90 6.0 3,268.6 8Commerce 772.4 92.7 12.0 812.6 11Defense* 112,695.0 106,905.0Education 465.0 23.3 5.0 591.6 1Energy 15,000.0 450.0 3.0 15,160.3 33Health and Human Services 3,016.6 260.5 8.6 3,258.8 22Housing and Urban Development 769.6 76.2 9.9 374.7 4Interior 877.6 79.0 9.0 1,112.4 10Justice 2,050.0 164.0 8.0 2,456.6 17Labor 883.8 31.3 3.5 1,017.1 4State 630.0 55.4 8.8 559.0 9Transportation 1,690.3 194.4 11.5 1,517.6 22Treasury 1,103.6 121.4 11.0 1,248.3 12Veterans Affairs 2,500.0 62.8 2.5 4,122.9 28Environmental Protection Agency 1,200.0 81.6 6.8 914.1 5General Services Administration 

(Federal Supply Schedules)** 4,890.5 1.8 0.0 6,771.7

General Services Administration 

(Non-Federal Supply Schedules) 6,414.2 608.0 9.5 7,061.2 44

National Aeronautics and Space Administration 9,400.0 310.0 3.3 9,605.0 33Social Security Administration 383.5 49.9 13.0 188.2 4Tennessee Valley Authority 2,180.6 18.3 0.8 2,717.0 U.S. Agency for International Development 455.6 47.3 10.4 743.3 5All Other Agencies 938.7 103.3 11.0 1,012.1 9

* DOD did not establish a separate 8(a) goal; it was combined with SDB goal.** GSA FSS did not have any 8(a) competitive awards.Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures submitted. Where no figures are shown, the a

set a goal in this category or did not submit an achievement report, or both.

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
296 The Annual Report on Federal Procurement Preference Goals

Total 938,693.6 103,350.5 11.0 1,012,078.1 91,384.2 9.0

American Battle Monuments Commission

Commission on Civil Rights

Commodity Futures Trading Commission 7,600.0 625.0 8.2

Consumer Product Safety Commission 2,789.5 697.4 25.0 3,291.4 822.9 25.0

Corporation for National Service 26,981.8 12,758.0 47.3

Equal Employment Opportunity Commission 10,600.0 1,060.0 10.0 8,132.0 446.0 5.5

Executive Office of the President 18,000.0 3,000.0 17.0 24,439.0 4,627.0 19.0

Export-Import Bank 3,902.4 341.5 8.8

Farm Credit Administration

Federal Communications Commission 37,767.2 7,721.3 20.4 39,538.9 10,828.4 27.4

Federal Election Commission 2,816.0 4,835.0

Federal Emergency Management Agency 200,000.0 15,000.0 7.5 247,408.0 9,708.5 3.9

Federal Energy Regulatory Commission 14,423.0 3,520.0 24.4 17,922.5 4,428.9 24.7

Federal Maritime Commission 300.0 443.0

Federal Mediation and Conciliation Service 1,019.7 25.0 2.5 1,019.7

Federal Mine Safety and Health Review Comm. 175.0 262.0

Federal Trade Commission 8,000.0 960.0 12.0 8000.0 1,104.0 14.0

International Trade Commission 3,426.0 171.3 5.0 3,426.0 171.3 5.0

Merit Systems Protection Board 1,000.0 20.0 2.0 801.0 29.0 3.6

National Archives and Records Administration 44,452.1 755.7 1.7 44,452.1 755.7 1.7

National Capital Planning Commission 300.0 75.0 25.0

National Endowment for the Arts 1,000.0 150.0 15.0 954.0 297.0 31.0

National Endowment for the Humanities 950.0 1,360.0

National Labor Relations Board 3,726.0 1,390.0 37.0 4,976.4 1,798.3 36.1

National Science Foundation 185,860.0 4,890.0 2.6 199,210.0 4,690.0 2.4

National Transportation Safety Board 2,000.0 10.0 0.5 6,824.5 26.5 0.4

Nuclear Regulatory Commission 59,567.4 16,284.2 27.3 78,146.2 16,772.6 21.5

Occupational Safety and Health Review Comm. 300.0 362.2

Office of Personnel Management 115,174.0 5,759.0 5.0 145,342.0 3,622.0 3.8

Securities and Exchange Commission

Selective Service System 818.5 0.4 0.0 1,408.0 149.7 10.6

Small Business Administration 25,000.0 10,000.0 40.0 37,339.0 17,137.0 46.0

Smithsonian Institution 110,000.0 12,100.0 11.0 59,746.0 7,750.0 13.0

U.S. Arms Control and Disarmament Agency 4,245.0 336.7 7.9 4,939.2 619.5 12.5

United States Information Agency 46,500.0 5,700.0 12.3 67,500.0 5,600.0 8.3

Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures

submitted. Where no figures are shown, the agency either did not set a goal in this category or did not submit an

achievement report, or both.

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
Fiscal Year 1997 297

Total 170,916.0 7,292.9 4.3 171,418.1 9,162.2 5.3

Agriculture 2,599.0 130.0 5.0 3,268.6 57.8 1.8

Commerce 772.4 46.3 6.0 812.6 49.4 6.1

Defense 112,695.0 5,634.8 5.0 106,905.0 6,697.0 6.3

Education 465.0 11.4 2.5 591.6 48.8 8.2

Energy 15,000.0 450.0 3.0 15,160.3 468.7 3.1

Health and Human Services 3,016.6 97.8 3.2 3,258.8 373.7 11.5

Housing and Urban Development 769.6 23.1 3.0 374.7 5.9 1.6

Interior 877.6 32.5 3.7 1,112.4 55.6 5.0

Justice 2,050.0 51.2 2.5 2,456.6 42.8 1.7

Labor 883.8 44.5 5.0 1,017.1 14.3 1.4

State 630.0 31.5 5.0 559.0 25.1 6.0

Transportation 1,690.3 38.8 2.0 1,517.6 73.1 4.8

Treasury 1,103.6 28.7 2.6 1,248.3 42.6 3.4

Veterans Affairs 2,500.0 62.8 2.5 4,122.9 165.7 4.0

Environmental Protection Agency 1,200.0 24.0 3.0 914.1 17.0 1.8

General Services Administration 

(Federal Supply Schedules) 4,890.5 141.4 3.2 6,771.7 431.8 6.4

General Services Administration

(Non-Federal Supply Schedules) 6,414.2 232.0 3.6 7,061.2 311.9 4.4

National Aeronautics and Space Administration 9,400.0 89.0 1.0 9,605.0 141.4 1.5

Social Security Administration 383.5 20.7 5.4 188.2 13.7 7.3

Tennessee Valley Authority 2,180.6 58.9 2.7 2,717.0 48.4 1.8

U.S. Agency for International Development 455.6 25.0 5.5 743.3 30.2 4.0

All Other Agencies 938.7 18.5 2.0 1,012.1 47.3 4.7

Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures

submitted. Where no figures are shown, the agency either did not set a goal in this category or did not submit an

achievement report, or both.

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
298 The Annual Report on Federal Procurement Preference Goals

Total 938,693.6 18,542.9 2.0 1,012,078.1 47,312.4 4.7

American Battle Monuments Commission

Commission on Civil Rights

Commodity Futures Trading Commission 7,600.0

Consumer Product Safety Commission 2,789.5 279.0 10.0 3,291.4 329.1 10.0

Corporation for National Service 26,981.8 609.3 2.3

Equal Employment Opportunity Commission 10,600.0 530.0 5.0 8,132.0 1,202.0 14.8

Executive Office of the President 18,000.0 900.0 5.0 24,439.0 283.0 1.0

Export-Import Bank 3,902.4 41.0 1.1

Farm Credit Administration

Federal Communications Commission 37,767.2 550.0 1.5 39,538.9 195.8 0.5

Federal Election Commission 2,816.0 4,835.0

Federal Emergency Management Agency 200,000.0 2,600.0 1.3 247,408.0 20,072.6 8.1

Federal Energy Regulatory Commission 14,423.0 17,922.5 421.6 2.4

Federal Maritime Commission 300.0 443.0

Federal Mediation and Conciliation Service 1,019.7 21.1 2.1 1,019.7

Federal Mine Safety and Health Review Comm. 175.0 262.0

Federal Trade Commission 8,000.0 80.0 1.0 8,000.0 69.0 1.0

International Trade Commission 3,426.0 33.6 1.0 3,426.0 33.6 1.0

Merit Systems Protection Board 1,000.0 30.0 3.0 801.0 3.0 0.4

National Archives and Records Administration 44,452.1 866.8 2.0 44,452.1 866.8 2.0

National Capital Planning Commission 300.0 50.0 16.7

National Endowment for the Arts 1,000.0 30.0 3.0 954.0 41.0 4.0

National Endowment for the Humanities 950.0 19.0 2.0 1,360.0 62.0 5.0

National Labor Relations Board 3,726.0 13.0 0.3 4,976.4 79.0 1.6

National Science Foundation 185,860.0 2,156.0 1.2 199,210.0 2,030.0 1.0

National Transportation Safety Board 2,000.0 10.0 0.5 6,824.5

Regulatory Commission 59,567.4 202.0 0.3 78,146.2 647.8 0.8

Occupational Safety and Health Review Comm. 300.0 362.2

Office of Personnel Management 115,174.0 2,085.0 2.0 145,342.0 5,583.0 2.5

Securities and Exchange Commission

Selective Service System 818.5 98.2 12.0 1,408.0 60.0 4.3

Small Business Administration 25,000.0 2,500.0 10.0 37,339.0 4,663.0 13.0

Smithsonian Institution 110,000.0 3,300.0 3.0 59,746.0 5,934.0 9.9

U.S. Arms Control and Disarmament Agency 4,245.0 808.9 19.1 4,939.2 536.2 10.8

United States Information Agency 46,500.0 730.0 1.6 67,500.0 4,200.0 6.2

Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures

submitted. Where no figures are shown, the agency either did not set a goal in this category or did not submit an

achievement report, or both.

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
Fiscal Year 1997 299

Table 9 Small and Disadvantaged Business Share of Federal Subcontracts: Performance by Prime Contractors to Federal Agencies, FY 1997 (Millions of Dollars)

Agency Projections Actual Aw

SDB Subcontracts 

Total Dollars Dollars Percent Total Dollars D

Total 52,661.8 3,125.5 5.9 71,451.5 4Agriculture 804.2 40.2 5.0 604.1 Commerce 167.0 30.1 18.0 136.2 Defense 39,536.0 1,976.8 5.0 54,429.0 3Education 9.3 0.7 7.1 168.6 Energy 800.0 40.0 5.0 1,516.2 Health and Human Services 395.2 45.0 11.4 282.2 Housing and Urban Development 95.5 19.1 20.0 120.4 Interior 100.0 3.5 3.5 69.8 Justice 800.0 44.0 5.5 822.5 Labor 170.2 20.2 11.9 222.9 State 60.0 3.0 5.0 74.4 Transportation 344.7 36.2 10.0 101.8 Treasury 441.0 22.0 5.0 307.5 Veterans Affairs* 400.0 20.0 5.0 4,661.1 Environmental Protection Agency 150.0 16.5 11.0 180.0 General Services Administration 

(Federal Supply Schedules)**

General Services Administration

(Non-Federal Supply Schedules) 3,000.0 150.0 5.0 1,610.8 

National Aeronautics and Space Administration 4,534.0 621.0 13.7 5,517.0 Social Security Administration 3.5 0.2 5.0 32.6 Tennessee Valley Authority 380.0 9.5 2.5 330.3 U.S. Agency for International Development 8.1 0.9 11.5 54.6 All Other Agencies 463.1 26.5 5.8 209.5 

* VA proposed dollars are based on planned new subcontracts and their achievements are the cumulative dollars for all new and existing subcontracts.** GSA FSS did not submit any subcontract data.Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures submitted. Where no figures are shown, the a

set a goal in this category or did not submit an achievement report, or both.

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
300 The Annual Report on Federal Procurement Preference Goals

Total Dollars Dollars Percent Total Dollars Dollars Percent

Total 463,107.0 26,502.3 5.7 209,545.1 19,088.9 9.1

American Battle Monuments Commission

Commission on Civil Rights

Commodity Futures Trading Commission

Consumer Product Safety Commission

Corporation for National Service 665.5 427.5 64.2

Equal Employment Opportunity Commission

Executive Office of the President 1,400.0 85.0 6.0 1,134.0 228.8 20.0

Export-Import Bank

Farm Credit Administration

Federal Communications Commission

Federal Election Commission

Federal Emergency Management Agency 9,000.0 500.0 5.6 44,140.5 5,599.0 12.7

Federal Energy Regulatory Commission 1,366.0 251.0 18.4 13,364.9 1,536.9 11.5

Federal Maritime Commission

Federal Mediation and Conciliation Service

Federal Mine Safety and Health Review Comm.

Federal Trade Commission

International Trade Commission

Merit Systems Protection Board

National Archives and Records Administration 3,782.5 112.3 3.0 3,782.5 112.3 3.0

National Capital Planning Commission

National Endowment for the Arts

National Endowment for the Humanities

National Labor Relations Board

National Science Foundation 109,940.0 6,780.0 6.2 103,450.0 6,220.0 6.0

National Transportation Safety Board

Nuclear Regulatory Commission 3,350.0 617.0 18.4 5,813.2 693.9 11.9

Occupational Safety and Health Review Comm.

Office of Personnel Management 317,203.0 16,677.0 18.7 9,948.0 668.0 6.7

Securities and Exchange Commission

Selective Service System

Small Business Administration

Smithsonian Institution 1,500.0 52.5 3.5 23,312.0 4,013.0 17.2

U.S. Arms Control and Disarmament Agency

United States Information Agency 14,900.0 1,000.0 6.7 4,600.0 17.0 0.4

Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures

submitted. Where no figures are shown, the agency either did not set a goal in this category or did not submit an

achievement report, or both.

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
Fiscal Year 1997 301

Table 11 Women-Owned Small Business Share of Federal Prime Contracts: Performance by Major Federal AgeFY 1997 (Millions of Dollars)

Agency Projections Actual Awa

WOSB Prime Contracts WO

Total Dollars Dollars Percent Total Dollars Dol

Total 170,916.0 7,869.5 4.6 171,418.1 3,63Agriculture 2,599.0 130.00 5.0 3,268.6 8Commerce 772.4 61.8 8.0 812.6 4Defense 112,695.0 5,634.8 5.0 106,905.0 1,84Education 465.0 23.3 5.0 591.6 Energy 15,000.0 450.0 3.0 15,160.3 32Health and Human Services 3,016.6 149.0 5.0 3,258.8 15Housing and Urban Development 769.6 46.2 6.0 374.7 Interior 877.6 42.1 4.8 1,112.4 5Justice 2,050.0 102.5 5.0 2,456.6 4Labor 883.8 52.0 5.9 1,017.1 1State 630.0 31.5 5.0 559.0 4Transportation 1,690.3 84.5 5.0 1,517.6 6Treasury 1,103.6 55.2 5.0 1,248.3 8Veterans Affairs 2,500.0 87.5 3.5 4,122.9 25Environmental Protection Agency 1,200.0 36.0 3.5 914.1 2General Services Administration 

(Federal Supply Schedules) 4,890.5 307.3 7.0 6,771.7 15

General Services Administration 

(Non-Federal Supply Schedules) 6,414.2 321.6 5.0 7,061.2 17

National Aeronautics and Space Administration 9,400.0 132.0 1.4 9,605.0 15Social Security Administration 383.5 19.2 5.0 188.2 Tennessee Valley Authority 2,180.6 41.2 1.9 2,717.0 3U.S. Agency for International Development 455.6 22.7 5.0 743.3 2All Other Agencies 938.7 39.1 4.3 1,012.1 4

Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures submitted. Where no figures are shown, the a

set a goal in this category or did not submit an achievement report, or both.

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
302 The Annual Report on Federal Procurement Preference Goals

Total 938,693.6 39,119.7 4.2 1,012,078.1 43,551.0 4.3

American Battle Monuments Commission

Commission on Civil Rights

Commodity Futures Trading Commission 7,600.0

Consumer Product Safety Commission 2,789.5 418.4 15.0 3,291.4 493.7 15.0

Corporation for National Service 26,981.8 3,120.0 11.6

Equal Employment Opportunity Commission 10,600.0 742.0 7.0 8,132.0 634.0 7.8

Executive Office of the President 18,000.0 900.0 5.0 24,439.0 583.0 2.0

Export-Import Bank 3,902.4 41.0 1.1

Farm Credit Administration

Federal Communications Commission 37,767.2 96.0 0.3 39,538.9 8.9 0.0

Federal Election Commission 2,816.0 112.5 4.0 4,835.0 174.0 3.6

Federal Emergency Management Agency 200,000.0 4,500.0 2.3 247,408.0 8,904.6 3.6

Federal Energy Regulatory Commission 14,423.0 850.0 5.9 17,922.5 796.6 4.4

Federal Maritime Commission 300.0 443.0

Federal Mediation and Conciliation Service 1,019.7 1,019.7

Federal Mine Safety and Health Review Comm. 175.0 20.0 11.4 262.0 63.0 24.0

Federal Trade Commission 8,000.0 400.0 5.0 8,000.0 652.0 8.0

International Trade Commission 3,426.0 171.3 5.0 3,426.0 171.3 5.0

Merit Systems Protection Board 1,000.0 256.0 25.6 801.0 182.0 22.7

National Archives and Records Administration 44,452.1 755.7 1.7 44,452.1 755.7 1.7

National Capital Planning Commission 300.0 40.0 13.3

National Endowment for the Arts 1,000.0 20.0 2.0 954.0 74.0 8.0

National Endowment for the Humanities 950.0 190.0 20.0 1,360.0 485.0 36.0

National Labor Relations Board 3,726.0 729.0 20.0 4,976.4 749.4 15.1

National Science Foundation 185,860.0 1,980.0 1.1 199,210.0 1,870.0 0.9

National Transportation Safety Board 2,000.0 100.0 5.0 6,824.5 153.6 2.3

Nuclear Regulatory Commission 59,567.4 6,281.4 10.5 78,146.2 9,471.5 12.1

Occupational Safety and Health Review Comm. 300.0 125.0 4.2 362.2 37.0 10.2

Office of Personnel Management 115,174.0 5,759.0 5.0 145,342.0 2,171.0 1.5

Securities and Exchange Commission

Selective Service System 818.5 73.7 9.0 1,408.0 69.0 4.9

Small Business Administration 25,000.0 2,000.0 8.0 37,339.0 4,944.0 13.0

Smithsonian Institution 110,000.0 5,500.0 5.0 59,746.0 7,103.0 11.9

U.S. Arms Control and Disarmament Agency 4,245.0 238.7 5.6 4,939.2 304.8 6.1

United States Information Agency 46,500.0 3,700.0 8.0 67,500.0 2,700.0 4.0

Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures

submitted. Where no figures are shown, the agency either did not set a goal in this category or did not submit an

achievement report, or both.

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
Fiscal Year 1997 303

Total 52,661.8 2,647.1 5.0 71,451.5 2,924.7 4.1

Agriculture 804.2 40.2 5.0 604.1 29.0 4.8

Commerce 167.0 13.4 8.0 136.2 12.8 9.4

Defense 39,536.0 1,976.8 5.0 54,429.0 1,875.0 3.4

Education 9.3 0.6 6.6 168.6 6.4 3.8

Energy 800.0 32.0 4.0 1,516.2 115.5 7.6

Health and Human Services 395.2 6.7 1.7 282.2 12.9 5.0

Housing and Urban Development 95.5 4.8 5.0 120.4 12.4 10.0

Interior 100.0 2.0 2.0 69.8 5.9 8.5

Justice 800.0 52.0 6.5 822.5 67.9 8.3

Labor 170.2 9.0 5.3 222.9 10.8 4.8

State 60.0 3.0 5.0 74.4 8.2 8.0

Transportation 344.7 17.2 5.0 101.8 12.3 12.1

Treasury 441.0 22.0 5.0 307.5 24.0 7.8

Veterans Affairs * 400.0 4.0 1.0 4,661.1 255.1 5.5

Environmental Protection Agency 150.0 4.9 3.5 180.0 6.0 3.4

General Services Administration 

(Federal Supply Schedules)** 0.0

General Services Administration 

(Non-Federal Supply Schedules) 3,000.0 150.0 5.0 1,610.8 72.7 4.5

National Aeronautics and Space Administration 4,534.0 272.0 6.0 5,517.0 369.5 6.7

Social Security Administration 3.5 0.2 5.0 32.6 1.6 4.9

Tennessee Valley Authority 380.0 15.2 4.0 330.3 11.6 3.5

U.S. Agency for International Development 8.1 0.4 5.0 54.6 4.8 8.8

All Other Agencies 463.1 20.7 4.5 209.5 10.3 4.9

*VA proposed dollars are based on planned new subcontracts and their achievements are the cumulative

dollars for all new and existing subcontracts.

**GSA FSS did not submit any subcontract data.

Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures

submitted. Where no figures are shown, the agency either did not set a goal in this category or did not submit an

achievement report, or both.

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
304 The Annual Report on Federal Procurement Preference Goals

Total 463,107.0 20,676.1 4.5 209,545.1 10,310.5 4.9

American Battle Monuments Commission

Commission on Civil Rights

Commodity Futures Trading Commission

Consumer Product Safety Commission

Corporation for National Service 665.5 35.1 5.3

Equal Employment Opportunity Commission

Executive Office of the President 1,400.0 135.0 10.0 1,134.0 116.8 10.0

Export-Import Bank

Farm Credit Administration

Federal Communications Commission

Federal Election Commission

Federal Emergency Management Agency 9,000.0 450.0 5.0 44,140.5 5,146.3 11.7

Federal Energy Regulatory Commission 1,366.0 10.0 0.7 13,364.9 473.0 3.5

Federal Maritime Commission

Federal Mediation and Conciliation Service

Federal Mine Safety and Health Review Comm.

Federal Trade Commission

International Trade Commission

Merit Systems Protection Board

National Archives and Records Administration 3,782.5 3,782.5

National Capital Planning Commission

National Endowment for the Arts

National Endowment for the Humanities

National Labor Relations Board

National Science Foundation 109,940.0 2,530.0 2.3 103,450.0 2,060.0 1.99

National Transportation Safety Board

Nuclear Regulatory Commission 3,350.0 517.0 15.4 5,813.2 796.5 13.7

Occupational Safety and Health Review Comm.

Office of Personnel Management 317,203.0 16,477.0 15.6 9,948.0 1,105.0 11.1

Securities and Exchange Commission

Selective Service System

Small Business Administration

Smithsonian Institution 1,500.0 75.0 5.0 23,312.0 587.0 2.5

U.S. Arms Control and Disarmament Agency

United States Information Agency 14,900.0 447.0 3.0 4,600.0 26.0 0.6

Notes: Dollar or percentage figures may vary slightly because of rounding or necessary corrections of figures

submitted. Where no figures are shown, the agency either did not set a goal in this category or did not submit an

achievement report, or both.

Source: U.S. Small Business Administration, Office of Government Contracting, unpublished data.
the Federal Procurement Data Center each quarter.

Actions, reported individually: federal procurement contract actions over

$25,000. Federal agencies are required to file a detailed report, Standard

Form 2790, for each of these contract actions with the Federal

Procurement Data Center. Prior to FY 1983 for the Department of

Defense, and FY 1986 for civilian agencies, the dollar threshold for

reporting detailed information on procurement contracts was $10,000.

Bankruptcy: condition in which a business cannot meet its debt obligations

and petitions a federal district court for either reorganization of its debts

or liquidation of its assets.

Business birth (entry): formation of a new establishment or enterprise.

Business dissolution: for enumeration purposes, the absence from any current

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 creditor.

Capital expenditures: business spending on additional plant, equipment,

and inventory.

Code of Federal Regulations: codification of the general and permanent rules

of the federal government published in the Federal Register.

Corporation: firm granted a state charter to incorporate, thereby limiting the

liability of its owner(s).

Cost-type contract: a contract that provides for payment to the contractor of

allowable and reasonable costs plus a profit. Under such an arrangement,

there is less financial risk to the contractor.

Current Population Survey (CPS): monthly survey conducted by the Bureau of

the Census that provides estimates of the number of persons working, the

number unemployed, and related employment data.

Debt capital: business financing that normally requires periodic interest payments and repayment of the principal within a specified time.

8(a) program: program, authorized under the Small Business Act, that directs

federal contracts to small businesses owned and operated by socially and

economically disadvantaged individuals.

Enterprise: aggregation of all establishments owned by a parent company. An

enterprise may consist of a single, independent establishment, or it can

include subsidiaries or other branch establishments under the same ownership and control.

Equity capital: an investment in exchange for partial business ownership. The

investor’s financial return comes from dividend payments and from

growth in the net worth of a business.

Establishment: a single-location business unit, which may be independent—

called a single-establishment enterprise—or owned by a parent enterprise.
cases, an adjustable price) for the supplies or services being procured,

usually within a stipulated contract period. Under this type or agreement,

maximum risk and responsibility are placed upon the contractor.

Full-time workers: generally, workers who work a regular schedule or more

than 35 hours per week.

Gross domestic product (GDP): the most comprehensive single measure of

aggregate economic output. Represents the market value of the total output of goods and services produced by a nation’s economy.

Incorporation: filing of a certificate of incorporation with a state’s secretary of

state, thereby limiting the business owner’s liability.

Indeterminate industry: industry in which the small or large business share

of employment or sales falls between 40 and 60 percent of total industry employment.

Informal capital: financing from an informal, unorganized source; includes

informal debt capital such as trade credit or loans from friends and relatives and informal equity capital from informal investors.

Initial public offering (IPO): a public offering of securities by a first-time issuer.

Innovation: introduction of a new idea into the marketplace in the form of a

new product or service or an improvement in organization or process.

Large-business-dominated industry: industry in which a minimum of 60 percent of employment is in firms with more than 500 workers.

Metropolitan Statistical Area (MSA): a geographic area defined by the Office

of Management and Budget as a large population nucleus with at least

50,000 persons, together with adjacent communities that have a high

degree of economic and social integration with that nucleus.

Minority-owned businesses: for the purposes of the Bureau of the Census’

Characteristics of Business Owners (CBO) survey, businesses owned by

members of the following minority groups: black, Hispanic, and other

minority (primarily Asian, American Indian, and Alaska native).

North American Industrial Classification System (NAICS): The system used

for classifying businesses by industry that will replace the Standard

Industrial Classification (SIC) system. The new system is being implemented. The 1997 Economic Census will be based on NAICS, rather than

SIC, classifications.

Partnership: two or more parties who enter into a legal relationship to conduct

business for profit. Defined by the Internal Revenue Code as joint ventures, syndicates, groups, pools, and other associations of two or more

persons organized for profit that are not specifically classified in the IRS

code as corporations or proprietorships. 

306 Glossary
Public equity markets: organized markets for trading in equity shares such as

common stocks, preferred stocks, and warrants. Includes markets for both

regularly traded and non-regularly traded securities.

Public offering: a general solicitation for participation in an investment opportunity. The Securities and Exchange Commission supervises interstate

public offerings.

Short-term interest rates: interest rates for short-term borrowing, usually for a

term of one year or less.

Size standard: standard based on the amount of a business’ annual gross

receipts used to determine eligibility for small business set-aside programs in government procurement.

Small business: a business smaller than a given size as measured by its

employment, business receipts, or business assets. The SBA’s Office of

Advocacy generally uses employment data as a basis for size comparisons, with firms having fewer than 100 or fewer than 500 employees

defined as small. 

Small-business-dominated industry: industry in which a minimum of 60 percent of employment is in firms with fewer than 500 workers.

Small-Business Innovation Development Act of 1982: federal statute requiring federal agencies with large extramural R&D budgets to allocate a certain percentage of these funds to small R&D firms. The program is

designed to stimulate technological innovation and make greater use of

small businesses in meeting national innovation needs.

Small Business Innovation Research (SBIR) program: program mandated by

the Small Business Innovation Development Act of 1982, requiring federal agencies with $100 million or more of extramural R&D obligations

to set aside 1.25 percent of these funds for small business.

Small business investment company (SBIC): privately owned company

licensed and funded through the U.S. Small Business Administration and

private sector sources to provide equity or debt capital to small business.

Socially and economically disadvantaged: individuals who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member or a group, without regard to their qualities as individuals, and whose ability to compete is impaired because of diminished

opportunities to obtain capital and credit.

Sole proprietorship: unincorporated, one-owner business, farm, or professional practice. See also proprietorship.

Standard Industrial Classification (SIC) codes: a classification system established by the federal government, used to categorize businesses by type

of economic activity. The SIC system is being replaced by the North

American Industrial Classification System.

Glossary 307
about cash and noncash income, assets and liabilities, and taxes paid,

and a variety of labor market data.

308 Glossary
THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

Chapter 1 The State of Small Business 21

Chapter 2 Financing Small Business 41

Appendix A Supplementary Tables 69

Appendix B Procurement 175

1996 THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

Chapter 1 The State of Small Business 23

Chapter 2 The White House Conference on Small Business:

Implementing the Recommendations 43

Chapter 3 Changes in Self-Employment as Small Business 85

Chapter 4 Regulatory Relief for Small Business 131

Chapter 5 Innovation and Small Business 139

Appendix A Supplementary Tables 169

Appendix B Financing Small Business 271

Appendix C Procurement 305

THE ANNUAL REPORT ON FEDERAL PROCUREMENT 

PREFERENCE GOALS 327

1995 THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

Chapter 1 The State of Small Business 27

Chapter 2 Into the 21st Century: The Changing Role of Small

Business by Firm Size and Employment Status 69

Chapter 3 The Changing Work Force 89

Chapter 4 New Research on Small Business 117

Appendix A Supplementary Tables 133

Appendix B Financing Small Business 275

Appendix C Procurement 317

THE ANNUAL REPORT ON FEDERAL PROCUREMENT 

PREFERENCE GOALS 339
Uninsured by Firm Size and Employment Status 65

Chapter 3 Innovation by Small Firms 109

Chapter 4 Defense Diversification and Small Business 133

Appendix A Supplementary Tables 157

Appendix B Small Business Financing 311

Appendix C Procurement 351

THE ANNUAL REPORT ON FEDERAL PROCUREMENT 

PREFERENCE GOALS 381

1993 THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

Chapter 1 The State of Small Business 21

Chapter 2 Pension Coverage and Costs in Small and Large Business 67

Chapter 3 Franchising: An Alternative for Small Business 109

Appendix A Supplementary Tables 133

Appendix B Small Business Financing 267

Appendix C Procurement 293

Appendix D Characteristics of Business Owners 329

THE ANNUAL REPORT ON FEDERAL PROCUREMENT 

PREFERENCE GOALS 353

1992 THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

Chapter 1 The State of Small Business, 1991 1

Chapter 2 Ten Years of Small Business in the United States 55

Chapter 3 Highlights of Small Business Research, 1978-1992 95

Appendix A Supplementary Tables 141

Appendix B Small Business Financing 251

Appendix C Procurement 303

Appendix D Minority-Owned Businesses 331

THE ANNUAL REPORT ON FEDERAL PROCUREMENT 

PREFERENCE GOALS 383

310 The Annual Report on Small Business and Competition
Appendix B Small Business Financing 181

Appendix C Procurement 220

Appendix D Women-Owned Businesses 250

Appendix E Black-Owned Businesses 276

1990 THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

The State of Small Business 1

Appendix A Supplementary Tables 68

Appendix B Small Business Financing 159

Appendix C Procurement 187

Appendix D Women in Business and the Labor Force 228

1989 THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

The State of Small Business 1

Appendix A Supplementary Tables 42

Appendix B Small Business Financing 119

Appendix C Procurement 143

1988 THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

The State of Small Business 1

Appendix A Supplementary Tables 57

Appendix B Small Business Financing 151

Appendix C Procurement 173

1987 THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

Chapter 1 The State of Small Business 1

Chapter 2 Financing Patterns of Small Firms 65

Contents of Previous Editions 311
Business Sector 185

Chapter 6 Minority-Owned Business 223

Appendix A The Small Business Contribution to the Service Sector 271

Appendix B Procurement 303

1986 THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

Chapter 1 The State of Small Business 1

Chapter 2 Small Business Financing 43

Chapter 3 Veterans in Business 77

Chapter 4 Self-Employment as Small Business 105

Appendix A Women-Owned Businesses 151

Appendix B Minority-Owned Businesses 191

Appendix C Changing Characteristics of Workers and 

Size of Business 225

Appendix D Procurement 257

Appendix E Dimensions of Small Business 289

1985 THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

Chapter 1 The State of Small Business 1

Chapter 2 Industrial Strategies and Small Firms 99

Chapter 3 The Effect of Deregulation on Small Business 143

Chapter 4 Small Business Financing 199

Chapter 5 Changing Patterns in Employee Benefits 245

Chapter 6 Women-Owned Business 289

Appendix A Minority-Owned Business 339

Appendix B Procurement 377

Appendix C The Small Business Data Base: An Update 415

1984 THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

Chapter 1 The State of Small Business 1

Chapter 2 The Changing Industrial and Size Composition of 

U.S. Business 115

Chapter 3 Historical Patterns of Small Business Financing 181

312 The Annual Report on Small Business and Competition
Appendix C The Development of the Small Business Data 

Base: A Progress Report 405

Appendix D Export Programs of the Federal Government 443

Appendix E Federal Procurement from Small Business 453

1983 THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

Chapter 1 Small Business in 1982 1

Chapter 2 Small Business in the U.S. Economy 27

Chapter 3 Small Business Dynamics and Methods for 

Measuring J Job Generation 61

Chapter 4 Small Business Financing 89

Chapter 5 The Small Business Role in Innovation 121

Chapter 6 Business Formation and Dissolution 135

Chapter 7 Small Business and Regulation 165

Appendix A Tables 183

Appendix B The Development of a Small Business Data Base: A 

Progress Report 271

Appendix C Minority-Owned and Women-Owned Business 301

Appendix D Federal Procurement from Small, Minority-Owned, and 

Women-Owned Business 323

Appendix E Tax Developments 339

1982 THE STATE OF SMALL BUSINESS: A REPORT OF THE PRESIDENT

THE ANNUAL REPORT ON SMALL BUSINESS AND COMPETITION

Chapter 1 Small Business in the U. S. Economy 37

Chapter 2 Current and Historical Trends in the Small Business Sector 63

Chapter 3 Financial Developments and the Small Business Sector 105

Chapter 4 Effect of Federal Policy on Small Business 133

Appendix A Tables and Charts 183

Appendix B The Small Business Data Base and Other Sources 

of Business Information: Recent Progress 247

Appendix C Minority-Owned and Women-Owned Businesses 281

Appendix D Small Business Provisions of the Securities Laws 299

Appendix E Analysis of the Economic Recovery Tax Act of 1981 305

Appendix F Federal Procurement from Small, Minority-Owned and 

Women-Owned Businesses 329

Appendix G Federal Agency Small Business Offices 345

Contents of Previous Editions 313
138 (table)

Advocacy, U.S. Small Business 

Administration Office of, 89

Affirmative Action Act of 1978, 91

African Americans

self-employment of, 120

as small business employees, 131 

(table), 132

as small business owners, 99

African-American-owned businesses, 120

franchised, 123, 124 (table), 125 (table)

home-based, 123, 124 (table)

by industry, 102

role in economy, 92

success of, 103 (table), 124

survival rates of, 124

Age

of business owners, 99, 226 (table)

of firms, 89, 101

of the self-employed, 97 (table), 98

of small business employees, 132, 

133 (table), 133 (chart)

Agency data

on procurement, 245 (table), 246 (table), 

247 (table)

Agricultural services

employment in, 38 (table)

employment change in, 32, 35, 36, 

37 (table), 62

Agriculture, U.S. Department of

contracting by: 8(a) program, 269; 

with small businesses, 237, 262, 263; 

with small disadvantaged businesses, 

272; with women-owned small 

businesses, 277, 278

and SBIR program, 239 

subcontracting by: with small businesses, 

265, 266; with small disadvantaged

businesses, 274, 275; with womenowned small businesses, 281

Air transportation

employment growth in, 39

Aircraft manufacturing

employment growth in, 40

Aleut Eskimos, see Asian Americans

Almeida, Paul, 87

American Indians, see Asian Americans

Amusement and recreation services

employment growth in, 36, 39

federal procurement of, 237

Arizona

business formation in, 25

women’s self-employment in, 111

Asian-American-owned businesses, 120

franchised, 123, 124 (table), 125 (table)

home-based, 123, 124 (table)

by industry, 102

role in economy, 93

success of, 103 (table), 124

survival rates of, 124

Asian Americans

as business owners, 99

firms owned by, 100

self-employment of, 98, 120

as small business employees, 131 

(table), 132

Asian financial crisis, 144, 145

Audretsch, David, 81

Baldwin, John R., 88

Bankruptcies, 30, 31 (table) 

in 1980–1996, 234 (table)

by region, 33 (table)

by SBA region and state, 218 (table)

see also Business closings

Banks

assets held by, 153, 155 (chart)

finance company competition with, 155

lending in 1997, 150, 151 (table), 

152 (chart), 153 (chart), 154 (chart), 

155 (chart), 156 (table), 157 (chart), 

158 (chart), 159 (table)

loans by asset size of, 153, 156 (table), 

157 (table), 158 (chart), 159 (table)

mergers and acquisitions in, 153

minority-owned business use of, 173, 

177 (table), 179

number of, 152, 152 (chart)

size of loans from, 152, 154 (chart)

small business use of, 162

women-owned business use of, 117, 165, 

172 (table), 173

see also Borrowing, Credit, Debt, 

Financing

Barber and beauty shops

job losses in, 42

Birch, David, 81, 89

Births
Borrowing

by the business sector, 144

costs of, 145, 145 (chart), 149 (table), 

150 (table)

by the federal government, 144

by nonfarm, noncorporate businesses, 

148 (table)

by nonfarm, nonfinancial corporate 

businesses, 147 (table)

by nonfinancial businesses, 146 (table)

by state and local governments, 144

see also Banks, Credit, Debt, Financing

Brock, William, 80, 81

Business closings, 25

bankruptcies: 30, 31 (table); in 1980–1996,

234 (table); by region, 33 (table); 

by SBA region and state, 218 (table)

dissolution rates by firm age, 227 (table)

of employer firms, 211 (table), 213 (table)

of establishments, 49, 50, 51 (chart), 

52 (table), 54 (table), 56 

failures: 30, 31 (table), 32 (chart);

in 1975–1996, 234 (table);

by region, 33 (table); by SBA region 

and state, 218 (table)

termination rates, 34 (table, chart)

terminations: 26 (table), 30; in 

1982–1996, 234 (table);

by region, 28 (table), 33 (table); 

by SBA region and state, 218 (table)

see also Survival rates 

Business formation

incorporations: 27; in 1975–1996, 

234 (table); by region, 28 (table), 

29 (table); by SBA region and state, 

216 (table)

new employer firms: 25, 26 (table), 27 

(chart); in 1975–1996, 234 (table); by

region, 28 (table), 29, 29 (table); by SBA

region and state, 216 (table)

rates in United States compared with 

Europe, 77 

as source of U.S. economic growth, 78

see also Births

Business Information Tracking Series (BITS),

46–74, 89

description of, 70

years of data in, 49

Business owners

Businesses

acquisition of, 99

characteristics of, 99–104, 225 (table)

by major industry, 206 (table)

minority-owned, by SBA region and state,

223 (table)

in 1982–1996, 234 (table)

number of 25, 26 (table)

by receipts size, 210 (table)

by state, 109 (table), 186 (table)

women-owned, by SBA region and state, 

221 (table)

see also Minority-owned businesses, 

Small businesses, State data, 

Women-owned businesses

Butler, John S., 92

California

business formation in, 25

SBIR program in, 239, 249 (table)

Car rentals

employment growth in, 40

Census, U.S. Bureau of the, 48, 96

Change agents

small firms as, 88

Characteristics of Business Owners, 96

Churning in employment, 50

Civil Rights Act of 1964, 91

Coase, Ronald, 85

Colorado

women’s self-employment in, 111

Commerce, U.S. Department of

contracting by: 8(a) program, 268; with 

small businesses, 262; with small

disadvantaged businesses, 271; 

with women-owned small businesses, 

277, 278 

and SBIR program, 239

subcontracting by: with small businesses, 

266; with small disadvantaged

businesses, 274, 275; with 

women-owned small businesses, 

280, 281

Commercial banks, see Banks

Communications, see Transportation, 

communications, and public 

utilities industry

Community

role in economy, 93

316 The Annual Report on Small Business and Competition
employment in, 38 (table)

employment change in, 32, 35, 36, 37 

(table), 62

by ethnic group of owner, 102

federal procurement of, 237, 247 (table), 

248 (table)

home-based businesses in, 103

minority-owned businesses in, 120

women-owned businesses in, 107 

Consumer confidence index, 24 (table)

Contractions of firms

as source of employment change, 49, 50, 

51 (chart), 52 (table), 54 (table), 56

Corporations

data covering, 96

financing used by, 162, 170 (table), 173 

minority-owned, 173

number of, 77

by receipts size, 210 (table)

women’s ownership of, 105 (table), 106

see also Incorporations

Creative destruction, 94

Credit

minority-owned business use of, 128, 

129 (table), 130 (table)

nonfarm, noncorporate sector use of, 146 

(table), 148 (table), 150

women-owned business use of, 117

see also Banks, Borrowing, Debt, 

Financing

Credit card issuers

employment growth in, 41

Credit cards

minority-owned firms’ use of, 173, 

177 (table)

small business use of, 162, 164

women-owned business use of, 117, 165, 

172 (table), 173

Current Population Survey, 96

Data 

for job creation analysis, 46–74

see also Industry data, State data

Data processing

employment growth in, 40

federal procurement of, 237

Deaths

of employer firms, 211 (table), 213 (table)

of establishments as source of employment

of small firms, 168 (table), 169 (table)

of women-owned firms, 173, 174 (table), 

175 (table)

see also Credit, Borrowing, Financing

Defense, U.S. Department of

contracting by: 236; 8(a) program, 268; 

with small businesses, 262; with small

disadvantaged businesses, 271; with 

women-owned small businesses, 

277, 278

and SBIR program, 239

subcontracting by: with small businesses, 

265; with small disadvantaged

businesses, 274; with women-owned 

small businesses, 281

Deficit, federal, 144

Department of, see last part of department 

name

Department stores

employment growth in, 39

Dissolution rates, 227 (table)

see also Business closings

District of Columbia

women’s self-employment in, 111

Doctors’ offices and clinics

employment growth in, 39

Dow Jones Industrial Average, 76, 155

Downsizing, 78

Dun & Bradstreet, 89, 162

Dynamic theory and analysis of data, 48, 83,

85, 90, 92

Earnings, 30

of the self-employed, 97 (table), 98, 98 

(table), 111

Eating and drinking places

employment growth in, 36, 39

Economic crises and small firm role in 

stability, 82

Economic efficiency and small business, 83

Economic growth, 23

Economies of scale, 79, 83, 84

Education, U.S. Department of

contracting by: 8(a) program, 269; with 

small businesses, 262, 263; with small

disadvantaged businesses, 271; with 

women-owned small businesses, 

277, 278

and SBIR program, 239

Index 317
and pension benefits, 139, 139 (chart)

of self-employed, 97 (table), 98

of small business employees, 134, 

135 (table)

Efficiency 

small firm contributions to, 85, 90

8(a) program, 268

see also Procurement

Electric services industry

job losses in, 42

Electronic access to procurement 

programs, 241

Employee benefits

in small businesses, 136

Employee characteristics, 128–136

Employee compensation

Employer firms

births of, 211 (table), 213 (table)

deaths of, 211 (table), 213 (table)

by firm size, 184 (table)

by industry, 206 (table)

by metropolitan area and firm size, 

195 (table)

by SBA region and state, 214 (table)

by state, 186 (table)

see also Establishments

Employment

from births and deaths in employer firms, 

211 (table), 213 (table)

by firm size, 184 (table)

in indeterminate industries, 36, 37 (table)

by industry, 38 (table), 231 (table)

in large-business-dominated industries, 35

by metropolitan area and firm size, 

195 (table)

in small-business-dominated industries, 35

small business share of, 80

by state, 186 (table)

see also Employment change

Employment agencies

employment growth in, 39

Employment change, 23, 32

data for analysis of, 50

in indeterminate industries, 36, 37 (table)

industries generating jobs at fastest rates, 

39, 41 (table), 231 (table)

industries generating most jobs, 39, 40 

(table), 231 (table)

industries losing jobs at fastest rates, 42, 

in largebusinessdominated industries, 36, 

37 (table)

resulting from establishment changes, 51 

(chart), 52 (table), 54 (table), 56

in small-business-dominated industries, 

36, 37 (table)

see also Employment, Job creation

Employment churning rate, 50

Employment compensation, 24, 32, 

35 (table)

Energy, U.S. Department of

contracting by: 8(a) program, 269; with 

small businesses, 262, 263; with small

disadvantaged businesses, 271; with 

women-owned small businesses, 

277, 278 

and SBIR program, 239

subcontracting by: with small businesses, 

265; with small disadvantaged

businesses, 274; with women-owned 

small businesses, 280

Engineering services

employment growth in, 36, 39

Enterprises, see Employer firms

Entrepreneurship, 82

and efficiency theory, 85

as source of U.S. growth, 78

Environmental Protection Agency

contracting by: 8(a) program 269, 270; 

with small businesses, 262, 264; with

small disadvantaged businesses, 272, 

273; with women-owned small 

businesses, 277, 279

and SBIR program, 239

subcontracting by: with small businesses, 

266, 267; with small disadvantaged 

businesses, 274, 276; with womenowned small businesses, 281, 282

Equal Credit Opportunity Act of 1975, 91

Equipment loans

minority-owned business use of, 128, 129 

(table), 173, 176 (table)

women-owned business use of, 117, 165, 

171 (table)

Equity capital, 155, 157

Establishments 

change in the number of, 49, 52 (table), 

54 (table)

and firm births and deaths, 213 (table)

318 The Annual Report on Small Business and Competition
Ethnic entrepreneurship

role in economy, 92

see also Minority-owned businesses

Ethnic origin

of the self-employed, 97 (table)

see also Minorities

European Union

comparison with U.S. economy, 76, 77

Evans, David, 80, 81, 82

Executive Order 12432, 287

Expansions of firms

as source of employment change, 49, 50, 

51 (chart), 52 (table), 54 (table), 56

Experimentation

role in economy, 94

Exporters

by firm characteristic, 225 (table)

number of, 104

by state, 228 (table)

Exports, 183 (table)

Failure rates, see Dissolution rates

Failures, 30, 31 (table), 32 (chart)

in 1975–1996, 234 (table)

by region, 33 (table)

by SBA region and state, 218 (table)

see also Business closings

Federal Acquisition Reform Act of 1995, 241

Federal Acquisition Streamlining Act of 1994 

(FASA), 238, 241, 261

Federal deficit, 24 (table)

Federal procurement, see Procurement

Federal Procurement Data Center, 261, 287

Federal Procurement Policy, Office of 

role in federal procurement, 261, 287

Federal Reserve Board, 144, 150

Finance companies

and bank competition, 155

employment growth in, 41

lending by, 155, 160 (table)

minority-owned business use of, 128, 130 

(table), 173, 177 (table), 179

women-owned business use of, 117, 165, 

172 (table)

Finance, insurance and real estate industry

age of firms in, 101

employment in, 38 (table)

employment change in, 32, 36, 37 

(table), 62

Financial assistance

small business employees receiving, 136, 

137 (table), 137 (chart)

Financing, 143–180

minority-owned business use of, 128, 129 

(table), 130 (table), 173, 176 (table)

of small businesses, 158, 166 (table), 

167 (table)

women-owned business use of, 117, 165, 

171 (table)

see also Banks, Borrowing, Credit, Debt

Firms, see Businesses, Employer firms

Florida

women-owned businesses in, 107

Food stores

employment growth in, 39

Franchising, 103

by firm characteristic, 225 (table)

of minority-owned businesses, 123, 124 

(table), 125 (table)

of women-owned firms, 115, 115 (table)

Friends and family

as women-owned firms’ source of 

financing, 165, 172 (table), 173

Fruit and vegetable stores

job losses in, 42 

Full-time employment

of small business employees, 131 (table)

Funeral parlors

job losses in, 42

Garten, Jeffrey E., Under Secretary of 

Commerce, 76

Gender

of the self-employed, 97 (table)

see also Women, Women-owned 

businesses 

General Electric, 78

General merchandise stores

employment growth in, 39

General Services Administration 

contracting by: 236; 8(a) program, 269, 

270; with small businesses, 262, 264; 

with small disadvantaged businesses, 

271; with women-owned small 

businesses, 278, 279

procurement regulations concerning, 

285, 286

subcontracting by: with small businesses, 

Index 319
Globalization

and small business role, 93

see also Exporters

Government policy, 

role in economy, 94

Government purchases, 183 (table)

Green, Patricia Gene, 92

Gross domestic product (GDP), 24 (table), 

45

sources of, 183 (table)

Gross national product per firm, 81

Gross private domestic investment, 

183 (table)

Gross product originating in small 

business, 81

Hawaii

business formation in, 25

women’s self-employment in, 111

Health and Human Services, 

U.S. Department of

contracting by: 8(a) program, 269, 270; 

with small businesses, 262; with small

disadvantaged businesses, 271, 272; 

with women-owned small 

businesses, 277 

and SBIR program, 239

subcontracting by: with small businesses, 

266; with small disadvantaged

businesses, 274, 275; with womenowned small businesses, 280 

Health benefits

and educational attainment, 141 (chart)

in small businesses, 140, 141 (table), 

141 (chart)

Health services

employment growth in, 39

High technology

and new firms, 86

see also Innovation, Technology

Hispanic-American-owned businesses, 120

franchised, 123, 124 (table), 125 (table)

home-based, 124 (table)

by industry, 102

success of, 103 (table), 124

survival rates of, 124

Hispanic Americans

as owners of businesses with 

employees, 99

minority ownership of, 123, 124 (table)

women’s ownership of, 112, 115 (table)

Hospitals

employment growth in, 39

Housing and Urban Development, 

U.S. Department of

contracting by: 8(a) program, 268, 269, 

270; with small businesses, 262, 263; 

with small disadvantaged businesses, 

272; with women-owned small 

businesses, 277, 279

subcontracting by: with small businesses, 

265; with small disadvantaged

businesses, 274, 275; with womenowned small businesses, 280

HUBzone legislation, 241

Idaho

women-owned businesses in, 107

Immigrant communities

and small business, 86

Immigrants

entrepreneurial role of, 91

as owners of businesses with 

employees, 99

see also Ethnic entrepreneurship

Income, 24 (table), 32, 35 (table)

by state, 229 (table)

Income tax returns

in 1975–1996, 234 (table)

by receipt size of return, 210 (table)

Incorporations, 27 

in 1982–1996, 234 (table)

by region, 28 (table), 29 (table)

by SBA region and state, 216 (table)

see also Business formation

Industrial organization, 83, 85

Industries

fastest growing, 229 (table)

generating the most jobs, 229 (table)

Industry data

employer firms by employment size of 

firm, 206 (table)

employment by employment size of firm, 

206 (table)

establishments by employment size of 

firm, 206 (table)

payroll by employment size of firm, 

206 (table)

320 The Annual Report on Small Business and Competition
Inherited businesses

number of, 99, 101

Initial public offerings, 155, 161 (table)

Innovation, 87

and firm growth, 88

role in economy, 80

small business role in, 75

Insurance industry, see Finance, insurance, 

and real estate industry

Interest rates, 24 (table), 144, 145 (chart), 

149 (table), 150 (table)

Interior, U.S. Department of

contracting by: 8(a) program, 268; with 

small businesses, 237, 262; with small

disadvantaged businesses, 271; with 

women-owned small businesses, 277

and SBIR program, 239

subcontracting by: with small businesses, 

265; with small disadvantaged

businesses, 274; with women-owned 

small businesses, 280, 281

International trade, 93

Japan

comparison with U.S. economy, 76

Job creation

data for analysis of, 46–74

by firm size, 90 (chart)

and new firms, 89

small firm contributions to, 89

see also Employment change

Job generation

defined, 50

Justice, U.S. Department of

affirmative action proposal of, 287

contracting by: with small businesses, 262,

263; with small disadvantaged

businesses, 272, 273; with womenowned small businesses, 277, 279

subcontracting by: with small businesses, 

265, 266, 267; with small

disadvantaged businesses, 274, 276; 

with women-owned small 

businesses, 280

Kirchhoff, Bruce, 86

Knitting mills

job losses in, 42

Kogut, B., 87

subcontracting by: with small businesses, 

265, 266, 267; with small

disadvantaged businesses, 274, 276; 

with women-owned small businesses, 

280, 282

Labor Statistics, U.S. Bureau of, 96

Large-business-dominated industries, 35

see also Employment change

Laundries

job losses in, 42

Lending, see Banks, Borrowing, Credit, 

Financing

Lines of credit

minority-owned business use of, 128, 

129 (table), 173, 176 (table)

small business use of, 162, 164

women-owned business use of, 117, 165, 

171 (table)

Longitudinal Research Datafile, 49, 89

Loveman, G., 81

Maine

incorporations in, 30

Management

share of small business employees in, 136, 

138 (table)

Management services

employment growth in, 36, 39

procurement of, 238

Manufacturing

economic role, 80

employment in, 38 (table)

employment change in, 32, 35, 36, 

37 (table), 62

exporting in, 104

in OECD countries, 81

small firms in, 89

women-owned businesses in, 107

Massachusetts

SBIR program in, 239, 249 (table)

Mattresses and bedsprings industry

employment growth in, 39

Men

self-employment of, 114 (table)

as small business employees, 128, 

131 (table)

Mergers and acquisitions

effects on small business lending, 153

and increase in borrowing, 145

Index 321
womenowned businesses in, 107

Minorities

entrepreneurial role of, 91

self-employment of, 97 (table)

as small business employees, 131 

(table), 132

see also Minority-owned businesses

Minority-owned businesses, 120, 120 (chart), 

121 (table), 122 (table), 123 (table)

characteristics of, 123

data covering, 96

federal government procurement from, 

240, 240 (chart), 250 (table), 251 

(table), 268–277

financing used by, 173, 176 (table), 

177 (table)

home-based, 123, 124 (table)

by industry, 102, 120

role in economy, 92, 94

by SBA region and state, 223 (table)

success of, 103 (table)

survival rates of, 102

see also Minorities

Mortgage brokers

employment growth in, 41

Mortgage loans

small business use of, 164

Motion picture production

employment growth in, 39, 40

National Aeronautics and Space 

Administration

contracting by: 8(a) program, 268; with 

small businesses, 262; with small

disadvantaged businesses, 271; with 

women-owned small businesses, 277

procurement awards of, 236

and SBIR program, 239

subcontracting by: with small businesses, 

265; with small disadvantaged

businesses, 274, 277; with womenowned small businesses, 280, 281

National Science Foundation

and SBIR program, 239

National Survey of Small Business Finances, 

117, 128, 162

Nevada

business formation in, 25

incorporations in, 27

womenowned businesses in, 107

New York

incorporations in, 30

Nondepository institutions

employment growth in, 41

Nonminorities

in self-employment, 96, 97 (table), 98

see also Minorities, Whites

Nuclear Regulatory Commission

procurement from small firms, 237

and SBIR program, 239

Nucor Steel, 78, 80

Occupations

of small business employees, 136, 

138 (table)

Office of, see last part of office name

Ordnance manufacturing

job losses in, 42

Organisation for Economic Cooperation and 

Development, 81

Output

small business share of, 82, 83 (table)

Owners’ capital

minority-owned business use of, 173, 177 

(table), 179

small business use of, 164 

women-owned business use of, 165, 172 

Pacific Islanders, see Asian Americans

Partnerships

data covering, 96

financing used by, 162

minority-owned, financing used by, 173

number of, 77, 210 (table)

women’s ownership of, 105 (table)

see also Income tax returns

Part-time employment

and health benefits, 140

of small business employees, 132, 134 

(table), 135 (chart)

Patents, 87

Payroll

by firm size, 184 (table)

by major industry, 206 (table)

by state, 186 (table)

Pension benefits 

in small businesses, 136, 138 (table), 139 

(chart), 140 (chart)

322 The Annual Report on Small Business and Competition
Prime contracts, see Procurement

Private nonfarm gross product

small business share of, 82, 83 (table)

see also Gross product originating in 

small business

Procurement, 253–304

by agency, 236, 245 (table), 246 (table), 

247 (table)

electronic access to, 241

federal government total, 236, 244 (table)

from minority-owned businesses, 124, 126 

(table), 127 (table), 240, 240 (chart),

250 (table), 251 (table)

prime contract total, 236

by product or service category, 237, 

247 (table)

by size of contract action, 237, 238, 

244 (table)

from small businesses: 236, 244 (table), 

250 (table), 251 (table); prime contracts, 

262–265, 291 (table), 292 (table);

subcontracts, 265–268, 293 (table), 

294 (table)

from small disadvantaged businesses: 8(a) 

program, 268–271, 295 (table), 296

(table); prime contracts, 271–274, 297 

(table), 298 (table); subcontracts, 

274–277, 299 (table), 300 (table)

subcontracting total, 236

from women-owned businesses, 115, 116 

(table), 240, 240 (chart), 250 (table),

251 (table); prime contracts, 277–280, 

301 (table), 302 (table); subcontracts, 

280–283, 303 (table), 304 (table)

Procurement Marketing and Access Network 

(PRO–Net), 241

Profitability

as incentive for entry in industry, 85

Profits, 24 (table), 30, 35 (table)

Proprietors’ income 

by state, 229 (table)

Proprietorships

data covering, 96

number of: 77; by receipts size, 

210 (table)

receipts of women-owned, 111

women’s ownership of, 105 (table), 107, 

110 (table)

see also Income tax returns

Public Law 103355, 285

Public relations

employment growth in, 36, 39, 40

Race

of the self-employed, 97 (table)

see also Minorities, Minority-owned 

businesses

Raw cane sugar

employment growth in, 40

Real estate industry, see Finance, insurance, 

and real estate industry

Receipts

by firm size, 184 (table)

by major industry, 206 (table)

by state, 186 (table)

of women-owned businesses, 104, 

105 (table), 106 (chart), 108 (table), 111

Renewal process

small firm role in, 87

Research and development, 88

federal procurement of, 237, 239, 247 

(table), 248 (table)

Retail trade

employment in, 38 (table)

employment growth in, 32, 36, 37 

(table), 62

franchising in, 103

by minority group of owner, 102

role in economy, 82

women-owned businesses in, 106, 

107 (chart)

Rhode Island

women’s self-employment in, 111

SBIR program, 239

by state, 249 (table)

Schumacher, E. F., 79

Schumpeter, Joseph, 86, 94

Securities and commodities brokers

employment growth in, 41

Security systems

employment growth in, 39

Self-employment

characteristics of, 96–99

by gender, 112 (table), 114 (table)

of men, 111

of minorities, 120, 123 (table)

in 1975–1996, 234 (table)

Index 323
employment change in, 32, 35, 36, 37 

(table), 39, 62

by ethnic group of owner, 102

federal procurement of, 237, 247 (table), 

248 (table)

women-owned businesses in, 106, 

107 (chart)

Sherman Anti-Trust Act of 1890, 79

Shoe industries

job losses in, 42

Silicon Valley, 86

Simplified acquisition process, 238

Small Business Act, 260, 286

Small Business Administration, U.S.

loan programs of, 154

procurement guidance from, 260–261, 

285–288

Procurement Marketing and 

Access Network (PRO–Net) of, 241

small business investment company 

financing by, 158, 164 (table)

Small-business-dominated industries, 35

Small Business Innovation Research (SBIR) 

program, 239, 248 (table), 249 (table)

Small business investment companies, 158, 

164 (table)

Small businesses

defined for procurement purposes, 236n

employee characteristics, 128–136

importance to economy, 75

number of, 25

see also Business closings, Business 

formation

Smith, Adam, 79

Smithsonian Institution

procurement from small firms, 237

Social capital, 87

Social Security Administration

contracting by: 8(a) program, 268, 269, 

270; with small businesses, 262; with 

small disadvantaged businesses, 271, 

272, 273; with women-owned small 

businesses, 278, 280

subcontracting by: with small businesses, 

265, 266; with small disadvantaged

businesses, 274; with women-owned 

small businesses, 280, 281, 283

Social services

employment growth in, 36, 39

employer firms: 214 (table); by firm size, 

186 (table)

establishments by firm size, 186 (table)

exporters, 228 (table)

failures, 218 (table)

income, 229 (table)

incorporations, 216 (table)

minority-owned businesses, 223 (table)

new employer firms, 216 (table)

proprietorship income, 229 (table)

payroll by firm size, 186 (table)

receipts by firm size, 186 (table)

on SBIR program, 249 (table)

self-employment: 214 (table); of women, 

113 (table)

terminations, 218 (table)

wage-and-salary income, 229 (table)

women-owned businesses, 109 (table), 

113 (table), 221 (table)

State, U.S. Department of

contracting by: 8(a) program, 268; with 

small businesses, 262; with small

disadvantaged businesses, 271; with 

women-owned small businesses, 277

subcontracting by: with small businesses, 

265; with small disadvantaged

businesses, 274; with women-owned 

small businesses, 280

Static theory, 48, 83, 85, 90, 92

Stock market, 144, 145, 155

Subcontracting

from women-owned businesses, 117, 

116 (table)

see also Procurement

Success 

of firms, 102, 103 (table)

of minority-owned businesses, 124

Summers, Lawrence E., Deputy Secretary 

of Treasury, 76

Supplies and equipment

federal procurement of, 237, 247 (table), 

248 (table)

Survey of Minority-Owned Businesses, 96

Survey of Women-Owned Businesses, 96

Survival rates, 102

of businesses, by characteristic, 225 (table)

of minority-owned businesses, 124, 

126 (table)

324 The Annual Report on Small Business and Competition
Telecommunications

employment growth in, 35

federal procurement of, 237

see also Transportation, communications, 

and public utilities industry

Temporary agencies

employment growth in, 39

Tennessee Valley Authority

contracting by: 8(a) program, 269, 271; 

with small businesses, 262, 264; with

small disadvantaged businesses, 272, 

273; with women-owned small 

businesses, 278, 280

subcontracting by: with small businesses, 

265; with small disadvantaged

businesses, 274; with women-owned 

small businesses, 281, 283

Terminations, 34 (table), 34 (chart)

in 1982–1996, 234 (table)

by region, 33 (table)

see also Business closings

Textile industries

job losses in, 42

Trade contractors

employment growth in, 39

Transaction costs, 85

Transportation, communications, and

public utilities industry

age of firms in, 101

employment in, 38 (table)

employment change in, 32, 35, 36, 

37 (table), 39, 62

minority-owned firms in, 102, 120

minority-owned franchises in, 123

survival rates in, 102

women-owned businesses in, 107

Transportation, U.S. Department of

contracting by: 236; 8(a) program, 268; 

with small businesses, 237, 262; with

small disadvantaged businesses, 271; 

with women-owned small businesses, 

277, 279

and SBIR program, 239

subcontracting by: with small businesses, 

265, 266, 267; with small

disadvantaged businesses, 274, 276; 

with women-owned small businesses, 

280, 281, 282

subcontracting by: with small businesses, 

265, 266, 267; with small 

disadvantaged businesses, 274; with 

women-owned small businesses, 280

Turnover

of establishments, 50

Unemployment rate, 23, 24 (table), 45

comparison between United States and 

Europe, 77

in 1998, 76

U.S. Agency for International Development

contracting by: 8(a) program, 268, 269, 

271; with small businesses, 262, 264;

with small disadvantaged businesses, 

272, 274; with women-owned small 

businesses, 278, 280

subcontracting by: with small businesses, 

265; with small disadvantaged

businesses, 274; with women-owned 

small businesses, 280

U.S. Department of, see last part of 

department name

Used merchandise stores

employment growth in, 40

Utilities industry, see Transportation, 

communications, and public 

utilities industry

Vehicle loans

minority-owned business use of, 128, 

129 (table), 173, 176 (table)

women-owned business use of, 165, 

171 (table)

see also Financing

Venture capital, 157, 162 (table), 163 (table)

Veterans Affairs, U.S. Department of

contracting by: 8(a) program, 268, 269; 

with small businesses, 262, 264; with

small disadvantaged businesses, 271; 

with women-owned small 

businesses, 277

subcontracting by: with small businesses, 

265; with small disadvantaged 

businesses, 274; with women-owned 

small businesses, 280, 281

Videotape rental, employment growth in, 

39, 40

Index 325
Whiteowned firms

success of, 103 (table) 

see also Minority-owned businesses

Whites

in self-employment, 96, 97 (table), 98

share of firms owned by, 100

see also Minorities, Nonminorities

Wholesale trade

employment in, 38 (table)

employment growth in, 32

minority-owned firms in, 120

women-owned businesses in, 107

Women 

entrepreneurial role of, 91, 94

as owners of businesses with 

employees, 99

self-employment of: 111, 114 (table); by 

state, 113 (table)

share of firms owned by, 100

as small business employees, 128, 

131 (table)

Women in Franchising, Inc., 115

Women-owned businesses, 104, 105 

(table), 106 (chart)

characteristics of, 112

data covering, 96

federal government procurement from, 

115, 240, 240 (chart), 250 (table), 251

(table), 277–283

financing used by, 117, 118 (table), 119 

(table), 165, 171 (table)

in franchising, 115, 115 (table)

home-based, 112, 115 (table)

by industry, 102, 107 (chart), 108 (table)

and procurement reform, 261

by SBA region and state, 221 (table)

by state, 109 (table)

success of, 103 (table)

survival rates of, 102

Wyoming

women’s self-employment in, 111

326 The Annual Report on Small Business and Competition

USGPO T&D 2000 468–199